Internet Piracy Study by Wellesley Economist Featured in the Wall Street Journal, Bloomberg News

March 13, 2013

New research coauthored by Brett Danaher, assistant professor of economics at Wellesley College, reveals the impact of shutting down a major piracy website: an increase in legal movie sales. Danaher’s study, titled “Gone in 60 Seconds: The Impact of the Megaupload Shutdown on Movie Sales,” is the first to look at the effects of closing a major Internet source of illegal content. Published March 6 by the Social Science Research Network, the study’s findings have gained attention from media outlets around the world, including the Wall Street Journal, Bloomberg News, Variety, Ars Technica, and El Mundo.

Danaher and his coauthor, Carnegie Mellon professor Michael D. Smith, examined the shutdown of the popular Megaupload site, which had allegedly served as a major conduit for pirated content before being closed by the U.S. Department of Justice in January 2012. The researchers analyzed digital sales and rentals for two movie studios across 12 countries, over the course of 18 weeks following the shutdown. Their findings suggest that digital revenues for the two studios were 6 percent to 10 percent higher than they would have been if not for the shutdown.

The study contributes valuable data to the debate over how copyright policy should be enforced in the digital era, providing evidence that anti-piracy interventions like the Megaupload shutdown can lead to a growth in legal sales.