Year book of motion pictures (1925)

Investment in motion picture industry 1,250,000,000 Annual salaries and wages paid at studios in production . 75,000,000 Persons permanently employed in picture production 50,000 * * * The following table furnishes a basis for comparison with the three ranking industries, as listed in the Census of Manufacturers for 1921 : Wage-earners, Value of average Wages Product number (annual) Slaughtering and meat packing. $2,200,942,000 117,042 $152,903,000 Petroleum refining. 1,727,440,000 63,189 102,294,000 Motor vehicles .. 1,671,387,000 143,658 221,974,000 Motion pictures. 77,397,000 10,659 37,693,000 * * * As a result of recent mergers instances may now be found in the industry of organizations with capital ranging as high as 25 to 50 million dollars. * * * * * * A production budget for 1923-24, compiled by a film publication, showed that twentythree of the larger companies planned a total outlay in that year of more than $100,000,000. Of these companies two planned to spend over $10,000,000 each in that season, six had in view an outlay of $5,000,000 to $8,000,000 each and the remaining were to spend from $1,000,000 to $4,000,000. This enumeration does not cover the independent field. * * * Losses are particularly heavy in the independent branch of production, not only because of the inexperience of new producers who try out pet projects but because of defects in distribution. It is well known that there is a multitude of small independent producers who are led to sink $100,000 or more in single productions, generally a total loss because of their lack of contact with the distributing market and their ignorance of the prevailing trend of popular taste in moving pictures. Only gradually is the motion picture business gaining recognition as a proper field for the placing of bank funds. Until the past year or two few companies could secure loans. A western bank in close touch with the industry stated in 1921 that only a few out of nearly a hundred producing concerns in its district were safe risks for bank loans. At present this condition is changing. Bank officers have been invited to join the directorates of larger film companies and the modifying of speculative features in the industry is resulting in a less distrustful attitude on the part of the banks. * * * * * * Costs of production in this industry, as in others, have risen rapidly in the past few years. Once it was possible to produce an acceptable "feature" picture for a few thousand dollars. Now the average is between $100,000 and $200,000. "Superpictures" which have been exploited in very recent years cost from $700,000 to $1,500,000. Cost does not determine profits, however. Producers have learned that it is possible to earn as large a profit on a good $100,000 picture as on one which costs $200,000. * * * A million-dollar picture may take from one to two years to bring back its cost. In exceptional cases, a picture may run for several years. * * * In the short life of the motion picture industry, American producers have reaped a golden harvest. Of a possible 90,000 picture theaters in the world, 15,000 are in the United States with a weekly attendance now estimated at 50,000,000 and weekly admissions of $10,000,000. * * * * * * Foreign business of the leading American companies, some of which have several foreign branches, brings in a maximum of 15 to 25 per cent, of their total receipts. Most oi the foreign business is profit, expenses being covered by sales in the domestic market. » • • * * * Until 1923 the motion picture industry was the spoiled child among American industries, spending as lavishly as it pleased on more and more costly productions, knowing that the generous public would foot the bills. This condition was not permanent. Judging from the volume of collections under the Federal tax on admissions to all classes of entertainments, the 12 months ending June 30, 1921, established the record for expenditure on admissions to entertainments. Undoubtedly, admissions to motion picture theaters formed the larger share of this total. * * * * * * Serious efforts are under way to prevent the marketing of pictures which have no "box office value" and to assure the independent producer of good pictures that he will receive the returns which are due him. A movement for the organization of smaller independent interests has been launched. From now on moving pictures will be a less spectacular business but a safer one. STANDARDS FOR MEASURING BANK LOANS John E. Barber, vice president of the First National Bank of Los Angeles, who has contributed many important papers on picture financing to various publications, in an article in "Commerce Journal'' issued by the School of Commerce and Business Administration of the University of Southern California, declared: "There are certain fundamental standards for measuring motion picture loans, of which the following are the most important: "1. Intergrity, experience and business (not merely artistic) ability of producer and his previous record for box office success. "2. The director, his temperament, his success at keeping within time and cost schedule and previous experience with successful pictures. "3. Story and box office appeal. Adaptability of the cast. . "4. Distribution. Capabilities. How well established. What guarantees of cost advances? Any objectionable screen examination or rejection clauses ? "5. Study cost of production and classification of costs. "If a picture measures up to these standards and it is decided to make the loan, the following steps should be taken, most important, perhaps, among which are those relating to the legal precautions protecting the bank's advances: "1. Assignment to the bank of all right and interest to the negatives, both foreign and domestic, and also the prints. Record these assignments as chattel mortgages and have them acknowledged by distributor. "2. Distributor should agree to direct repayment to the bank of the producer's full share of the gross. "3. Assignment of the story rights and also all contracts between producer and stars. "4. Copyright protection and recordation at Wash ington. "5. Insurance, not only of stars, producer, director and essential actors, but for negatives and prints as well. "6. Actual physical possession of the negatives should be taken following completion in order to preserve the bank's loan. Prints are only released on carefully drawn Trust Receipts. "7. Insist on right to inspect the books of the producers and the distributor. "8. Bank advances to be made only as work progresses. It is necessary to keep careful check on the time or working schedule to see that the progress of the picture corresponds to the money being spent. Weekly cost sheets should be submitted." ALUMINUM FILM Paris — Metro-Goldwyn in December secured an option for a large interest in an invention which may revolutionize the raw stock market. The patent, held by Michael Werthen, calls for raw stock to be made on an aluminum base which is said to possess certain unusual qualities, such as being impervious to wear. It is said that the patent needs development before it is in readiness for practical use. 57