Study says piracy does not affect box office sales, delayed releases do

On January 16, 2012, an academic study concluded that not only does the US box office not suffer any loss of sales due to piracy, but also that Hollywood’s delayed release dates drive piracy, at a seven percent box office loss, internationally.

Study says piracy does not affect box office sales, delayed releases do

This news broke just three days before the arrest of Megaupload founder Kim DotCom and the seizure of the infamous file sharing company’s domains by US authorities.

The copyright infringement issue of stealing artistic media will never be a clear, two-sided argument, but what is clear is that legislators have certainly targeted online piracy with all of the renewed vigor of the Salem witch hunt trials.

The Motion Picture Association of America (MPAA) was actively involved in the multi-year FBI investigation of Megaupload, yet the study titled Reel Piracy: The Effect of Online Film Piracy on International Box Office Sales, conducted by Brett Danaher of Wellesley College and Joel Waldfogel of the University of Minnesota along with NBER, refutes the need for any such witch hunt.

The study admits that the question of how free availability of intellectual property content affects paid demand is not as obvious as it may appear.

But the economists involved appear to have done their homework and after careful analysis of sales results in the US and abroad have reached stunning conclusions. The authors wrote that they, do not see evidence of elevated sales displacement in US box office revenue following the adoption of BitTorrent [file sharing starting in 2003].

The movie studios are not losing any box office sales money in the US . . . period.

There have been no discernible losses for movies, in US theaters, so the MPAA’s claims against piracy in the US appear to be at least partly unfounded.

The study also made another startling discovery. In countries with high BitTorrent use, movie piracy has reduced sales internationally by seven percent when there was a huge delay in the theatrical release of the films.

Hollywood and other international film studios routinely release their films in other countries months after their initial debut, but then they blame piracy for their losses in sales. The MPAA and film companies that continue to use 35mm film to play their movies in theaters need to find a more cost-effective means to distribute these films without the months-long lags between the US releases and international ones. The Muppets was only just released in the UK this month — after a Thanksgiving release in the US, and this huge gap, where international movie viewers are left out in the cold, has spurred on piracy abroad.

The study states that movies: have become available through illegal piracy immediately after release in the US, while they are not available for legal viewing abroad until . . . foreign premieres . . . [and] this variation in international release lags . . . [that] facilitate more local pre-release piracy . . . [also] depress theatrical box office receipts in eager viewers [that] pirate movies.

There is a direct correlation between delayed releases of films and the pirating of such movies by impatient viewers, and the movie companies are responsible for these delays. Piracy is, alternatively, not to blame for any theatrical losses it would seem. So why does SOPA and other legislative witch hunts keep on creeping up?