Megaupload shutdown boosted paid digital downloads by 6-10 per cent

08 March, 2013 by Brendan Swift

The shutdown of file sharing and storage site Megaupload led to a significant increase in paid digital downloads at two major Hollwood studios, according to a new study.

The report, by Carnegie Mellon University's Initiative for Digital Entertainment Analytics, looked at 12 countries (including Australia) and found that in the 18 weeks following the shutdown, digital revenues were 6 to 10 per cent higher than they would have otherwise been.


"Thus our findings show that the closing of a major online piracy site can increase digital media sales, and by extension we provide evidence that internet movie piracy displaces digital film sales," the study said., run by the larger-than-life Kim Dotcom, was shutdown in January 2012 (although the process has not been without controversy and has been challenged in court). The site held an estimated 25 petabytes of content, much of it films, and accounted for approximately 4 per cent of worldwide traffic.

The Carnegie study is one of the first to show that cutting off the supply of illegal digital copies leads to an increase in demand for legitimately-produced content.

Study co-author Michael D. Smith told The Wrap that the increase in demand for paid content may not have been solely driven by the Megaupload shutdown but by the knock-on impact, as other cyber-locker companies cleaned up their sites to avoid potential legal problems.

The Motion Picture Association of America provided an "unrestricted gift" that helped launch the Initiative for Digital Entertainment Analytics in 2012 although Smith said there were no restrictions on their ability to publish their findings and they did not use any outside funding from the MPAA or other organisations to conduct the research.

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