X-Men Origins: Wolverine was leaked one month before its box office release
X-Men Origins: Wolverine was leaked one month before its box office release, but an economist says the leak had little effect on box office revenues or stock prices20th Century Fox

A new study by an economist comparing Hollywood Exchange stock prices to online piracy data has found that the movie industry is spending more than double the impact of piracy on piracy prevention methods.

The paper, entitled "Using Markets to Measure the Impact of File Sharing on Movie Revenues" by Koleman Strumpf of the University of Kansas School of Business, looks at 150 of the most popular movies released between 2003 and 2009.

Using file-sharing data from one of the biggest BitTorrent index sites, compared with stock prices and box office revenue projection from the Hollywood Stock Exchange, Strumpf looked at how stock prices reacted to news about file sharing.

One example is the leaked version of X-Men Origins: Wolverine in 2009, which was illegally downloaded 4.5 million times before the film even opened at the box office.

Strumpf found that the stock prices barely changed due to news of the leak and actually continued to rise until the theatrical release date. The film was also "relatively successful", taking $373m (£218m) in worldwide box office sales, showing little evidence that file-sharing affected how well the film did.

Very little impact on box office sales

"There is no evidence in my empirical results of file-sharing having a significant impact on theatrical revenue," Strumpf told TorrentFreak.

"My best guess estimate is that file sharing reduced the first month box office by $200 million over 2003-2009, which is only three tenths of a percent of what movies actually earned. I am unable to reject the hypothesis that there is no impact at all of file-sharing on revenues."

The Motion Picture Association of America (MPAA) has long claimed that online piracy costs the movie industry $500m in damages annually.

TorrentFreak says that the MPAA spent a total of $500m between 2003 to 2009 on anti-piracy efforts, which is more than twice the impact of file sharing on the industry during the same period.

File-sharing can help to promote a film

Strumpf also found that movies leaked onto file-sharing sites before their theatrical release can often help to promote the film so more people go to the cinema to watch it.

"One explanation is that such releases create greater awareness of the film. This is also the period of heaviest advertising," he said.

Strumpf's research is not the first to be done showing that file-sharing is not damaging the movie industry, but it is more statistically precise, as the data analysed includes thousands of daily observations.

Although the Hollywood Stock Exchange is not a direct form of measurement, its data has been shown to be a fairly accurate predictor of what actual movie revenues will be.