Motography (Jan-Jun 1918)

January 12, 1918. MOTOGRAPHY 61 L Je DiscL aemmie discloses Dome nam l ruths PRODUCER POINTS EVIL IN TOO MUCH BALLYHOO ABOUT SUCCESSES Plain Ti In a straight from the shoulder talk, Carl Laemmle, president of the Universal Film Manufacturing Company, has a message to deliver to the motion picture industry. He titles his talk "Exposing Some Big Secrets." BY CARL LAEMMLE MUCH of the misunderstanding that exists between various branches of the picture industry at the present time is due to the fact that some of us have been afraid to tell thetruth about ourselves and our conditions. For the same reason there is a misunderstanding between the general public and the people in the picture business. Every business concern, including picture companies, has a deadly fear of being considered anything but the richest company in its line of business. All of us are guilty of letting the public (including the exhibitors, too) think that we have the fattest bank-roll imaginable and that nothing short of an earthquake can shake our foundations. On the theory that "nothing succeeds like success," we have deliberately let the public think that the moving picture business is a gold mine. Failures Are Concealed We have all concealed our failures and our losses, but have made a great noise about our successes. Our press men are allowed to tell about the big pictures that net a profit of $100,000 or $1,000,000, but they are never allowed to print a word about the many pictures that net us as great a loss, or a greater one. The People love to hear about success, even though it is not their own. They don't like to hear about failures, because they are not so interesting to talk about. But after they have been fed up on this success stuff, after they have contracted mental indigestion eating up stories about the making of millions, they finally turn against those whom they believe to be wallowing in wealth. They sour. And finally they build up an envious hatred of the supposed plutocrats. All Guilty Alike That is where we all stand right now. I am speaking of ALL moving picture companies. By foolishly letting the people think what they like to think, we "have completely got out of touch with them and have lost their sympathetic finterest. So far I have spoken of all companies. But now. I will confine my remarks to the Universal and give you a few doses of the plain, brutal truth, in the hope that it may help a very bad condition. No Dividend for a Year The stockholders of the Universal company have not been paid a dividend, either on the preferred or common stock, for a year. The officers of the Universal company, in order to play fair with the stockholders, have purposely paid themselves much smaller salaries than the usual run of salaries paid to producing company executives. The element of waste is lower in the Universal, we believe, than in any company in the business. It took us years to cut out waste, but we finally succeeded. Pay* No High Salaries While the people are appalled at the $5,000 to $10,000 per week salaries that are paid to certain stars and while this practice has made the whole world believe that picture producers are making wicked fortunes, the Universal has never indulged in it. The highest salary we ever paid to any actor or actress was $1,500 per week — and that only for a short time. In spite of the elimination of waste and extravagance, our expenses have constantly advanced so close to our gross income that we have not paid a cent of dividends in a year. Profit* Big on Paper True we have "made money." Our books show some wonderful figures of big profits, but unfortunately they are all on paper or else they are in the form of studios, negatives or equipment. We have paid for these out of earnings and we assumed that the time would come when we could turn earnings into dividends instead of equipment. But it hasn't. And probably it won't, because every time we seem just ready to reach a dividend-paying basis, some new development comes along which compels us to re-invest and re-invest terific sums either in negatives or new exchanges or new markets or something else unforseen. We have been asked why we discontinued our one, two and three-reel program pictures. The answer is interesting: An audit of our books shows that in a recent 6-months period we lost $3.08 on every positive reel of short stuff shipped from our plant — not on every negative reel but on every positive. And in that period we shipped 24,810 such reels! Shipped nearly twenty-five thousand and lost over three dollars on every one of them! Forced to Quit Short Reel* This has been going on for eighteen months, but every time we even hinted that we might discontinue the short stuff, we received pleading letters from exhibitors, urging us to stand by the little exhibitor who needed the short stuff in his business. So we stuck to it and took our loss, thinking that we could turn the loss into a profit by getting the exhibitors to pay us a little more money for the short pictures. But instead of paying more they paid less and less and less, hammering the price down and down until we finally had to quit releasing short stuff altogether, with the exception of serials, weeklies and two comedies. We now have on our shelves 371,000 feet of perfectly good negatives, one, two and three reels in length. These are comedies and dramas. They cost us close to a million dollars, but we cannot release them because we would lose money on every positive reel made from them. Chance to Get Home So we are simply holding them in the hope that some day the exhibitors can pay us a fair rental price for the use of them. And I'll buy a house and lot for any exhibitor who can show me how to cash in on them right now! One day when Lee Ochs was in my office I asked him what he thought we averaged per day on renting a certain brand of pictures. He considered the matter a moment, figured what our probable expenses were and what we ought to average in renting each positive print per day and then said, "I should' guess about $20 a day." Then I showed him that the actual average was $9.87. Mr. Ochs urged me to publish these facts, saying that it would open the eyes of .exhibitors and everybody else to the true condition of affairs in the producing and distributing end of the business. And that's one reason why I am doing so. Pablic Should Pay More Stanley Mastbaum has proposed an amalgamation as a remedy for existing evils. That may be possible but I doubt it. Experience has shown me that every