Harvard business reports (1930)

230 HARVARD BUSINESS REPORTS other producers of newsreels, sold a service calling for two issues per week for one year. The reels of news films never were sold individually. Other producers of short films released their productions in the same way. The United Artists Corporation was the only large distributor of motion pictures that did not sell its pictures in blocks.4 It never had produced a large number of pictures in any one year, although there had been a tendency for the number to increase. These were generally conceded to be comparable to the best pictures of the other companies. It sold them individually as high-class productions "on their merits." Other distributing companies held the opinion that this method, which doubtless was effective in selling a few high-class pictures, would not prove practicable in selling a large number of pictures. The practice of selling pictures in blocks had been common among distributors since about 1920. The Famous PlayersLasky Corporation, in its brief in reply to the Federal Trade Commission, outlined the historical basis of block booking as follows:5 The practice of block booking, in its essential substance, has been rooted in the industry since its inception. The practice is directly evolved from the old service idea, under which entire programs were furnished to exhibitors, and which is frequently referred to as the " program" system . . . At the beginning of the motion picture business the sporadic motion picture films were exchanged by exhibitors among themselves. Gradually they established offices called "exchanges" and went into the business of distributing motion pictures as a regular service as a side line to their exhibition interests. Definite methods of marketing, however, did not emerge until the entry of the producers into the field of distribution. In those early days the output of the producers consisted of but single reel subjects. Since the average exhibitor exhibited at least three reels at each performance and since he changed programs daily, he required a large number of pictures during the course of the year. These pictures were licensed to exhibitors under the "service" idea, or "program" system, by virtue of which an exhibitor would purchase the right to use a certain number of reels per day, constituting his entire program, for an indefinite time in the future at a flat rate per foot of film. The "service" system took no account of individual 4 See United Artists Corporation, page 281. 5 Brief on behalf of Famous Players-Lasky Corporation in answer to supplemental brief for the Federal Trade Commission — Docket 835.