File-Sharing Less of a Threat to Box Office than Feared

New study by Koleman Strumpf shows that the damage to Box Office profits from file-sharing film piracy is negligible

Contrary to scare-mongering stories that file-sharing on the internet could decimate the film industry, a new study by economist Koleman Strumpf denies the significance of this threat.

Koleman’s study is the most comprehensive ever undertaken into the effects of online file-sharing on box office revenue.

Looking at the top 150 box office hits over the last seven years, Koleman’s study found that box office revenue is not significantly damaged by the competition from pirated films on file-sharing sites.

“My best guess estimate is that file sharing reduced the first month box office by $200 million over 2003-2009, which is only three tenths of a percent of what movies actually earned,” Strumpf said. However, he did not make any assertions that there is no financial loss whatsoever, only that it was so small as to be insignificant in the grand scheme of things: “I am unable to reject the hypothesis that there is no impact at all of file-sharing on revenues,” he added.

Another unexpected finding of this study was that unofficial file-sharing actually serves to promote the films: “One consistent result is that file-sharing arrivals shortly before the theatrical opening have a modest positive effect on box office revenue. One explanation is that such releases create greater awareness of the film. This is also the period of heaviest advertising,” Strumpf notes.

So the big movie bosses can rest easy in their beds: even if the negative results were doubled in capacity, it would still be less than the $500 million Hollywood outlaid in anti-piracy measures over this time period...

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