Motography (Apr-Dec 1911)

November, 1911. MOTOGRAPHY 237 On the Outside Looking In By the Goat Man TrilS department is established as a regular feature of Motography to supply information to those readers who are buying the magazine from the newstands. It is our hope that the trade itself will find the department of interest. There will be frequent reference to "outsiders" and "insiders," by which it may be known that there is a charmed circle who are on the inside and a great herd of the simple minded who are on the outside. In the latter class we find the public — the amusement-loving folks who support the whole scheme ; the exhibitor of the film and the trade press. The development of the motion picture has required great activity among the insiders. In a halfhearted way they have had kindly feelings for the outsiders, but not to the point of giving up coin. A film is a film— something for the public to go see ; the exhibitor to put on the screen; the trade press to eulogize, for it dares not condemn. That is the short story. However, there are subjects that will be treated in subsequent issues. We are fortunate this month, in being able to present Mr. Frederic J. Haskins' syndicated comments which recently appeared in the Indianapolis News and other papers. Mr. Haskins has held closely to the two subjects of distribution and future of films and his opinions, while open to small criticism, are generally near the truth. He shows that he has given much time in research and is remarkablv well informed. DISTRIBUTION OF FILMS. The most complex and intricate business problem of the motion picture trade is the distribution of the films. There are probably seventy film manufacturers in the American market, forty domestic and thirty foreign. These seventy concerns must contribute their product to exhibitors ranging in number from ten thousand or twelve thousand in the winter to fifteen or sixteen thousand in the summer. Since each exhibitor will require an average of at least three reels daily, and since at least 90 per cent of the exhibitors demand a complete change of program every day, it is manifest that the natural problems arising from the very nature and character of the business are far from simple. But in the United States these natural complexities are increased and multiplied by the division of the entire motion picture business into two camps, known as the "licensed" and the "independent." As far as the manufacturers and the middlemen are concerned, these camps are hostile and the exhibitors are forced to divide largely against their will, by the powers "higher up." The whole question at issue arises from the litigated control of the patents on the essential parts of moving picture machines, both cameras and projectors. The older manufacturing companies, after a long season of sharp competition, combined to organize the Motion Picture Patents company, to which were assigned the principal and essential patents. This company licenses manufacturers to operate with the use of its patented machines. These licensed manufacturers lease the films they make to the General Film company for a stipulated rental, varying according to the character of the film. This company, in turn, leases the films to the exhibitors through exchanges operated in cities all over the .country. Licensed films are leased only to exhibitors who have obtained from the parent patents company a license, for which a fee of $2 a week is charged. Since there are six thousand licensed exhibitors, this fee alone brings to the patents company an annual income of approximately $600,000. Licensed films are never sold, but are leased by the manufacturers to the film company, which, in turn, leases them to the exhibitors. The "independent" manufacturers are those who deny that the patents owned and controlled by the Motion Picture Patents Company cover the essential features of moving picture machines. They operate under other patents, which, they assert in the courts, do not infringe upon those of the licensed manufacturers. Most of the independent companies also work in co-operation with each other, but on a different plan. The films they produce are sold outright to the Motion Picture Distributing and Sales Company. This concern, through independent film exchanges operates in cities all over the country, leases the films to independent exhibitors, who are not required to pay a fee for the privilege. Licensed films, therefore, are never sold, but always leased. Such films are permitted to circulate over the country for a space of seven months, when they are recalled and retired. Independent films, being sold outright to the distributing agency, have no time limit placed upon their life, and they continue in circulation until the exhibitors refuse longer to book them, or until they are worn out. Licensed exhibitors are prohibited from showing independent films, the penalty being revocation of their licenses. Since the licensed exchanges strictly enforce this rule it therefore happens that licensed and independent films are never shown in the same theater. In this way the exhibitors are compelled to choose between the rival organizations. There are other independent film manufacturers who sell and lease films directly to the exhibitors or who operate through film exchanges of their own. But by far the greater part of the motion picture business is divided between what are briefly known as "the patents company" and "the sales company." The independents have .built up a large business in spite of interminable and extensive litigation. At one time, the licensed people having won a judicial victory, the independent companies fled precipitately from the United States, some of them taking refuge in Canada, others going to Mexico, and others to Cuba. They continued, however, to distribute their films in this country. Finally the independents won a victory in court by a decision which declared a certain foreign-made camera not to be an infringement upon the patents of the patents company. Under this decision the independents came back to America and since have been operating here. . The litigation, which is most complex and involved, is yet pending in the courts, and it remains for the future to determine whether or not the licensed manufacturers will be able to drive the independents out of business. Before the film distribution business was crystallized in its present form by reason of >he patent litigation between the two groups of manufacturers, film exchanges ordinarily were operated as private and individual enterprises. As there, was competition the exchange men necessarily took good care 'to please the exhibitors, the relation being that of merchant and customer. This led to discrimination in favor of large exhibitors over small ones, and when the film exchanges were taken over by the controlling corporations and competition was narrowed to the two rival camps, the change was general!}' welcomed on the part of the exhibitors. Later, as was inevitable, the exhibitor found that he was forced to submit more or less to the dictation of the exchange men, the influence of open competition having been removed, and, therefore, there is an increasing demand among exhibitors all over the country for the "open market." The exhibitors are willing to let the manufacturers fight out their differences among themselves, if only they will remove the restrictions placed upon exhibitors, and permit each exhibitor to book what films he pleases, from what exchange he pleases, without respect to their origin. A national organization of motion picture exhibitors, called the Motion Picture Exhibitors League of America, was organized at Cleveland in August in response to a call issued by the Ohio Exhibitors' League. While little was done at this first meeting beyond the launching of the new national organization, there was a general disposition to declare the exhibitors independence of the control of the manufacturers and distributors. Secret sessions were held from which were excluded all agents of manufacturers and film