Phoenix Center Criticizes “Poorly Designed” Megaupload Study

Last month we covered a new study from European researchers which revealed that the Megaupload shutdown had a negative effect on the box office revenues of smaller films.

megauploadThe researchers wrote a detailed report using weekly data from 10,272 movies in 50 countries spanning over several years.

The researchers suggested that the effect may be caused by a drop in word-of-mouth promotion from pirates, which affects smaller movies more since they have smaller advertising budgets.

A provocative result, and also one that has been welcomed with skepticism by some fellow researchers. This includes Dr. George Ford of the Phoenix Center for Advanced Legal & Economic Public Policy Studies who wrote a reply, criticizing the study’s methodology.

“While the unexpected conclusion drew significant media attention, the result is sufficiently bizarre to make an audience of professional economists suspicious,” Ford starts his paper.

“Indeed, although theft may offer benefits to the thief, economists generally do not normally view theft as beneficial to the victim or to society as a whole. Accordingly, a claim of such an effect obviously faces a high evidentiary standard,” he adds.

Ford argues that the Megaupload study fails on this front and that the results are artifacts of a flawed design.

“Upon close inspection of Tale of the Long Tail, it is clear the authors have failed to meet this burden. To the contrary, the “piracy helps box office sales” result is an artifact of a poorly designed statistical model, which is, in part, a consequence of the study’s authors ignoring the basic economics of the box office.”

The major flaw Ford points at is the researchers’ decision to define the “size” of a movie based on the number of theater screens it premieres in.

According to Ford this measure doesn’t say much about the actual revenues it will bring in, and he gives several examples of movies that open small but later see a massive increase in the number of screens they are shown on.

TorrentFreak asked the authors of the original study for a comment but we have yet to hear back from them.

As expected, the MPAA more than welcomes Ford’s critical notes.


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