Movies and Film
Production, Distribution, Exhibition
The first public showing of film by the Lumière brothers cost one franc per patron (about 20¢). This first audience contained 35 spectators. However, within a month, the showings earned about 7,000 francs per week, and commercial film was born.
The Lumières were their own producers, distributors, and exhibitors. But these jobs would be quickly compartmentalized. One reason was that the closest popular-entertainment model—vaudeville—had, in the previous century, divided the workload in roughly this fashion. Also and as we'll discuss later in this section, government intervention prevented the film producers from gaining too great a control over distribution. Further, the widening appeal of cinema in several countries made international distribution a rather taxing process. But perhaps the principal reason was that, by the 1920s, each task had become incredibly complex, requiring specialized knowledge, sets of contacts, and mountains of legal issues. Ultimately, the film industry compartmentalized itself into three categories. Production, distribution, and exhibition are the Three Stooges of the film industry: distinguishable but inseparable.
Production: That part of the moviemaking industry that actually cranks out the product. In the golden age of Hollywood, production was principally associated with the big studios.
Distribution: The middleman of the business, distribution includes that part of the industry that gets the movie from the studio to the theater.
Exhibition: The branch including the theaters in which films are shown; the people and technologies involved in exhibition—projectors and projectionists, sound equipment, and so on.
Of the three tasks, production is chronologically first: You have to make a film in order to distribute and exhibit it. At first, the inventors financed and showed their own films, even renting their own halls.
Getting Gold in the Golden Era
As the primitive era of film in the United States became the golden era, East Coast banks had a greater and greater role in financing film production. Because movies had become increasingly expensive to make in the first three decades of the twentieth century, filmmakers found themselves more and more seeking capital from outside sources. In 1903, the average one-reel film cost between $200 and $500. By the 1930s films could be priced in six figures. Today, the cost of feature filmmaking is astronomical. The total cost of Titanic (1997) was $265,000,000. We shall discuss star salaries later in this section, but it is worth mentioning that a hefty percentage of most widely distributed feature films today is not invested in production at all, but in star salaries, publicity, and advertising.
Always a shameless self-promoter in classic American fashion, Thomas Edison not only cofinanced his own films, and tried to push any competitor out of the picture, he bought someone else's projector and then claimed it as his own in what film critic/historian David Cook describes as "a scandalous agreement whereby [Edison] would himself manufacture [the projector] and take full credit for its invention while Armat [the actual inventor] would be allowed a small plate on the back crediting him with 'design.'" You have to think of Edison as the Bill Gates of his day: brilliant, unrelentingly greedy, and power-hungry, and without many business scruples.
From early on, there were several financing routes. The studio could ask the distributors to advance money. Money was also borrowed from banks, and even loan sharks. Finally, the studios might issue stock in a public offering.
The moment that solidified this dependence of the movie industry on external capitalization, and put an end for several decades to autonomous Hollywood production, however, was the 1929 stock market crash, and the onset of the Great Depression. Initially doing well because people still wanted to go to the movies, if only to see resolvable versions of the Depression onscreen, the studios started going into receivership, requiring refinancing.
This dependence on financing had real consequences for the kinds of films that were produced. As the industry increasingly depended on financing through more traditional corporate capital routes, the early notion of the film artist—the D. W. Griffiths and the Eric von Stroheims—pursuing a personal aesthetic/social vision, disappeared, to give way to the industrially familiar assembly line mode of making films. The filmmaker became subordinate to the studio, which was answerable to the banks.
A related side effect of the increasingly high cost of film production was the subordination of the independent unit producer. Only a few managed to survive with their autonomy intact: David O. Selznick and Charlie Chaplin, to name two. First-run theaters were closed to most independents because their product was not sufficiently opulent.
Finally, though there was little direct connection between the financing banks and the artistic part of the filmmaking process, it is also true that Hollywood in the 1930s did not make films exploring the depths of the Great Depression, its causes, and, perhaps, realistic resolutions. The exceptions—films like The Grapes of Wrath (1940)—are often considered great exactly because they are fairly courageous exceptions.
Not all profit is made at home; much of it has been realized abroad. American films have been so popular that various countries at various times have imposed quota restrictions to prop up the economic health of their own national film industries. Even countries with significant industries of their own have at one time or another formed such policies: the British and the French, for example.
When the studio system began to fail in the 1950s, independent producers and small production companies began springing up to take their place. Also, as the studios began hurting financially, they began to be bought up and to became subsidiary corporations. This tendency began in the 1970s. Sometimes in this global economy the takeovers have been international: Columbia Pictures became a subsidiary of Sony Corporation. It's almost impossible to discuss contemporary financing because it has become extremely variegated. Later in this section we will discuss the more limited issue of independent film financing.
The corporate takeover and merger history of one company can in some ways stand for all. Beginning life as an autonomous company, Warner Brothers was founded in the 1920s. At first an ailing studio, it finally bought out and controlled First National Pictures after its success with sound. However, in the late 1960s Warner Brothers changed hands twice, finally changing its name to Warner Communications in 1972. Time, Inc., merged with the company in 1989 to form Time-Warner, which was itself recently purchased by AOL, making Warner the subsidiary of a subsidiary.
Excerpted from The Complete Idiot's Guide to Movies and Film © 2001 by Mark Winokur and Bruce Holsinger. All rights reserved including the right of reproduction in whole or in part in any form. Used by arrangement with Alpha Books, a member of Penguin Group (USA) Inc.