• Corpus ID: 198991474

A Structural Model of Movie Piracy with Word-of-Mouth

@inproceedings{Liu2018ASM,
  title={A Structural Model of Movie Piracy with Word-of-Mouth},
  author={Zhuang Liu},
  year={2018}
}

• Zhuang Liu
• Published 2018
• Economics

The debate on digital piracy have attracted a lot of public attention. Part of the debate is related to the dual roles of piracy: despite the obvious cannibalization effect on legitimate sale, pirated consumption might also benefit the sale through the spread of positive word-of-mouth. Using a novel dataset of downloads from Bit-Torrent network, this paper estimate a structural model of movie piracy with word-of-mouth effect to quantify the impact of file-sharing on movie box-office. Using the estimated model, I then decompose the total impact of digital piracy into cannibalization effect and word-of-mouth spillover effect. The estimates show that digital piracy reduces box-office revenue of motion picture industry by 1.4 % over a 20 week period in 10 countries. In addition, positive word-of-mouth spillovers from pirated consumption contribute to $ 9.4 million (0.14%) to movie box-office revenue. ∗Preliminary and Incomplete, please do not cite without permission. This paper was previously titled ”Estimating the Effects of fil-sharing on Movie-Boxoffice”. I thank Salvador Navarro, David Rivers, Tim Conley, Tai-Yeong Chung, Paul Belleflamme, Giulia Pavan, Scott Orr and participants of 1st Doctoral Workshop on the Economics of Digitalization, Tenth IDEI-TSEIAST Conference on The Economics of Intellectual Property, Software and the Internet, 50th Annual Conference of the Canadian Economics Association, Western Economics 50th Anniversary Conference and UWO labor lunch seminar for their help and useful comments. All errors are mine.