Professor Joel Waldfogel in

Brett Danaher of Wellesley College and I have a new working paper (Reel Piracy: The Effect of Online Piracy on International Box Office Sales) attempting to find evidence on whether piracy, in particular movie downloading via BitTorrent, depressed international movie box office revenue. Our approach is based on the following two insights. First, Hollywood movies are generally released around the world a month or two after initial US release. Second, BitTorrent grew by leaps and bounds from 2003 to 2006. So our question is whether a movie's box office revenue is lower in a country receiving the movie with a longer lag, after BitTorrent's diffusion relative to before.

That last clause is important. A longer lag between US and foreign debuts could lead to lower sales for reasons other than piracy. For example, the "buzz" surrounding a movie may peak at US release and decay thereafter. So we don't view the reduction in revenue with time since US release as evidence of piracy. Rather, we view the post-BitTorrent increase in the impact of the lag as evidence that piracy depresses sales.

Read the rest of Prof. Waldfogel's piece at Digitopoly.