THE MOTION PICTURE INDUSTRY: AN ECONOMIC STUDY OF THE HISTORY AND PRACTICES OF A BUSINESS

295 Pages·013.462 MB·English

by  GREENWALD, WILLIAM IRVING

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Greenwald, William Irving, 1920-
The motion picture industry; an
economic study of the history and
practices of a business, Hew York
19£0.
iii,280 typewritten leaves, 29cm.
Thesis (Ph.D.) - Hew York Univer­
sity, Graduate School, 19^0,
Bibliography: p,263-280.
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BmiRSIIT SEIOHTfr
THE MOTION PICTURE INDUSTRY
AN ECONOMIC STUDY OF THE HISTORY AND PRACTICES OF A BUSINESS
William If Greenwald
February 1950
A Dissertation in the Department of Economics sub­
mitted in partial fulfillment of the requirements
for the degree of Doctor of Philosophy at New York
University*
i
Introduction
Very little of a genuinely analytical character has been written about the
motion picture industiy. Most of the literature relating to the industry
has been concerned with its artistic, social, and cultural functions with
an attendant neglect of economic and technical aspects. Even less has
been written about the industry concerning its rank and importance in
relation to the service industiy, the amusement industry, or to general
industrial activity. Very little historical research has been devoted to
uncovering the developmental patterns of this business for the purpose of
comparing the design of its growth with that of other major industries.
As a result, a significant body of knowledge is not available for under­
standing and explaining the contemporary structure and functional charac­
teristics of the industry.
Legally and corporally it is difficult to justify such a tradition­
al classification but conventionally the film industiy has been categor^4d
into production, distribution, and exhibition branches. The industry as a
unit, for empirical purposes, has generally been classified as a service
industiy. At the same time, however, as a business it is more comparable
to manufacturing. The basic distinguishing feature of film production
from other commodity manufacture lies in the inherent nature of the prod­
uct which is produced, priced, and sold. Due to the particularistic
nature of this product the film industiy has developed trade and business
I
practices which are exceptionally unique. A superficial examination of
such practices might lead one to believe that the film industiy is great­
ly different from other businesses. Actually, however, as will be demon­
strated in the course of this study, a^ configurative and careful
ii
examination of the industry's financial, legal, and economic development
reveals a typical industrial enterprise.
In any descriptive or analytical study of an industry the question
of general methodology arises. An analytical and descriptive method which
is synoptic in scope relates the specific characteristics of an industry
to the historical changes through which an industry has moved. All the
unique patterns and processes of the film industry have takenxplace in
historical time and have been influenced by developments in other indus­
trial sectors of the economy. Only by such an approach has it been pos­
sible to unveil the underlying structure and operations of the film indus­
try. Such a detailed historical inquiry dovolopcd has given rise to in­
ferences and generalizations which have been basic for a genuine under­
standing of the contemporary constitution of.the industry. A detailed
historical study of this sort, however, does not necessarily imply a study
in detail. By a careful and deliberated selection only those factors
which have been relevant and important have been incorporated into the
exposition.
Historical analysis does not merely represent a stucjy in dynamism.
Evaluations and inferences about the generalized business behavior of the
film industry are dependent, in part, upon the dynamic patterns revealed.
Out of a knowledge of the growth and speed of development of the film
industry has arisen a revealing perspective of the common bend of progress
in the film industry with general industrial activity. For this reason,
in part, pure statistical and quantitative analysis has not been relied
upon. An empirical analysis which is not complimented by other types of
analyses too frequently fails to reveal much about underlying patterns,
processes, and changes. Therefore, in studying the economic, financial,
iii
technical, and corporate developments of the film industry it has been
necessary to examine, measure, and analyze the qualitative, factual,
statistical, and legal developments.
In establishing this as the aim of this paper, the artistic, social,
cultural, and moral characteristics and influences of the film and the
industiy producing the film have not been studied or measured. However,
often one or more of these factors acted as the major stimulus for
material change. Where such factors were the significant ones in affect­
ing the economic, technologic, or financial structure of the film indus­
try, they have been examined and their importance noted. Only in this
way has it been scientifically possible to study the motion picture in­
dustry in its structural, functional, and dynamic form and shape.
CONTENTS
Chapter Page
Introduction
Part One
The Development of the Industry
1888-1930
I The Early Years of the Industry, 1888-1908 1
II A Premature Combination, The Motion Picture Patents Com­
pany and Subsidiary, The General Film Company, 1908-12 16
III The Era of the Silent Film, 1912-1926 31
Appendix A to Chapter III, F.T.C. vs. Paramount Famous
Players-Lasky Corporation 61
Appendix B to Chapter III, Standardized Techniques for the
Mass Production of Films 63
IV Sound and the Silence of Competition, 1926-1930 68
Part Two
Trade Practices
V Contracts, Arbitration, and Credit 92
VI Film Amortization Schedules 106
VII Run, Zoning, and Clearance 117
VIII Block Booking and Blind Buying 126
IX The Legalization of Trade Practices, The Code of Fair
Competition for the Motion Picture Under the National
Recovery Administration 142
X The Film and Public Policy 137
- Contents -
Chapter Page
Part Three
The Maturity of the Industry
1930-1948
XI Challenging the International Structure of the Industry 164
XII A Mature Industry Confronts the Troublesome'Thirties 176
Appendix A to Chapter XII, Analysis of Double Features 193
XIII The Conflict and Aftermath of Two Wars 199
XIV The Industry and Its Future 217
Part Four
Appendices
A The Availability and Reliability of Statistical Data on
the Motion Picture Industry 241
B Definitions of Trade Terms 248
C Bibliography on the Motion Picture Industiy 263
TABLES
Number Page
IV-1 Total Assets and Net Earnings of Warner Brothers, Inc.,
1925-1936 71
IV-2 Theaters Annually Services by E.R.P.I., 1928-1936 80
IV-3 Structural Relation Between the Electrical and Film
Industries, 1929-1936 82
V-l Summary of Claims Handled by Boards of Arbitration in the
United States, 1924-1928 99
V-2 Summary of Cases of Arbitration in the United States,
1924-1928 100
V-3 Bases of Claims Filed by Distributors in the United States,
1928 101
V-4 Bases of Claims Filed by Exhibitors in the United States,
1928 102
VI-1 Hypothetical Film Amortization Schedules 109
VI-2 Film Amortization Schedules of the Seven Leading Compan­
ies for 1935j 1940, and 1946 112-113
VI-3 Geographic Areas Covered by AmortizationS chedules 115
VIII-1 Legislation Intended to Abolish Compulsory Block Booking
and Blind Selling, 1927-1939 140
IX-1 Theoretical Booking Schedule 150
IX-2 Percent of Cases Handled by 31 Grievance Boards Under the
N.R.A., 1933-1935 152
ix-3 291 Code Authority Decisions on Appeal Under the N.R.A.,
1933-1935 153
XII-1 Films Approved by the Production Code Administration,
1935-1945 189
XIII-1 Affiliated Theaters in the United States, 1945 204
XIV-1 Comparison of Exhibition with all Amusement, 1939 225
XIV-2 Expenditures on Motion Pictures and Other Amusements,
1929-1947 227
- Tables -
Number Page
XIV-3 Representative Financial Aggregates of the Motion Pic­
ture Industry Compared with all Industry, Service,
and other Amusement, 1944 228
XIV-4 Employment in Production, Distribution, and Exhibition,
1939 230
A-l Receipts of Motion Picture Theaters, 1927-1947 244