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Pirates who pay: do illegal downloads actually help the box office?

A new study suggests that shutting down Megaupload actually hurt the film industry, while a UK report has found that pirates spend more on digital entertainment.

A new study suggests that shutting down Megaupload actually hurt the film industry, while a UK report has found that pirates spend more on digital entertainment.

(Pirates of the Caribbean, Desert Operations image by A47, CC BY-SA 3.0)

When Kim Dotcom's infamous Megaupload service was shut down (with prejudice), much was made of the service being used to host illegal content. In fact, the Motion Picture Association of America (MPAA) was one of the major instigators of the investigation that led to the shutdown.

But did it impact on movie sales? Well, a study from the Munich School of Management and Copenhagen Business School suggests that it did — but in a negative fashion.

As reported by TorrentFreak, the study, entitled "Piracy and Movie Revenues: Evidence from Megaupload", looked at the weekly revenues of 1344 movies in 49 countries across a five-year period. The researchers saw that overall, box office sales decreased after the Megaupload shutdown — although sometimes in such a small manner as to be statistically insignificant.

"In all specifications, we find that the shutdown had a negative, yet in some cases insignificant, effect on box office revenues," said the report.

However, this finding didn't apply to so-called blockbuster movies — anything playing on over 500 screens. The implication seems to be that smaller films may actually benefit from word-of-mouth promotion via piracy.

Meanwhile, the UK Office of Communications (Ofcom) released a report last week showing that people who pirate content actually spend significantly more on movies, TV and music.

The report used the term "hybrid pirate" to define people who both illegally download and pay for some content. This group apparently represents 12 per cent of the UK population. Across the categories of TV, music and movies, the hybrids spent more than people who only pirated and people who only bought legally.

Music was the most significant, with hybrids spending the equivalent of AU$118.24 over three months, compared to AU$66.39 for the legal buyers. For movies, it was AU$86.02 versus AU$54.54, and for TV AU$39.38 versus AU$12.69.

Perhaps most telling from the Ofcom report was the findings that 48 per cent of people who pirated said they did so because it was "convenient", and 44 per cent because it was "quick". Once again, it seems that if you make it easy for someone to find and buy content, they will. Just like The Oatmeal said, really.