AMERICAN FILM: THE MOTION PICTURE PATENTS COMPANY & THE STAR SYSTEM
[American Film\Struggles for Control\MPPC & Star System]
I. INTRODUCTION
1. History of American film industry 1 of a struggle to control the profits of
the industry by restricting entry into the industry
2. Most commonly through controlling 3 PHASES of industry:
a. PRODUCTION
i. At the turn of the century, this phase was relatively easy to enter
ii. Many small companies in competition
b. DISTRIBUTION
i. Did not exist initially, as films were sold outright to exhibitors
ii. FILM EXCHANGES took over this function, renting films to exhibitors
c. EXHIBITION: At turn of the century, consisted of NICKELODEONS
II. THE MOTION PICTURE PATENTS CO. (MPPC, or the TRUST)
A. MPPC 1st attempt to exert a high degree of control over all 3 phases
B. Until 1908, the industry was truly competitive due to the low cost of
equipment & production, & the difficulty of prosecuting patent infringements
C. But 2 companies most important: EDISON CO. & AMERICAN BIOGRAPH
1. Engaged in extensive & expensive legal battles of basic patents involved in
motion picture production & exhibition (cameras & projectors)
2. MPPC largely a compromise between the 2, to limit outside competition
D. FORMATION OF THE TRUST
1. In 1908, the Trust was formed with Edison & Biograph forming the
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foundation & receiving the bulk of the profits
2. Allowed all existing production companies at the time of formation to join
(although not all chose to join)
a. They knew they could not supply all the needed films
b. They received royalties from these companies
c. All companies maintained distinct identities, competed with 1 another
d. However, they agreed to common practices:
i. Companies that manufactured projectors had to be licensed by the
Trust, & had to pay a $5 royalty per machine
ii. Selected distributors & exhibitors received licenses to rent Trust
films; no unlicensed parties could obtain Trust films
iii. Licensees bought equipment only from the Trust (mostly
manufactured by Edison & Biograph)
iv. Distributors agreed to distribute only Trust films & exhibitors
agreed to show only Trust films
v. Exhibitors paid license fee of $1-5 per week, depending on number
of seats
vi. Production companies bought raw film stock only from Eastman
Kodak; Kodak sold only to the Trust
vii. Production companies (except for Edison) paid to the Trust a “per
foot” royalty on all film stock purchased
3. 1910, Trust ended licensing of independent distributors, buying most
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existing exchanges & consolidating them as the GENERAL FILM COMPANY
E. THE END OF THE TRUST
1. Successful for several years, but began to lose control of industry around
1911, as independent production cos. & exhibitors defied the Trust
a. THE DEFECTION OF EASTMAN KODAK
i. 1911, contract modified to allow Kodak to sell to independents
ii. Within a year, 33% increase in number of theaters showing
independent films
b. INTERNAL STRIFE
i. Edison received 1/2 of royalties received by the Trust, Biograph 1/3,
& Armat 1/6; other 8 members split the remainder
ii. But legal costs split differently: 1/3 MPPC, 1/3 GFC, 1/3 members
c. WORLD WAR I
i. The MPPC made a strong effort to control the international market,
allowing independents to gain strength at home
ii. World War I eliminated foreign revenues
d. ADVENT OF THE FEATURE FILM; the MPPC (in general) failed to see the
growing popularity of longer films
e. REFUSAL TO ACCEPT WALL ST. FINANCING
i. Didn’t want to go into debt, used only internal revenues
ii. Not enough $ left to fight legal battles, keep stars, directors, etc.
2. 1915, Supreme Court declared Trust in violation of Sherman Antitrust Act
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III. HOLLYWOOD
A. Decade from 1915-25 saw transition from dominance of Trust to
establishment of STUDIO SYSTEM
B. 5 important changes that took place during this decade:
1. The end of nickelodeons & the beginning of the movie palaces
2. Audiences became more universal, spreading to middle & upper classes
3. Short (1 & 2-reel) films were replaced by feature-length films
4. Companies of the Trust were replaced by the independents (most
prominently, Adolph Zukor’s Paramount)
5. Industry moved from East coast to West Coast (Hollywood) for 3 reasons:
a. More sunshine
b. More diverse geography
c. Cheaper labor
6. The industry then became organized by the studio system, characterized
by OLIGOPOLY & VERTICAL INTEGRATION
C. OLIGOPOLY
1. Situation that exists when a few large firms control an entire industry (do
not confuse it with MONOPOLY, in which 1 firm controls an industry)
2. CONCENTRATION of the film industry & the creation of the oligopoly
a. After end of Trust in 1915, industry again truly competitive for a
number of years, many small companies dividing market fairly equally
b. But films soon became more expensive to make for 3 reasons:
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i. Feature-length films were more expensive, requiring more initial
capital than did short films; the return on investment was slower
ii. Salaries increased, especially for stars, as movie stars became more
popular & forced competition among studios for their services
iii. Production values increased, resulting in higher production costs
c. Therefore, small companies began to merge in order to compete
d. By late 1920s, only 8 companies controlled almost all of the American
film industry (US & Canada)
e. These companies were known as the 8 Majors
D. VERTICAL INTEGRATION
1. Situation in which a company controls its product from production to retail
sale
2. BIG 5 (MGM, PARAMOUNT, FOX, WARNER BROS., & RKO) totally vertically
integrated: production, distribution, & exhibition
3. LITTLE 3 (COLUMBIA, UNIVERSAL, & UNITED ARTISTS) were not totally
vertically integrated
i. Columbia & Universal in production & distribution, but no theaters
ii. United Artists only distributed films
4. Most of the Majors began as producers & acquired distribution & exhibition
branches to guarantee an outlet for their product
5. EXHIBITION UNDER VERTICAL INTEGRATION: THE PICTURE PALACE
a. THE BIG 5 & EXHIBITION
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i. The Big 5 owned only about 17% of all American theaters
ii. However, because these theaters were 1st-run picture palaces,
they enjoyed over 50% of the industry’s gross box-office
iii. Result of Run/Zone/Clearance system of distribution, which was
designed to favor the Big 5’s theaters
b. THE INDEPENDENTS & EXHIBITION
i. Rest of nation’s theaters owned by independents(chains or
individuals)
ii. They were at the mercy of the Majors; had to wait to get films after
the Majors had “skimmed the cream off the top”
iii. BLOCK-BOOKING
a) System whereby the majors rented films to the independents
b) The independents were forced to rent films in blocks of 10
c) In this package would be 2 or 3 “good” films, with high
production values, big stars, etc. (“A” films)
d) The rest would be inferior films (“B” films), which often would
not even be shown
e) These “B” films were used as training for new talent (directors,
actors, etc.), & block-booking guaranteed that the studios
would recover their expenses for these films
IV. THE STAR SYSTEM
A. Although studio heads often complained about behavior & salaries of
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Hollywood stars, they did & still do serve an important function in industry
1. In general, they established the value of motion pictures as a marketable
commodity
2. They served to establish & stabilize rental prices
B. Although the most visible & best-known of Hollywood figures, they were
“servants of the system”
1. They were subject to strict contractual control
2. They were “products” of the studios
3. Scripts were written to make, match, or play against a star’s persona
4. Advertising & PR departments transformed the star’s personal life to
match the screen persona
C. THE ECONOMIC IMPERATIVE
1. ESTABLISHING THE MARKET VALUE OF FILMS
a. Rental prices charged by studios to their own theaters were arbitrary
i. Each studio had its own bookkeeping system in charging rentals to
its own theaters
ii. Since all funds stayed within the corporation, it made a difference
only in terms of taxes, etc.
b. However, the rental prices charged to the other studio’s theaters, &
the independents theaters, required bargaining & negotiation
i. Rentals were a percentage of admissions; how to establish the
percentage?
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ii. The answer was found in stars; it was a way to determine demand
for a film that no one had yet seen
2. PRODUCT DIFFERENTIATION
a. PHILOSOPHY
i. Most products are well known to the consumer
ii. However, films are all different, &the public is unfamiliar with an
individual film
iii. If demand could be stabilized, so could price
b. HISTORY
i. Originally, trademarks of various companies used to differentiate
films
a) Bison, Méliès’s Star Film Co., Eclipse, Pathé’s rooster, etc.
b) If & when actors were acknowledged, it was not by name but by
trademark (the “Vitagraph Girl”)
c) But audiences didn’t really care or pay a lot of attention to
these trademarks
ii. Next, producers tried specializing in particular kinds of narratives
(genres, etc.); but audiences were much more interested in the
stars of these narratives than in the genres
iii. Therefore, producers realized that emphasis on stars would:
a) Help predict the success of a film, based on the success of past
films starring this actor
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b) Provide a basis for setting rental percentage charged for a film
c. DEMAND ELASTICITY
i. Emphasis on stars also encouraged raising rental prices on star
vehicles
ii. This is due to the concept of demand elasticity
a) This refers to the insensitivity of demand to changes in price;
demand is inelastic
b) If demand can be fixed & stabilized through product
differentiation, prices may be increased without decreasing
demand
iii. Therefore, publicity & advertising focused on stars, & were
designed to funnel audiences to 1st run theaters, owned by the
studios & charging the highest prices
D. THE PROCESS: How was a star developed; more accurately, how was a star
persona developed?
1. Initially, narratives not designed to fit actor; actor designed to fit
narratives
a. The studio would differentiate its product--the actor--to match
audience demand
b. Demand was determined by audience reaction to films
i. When audiences reacted positively (by paying to see a film, fan mail,
sneak previews, reports from theater owners, etc.), producers had
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an indication that the star persona was heading in the right
direction
ii. When audiences reacted negatively, producers knew they had to
adjust the star’s persona
c. THE FUNCTION OF ADVERTISING & PUBLICITY
i. Once star’s persona established, studio used advertising & publicity
to transform star’s personal life to match star’s screen persona
a) Accomplished through “authorized biography,” based in large
part on actor’s screen roles, & distributed as features in fan
magazines, press releases, “leaks” to gossip columnists, etc.
b) A publicist was assigned to each star to supervise interviews, as
well as make-up, clothing, & behavior at public appearances
c) Glamour photographs were taken & disseminated to visually
establish & reinforce the star’s image
d) Advertising campaigns were designed to promote the star’s films
to both theater owners & audiences
e) Exploitation campaigns (contests, planted stories, publicity
stunts) also designed to coincide with 1st runs of star’s films
ii. All of this could be changed to “adjust” the star’s persona as was
deemed necessary
E. THE STAR & NARRATIVE STRUCTURE
1. Later, narratives were designed as vehicles for the star
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2. Audiences had expectations based on the star’s persona, & these
expectations were used in scriptwriting
3. Therefore, scriptwriters expected to be fully aware of star’s persona; this
information was available from the studio’s publicity department
4. THE PRACTICE OF OFFCASTING
a. The practice of “offcasting” was the casting of the star in a role that
was the opposite of the differentiated image already established
b. This practice is linked to 2 economic needs:
i. The efficient use of resources
a) Stars were paid by the year, not by the film
b) So salary would be amortized across as many films as possible
c) This reduced the cost of the star per film
ii. Product variation
a) There was a limit to the number of similar films audiences would
pay to see featuring the identical star persona
b) Still allowed the studio to use the star’s persona in advertising
c) It also enhanced the star’s image as a “gifted performer”
F. THE CONTRACT CONTROLS
1. The actor’s contract provided the studio with salary control (options,
stipulated raises, etc.)
2. It also gave the studio control over the star’s image in advertising, public
appearances, etc.
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