Danaher and Smith (2013)
|Danaher and Smith (2013)|
|Title:||Gone in 60 seconds: The impact of the megaupload shutdown on movie sales|
|Author(s):||Danaher, B., Smith, M.|
|Citation:||Danaher, B., & Smith, M. D. (2014). Gone in 60 seconds: the impact of the Megaupload shutdown on movie sales. International Journal of Industrial Organization, 33, 1-8.|
|Link(s):||Definitive , Open Access|
|Key Related Studies:|
|Linked by:||Arnold, Darmon, Dejean and Penard (2014)|
|About the Data|
|Data Description:|| The methodology for estimating the effect of the Megaupload shutdown on sales involves crosscountry variation in the penetration level of the Megaupload cyberlocker site among Internet users. The sales data are provided by three major U.S. movie studios and include all digital purchases and rentals through their major digital channels aggregated at a weekly level from September 2, 2011 until May 31, 2012. These data include each of the 12 countries where these digital channels were available as of September 2011. The study also uses a similar dataset for a similar period from September 2012 until March 2013, in order to conduct a placebo test.
Internet penetration data is based on two statistics. First, Google AdWords estimates of the total number of unique visitors, by country, to Megaupload.com and Megavideo.com during December 2011, the last full month before the shutdown. Secondly, they obtained the total number of Internet users in each country in our sample as reported by the International Telecommunications Union at the end of 2011. This is used as a measure of the potential market size for digital sales in each country.
|Data Type:||Secondary data|
|Secondary Data Sources:|
|Data Collection Methods:|
|Data Analysis Methods:|
|Cross Country Study?:||Yes|
|Government or policy study?:||No|
|Time Period(s) of Collection:||
The growth of Internet-based piracy has led to a wide-ranging debate over how copyright policy should be enforced in the digital era. In this paper we analyze the impact of the US government's shutdown of a major piracy site – Megaupload.com – on digital sales and rentals of movies.
Exploiting cross-country variation in pre-shutdown usage of Megaupload, we find that the shutdown of Megaupload and its associated sites caused digital revenues for three major motion picture studios to increase by 6.5–8.5%. Our results suggest that some consumers will turn to legal channels when a major filesharing site is shut down, and by extension that illegal filesharing displaces digital movie sales.
Main Results of the Study
The main results of this study are:
- Before the shutdown of Megaupload, the variation in Megaupload usage across countries is random with respect to the modeled time trend of digital movie purchases.
- After the shutdown, countries with higher pre-shutdown usage of Megaupload experience larger increases in digital sales and rentals than countries with lower pre-shutdown usage do. This difference is both statistically and economically significant.
- The findings indicate that digital movie revenues for two studios were 6.5-8.5% higher over the 18 weeks following the shutdown (across 12 countries) than they would have been if not for the shutdown.
- The shutdown of a major online piracy site can increase digital media sales, and by extension we provide evidence that Internet movie piracy displaces digital film sales and rentals.
Policy Implications as Stated By Author
Teh authors suggest that in the case of Megaupload,com, shutdown had a measurable and significant impact on sales. " Our diff-in-diff results combined with a placebo test strongly suggest that the shutdown of the popular Megaupload and Megavideo sites caused an increase in digital motion picture sales and rentals leading to an increase in digital revenues of 6.5-8.5%."
However, the authors note that, "our study only measures specific benefits of this regulation — it does not measure either tangible or intangible costs of this sort of intervention, and such costs should be considered carefully as part of any policy decisions."
Coverage of Study
|Level of aggregation:||Motion Picture Markets|
|Period of material under study:||2011-2013|