A new study from Europe found that theater ticket sales for mid-range movies were hurt by the shut-down of pirate site Megaupload, according to Variety.  Box office revenues for blockbusters were positively affected by the shutdown, according to the study by researchers at Ludwig Maximilians University Munich and Copenhagen Business School. 

The authors theorized that the negative impact on mid-range movies was because people who viewed pirated copies weren’t talking about the movies to people who normally go to theaters.  “Piracy has positive externalities, where information about the quality of an experience good spills over from pirates to purchasers,” the study said.  Advertising for blockbusters meant that those movies were still able to get the word out, and the lowered availability of pirated copies increased ticket sales on the top movies as a result, according to the authors. 

The MPAA disagreed with the results of the study.  Calling the conclusions “total speculation,” the Association argued that the European study ignored other factors, such as timing, that might be causing the reduced box office revenues for mid-range movies, according to Variety.

An earlier study from Carnegie Mellon found that digital sales increased in the wake of the Megaupload shutdown (see “Megaupload Shutdown Increased Sales”).  Piracy competes more directly with digital sales, as the viewing experience is the same in both cases. 

It’s possible that the conclusions of both studies are accurate, and that the effect on digital sales is different from the effect on box office sales.  If so, only a comparison of the two effects could determine whether a reduction in piracy would be a net positive or negative for most intellectual property owners.  The producers of the most successful entertainment would unequivocally win if piracy could be reduced.  But for the majority of producers, the question would be a little more fraught:    is the benefit of piracy for ticket sales more or less than the negative impact on digital sales from piracy. 

The good news  is that the Megaupload shutdown was of sufficient scale, and the surrounding data sufficiently available, that social scientists may be able to conduct further studies to increase the understanding of the impact of piracy, and the potential trade-offs.  We look forward to that, as data-driven piracy strategies would be better than the current hodgepodge of often poorly informed policies.