A new study from Copenhagen Business School and Munich School of Managementcomes to overturn what we believed until now. Or at least what they wanted us to believe until now. The new study states in short that digital piracy actually increases revenue for small and medium-sized film productions.
We've been hearing for years that digital piracy is killing movie revenue, and there are studies that show it. The team from Copenhagen and Munich take a different approach. The researchers used statistics from boxofficemojo.com to study movie revenue before and after Megaupload went down last January. Kim Dotcom 's Megaupload was one of the largest file-sharing sites on the Internet and was often referred to as a haven for pirates. The team looked at the revenue of movies released from August 2007, when Megaupload launched, to October 2012, 10 months after Megaupload was shut down. They found that while blockbusters saw a revenue increase during the piracy slump, smaller and mid-sized films saw a significant revenue decline.
The explanation for why piracy can increase revenue for small films is intuitive: “Online piracy acts as a mechanism for spreading information among consumers who don’t usually pay for consumers who usually pay.” In other words, if a pirate sees a really good movie, he starts promoting it. If someone who doesn’t usually download from pirate sites hears about it, they will go to a movie theater to watch it, increasing the film’s revenue.
Small productions rarely have large budgets for advertising and of course they benefit from distributing the film through pirate channels.
