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New Study Shows Movie Piracy Has No Statistically Significant Impact on Revenue

by on17 July 2014 2579 times

We have talked about how the MPAA, RIAA and others use fantasy math to come up with the figures about how much Piracy hurts them. Usually they use these fantasy number when asking lawmakers for harsher punishments and also to show how malignant file sharers are. These numbers allege that every single download is a lost sale which leads to more revenue lost in concessions and many other non-related areas.

It is important to note that the MPAA alone spends roughly $500 Million per year on their anti-piracy efforts alone. This figure does not include other money that might be spent in lobbying so they could be spending much more. These funds are spent to help educate others to the evils of file sharing and also in legal efforts. This is a lot of money to spend to fight something that more than a few studies have shown has no significant financial impact. Oddly enough the Bar Association recently said that lawyers should avoid file sharing cases because they are do not yield significant financial results compared to the expense.

Now there is a very detailed study to back up the claim that file sharing is not the boogey man that the MPAA would like you to think. It also pokes holes in the fantasy math used. The study covered 150 films over a period of seven years. It compared the impacts of early leaks, late leaks and normal file sharing over the Bit Torrent network to the Hollywood Stock Exchange revenue projections. It was conducted by economist Koleman Strumpf and tracked Bit Torrent data through a Bit Torrent tracker.

It is quite impressive in its scope and the detail it went into. Unfortunately it did not do a direct comparison to movie revenues. Still the study looks to be a good statistical representation of what happens when a movie is leaked and its impact on revenue. Strumpf’s study showed that between 2003-2009 file sharing had a negative impact of 0.3% which equaled about $200 Million in lost revenue. This impact was only a hit to first month revenue meaning that follow on revenue for the film was not significantly impacted.

0.3% is not a statistically significant when compared to the annual amount spent fighting piracy. Another interesting find from Strumpf is that early leaks of films appeared to have a very small positive impact on revenue. These early previews, often of big films, seem to act as a form of advertising and get people into the theater.

I do not know about you, but I can’t wait to hear what the MPAA will try to say to counter this new study. We are sure it will be filled with even more fantasy numbers.

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Last modified on 17 July 2014
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