Here’s where the war on piracy gets really complicated. Because for all the ‘just embrace it’ advice from the tech community, it seems that shutting down massive piracy hubs actually improves digital sales.  You need an attractive carrot…

…and a giant stick as well.  It was true for song downloads following the shutdown of Limewire, and now, there are statistics backing the Megaupload shutdown, as well.  ”The shutdown of Megaupload caused a statistically significant increase in digital sales,” Carnegie Mellon professor of information technology and market Michael Smith recently told an audience last week at the Digital Book World Conference in New York.

According to details from MediaBistro, Smith analyzed and compared countries with varying degrees of Megaupload penetration (low, medium, high).  And after crunching the numbers he determined the following result:

Every 1% decrease in Megaupload usage

=

+2.6-4.1% increase in digital sales.

“It does suggest that when you look at competing with free, using anti-piracy measures to make piracy less attractive does work,” Smith said.  Perhaps the more important questions are how long the effect lasts, and whether it was worth the effort.  Limewire took years and millions of dollars to shut down (and let’s not even get into the costs of the Megaupload takedown).  

And sometimes, shutting down one massive piracy hub merely creates a void for another to fill.  In the case of Megaupload, Kim Dotcom is now filling that void himself.

Source: Digital Music News