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586 HARVARD BUSINESS REPORTS
production. For the sake of illustration, assume that this run also grosses $2,000. Using the same basis as before the program picture would be allocated 25% of the gross and the percentage relationship would mount to 60%. This is perhaps an extreme example, but it illustrates the fact that wide differentials in the allocation of gross to specific pictures cannot be employed unless such pictures are played consistently as either program or featured productions.
On the other hand, when a picture of exceptionally high quality and a mediocre production were paired, some differential in gross receipts attributable to each appeared necessary. A significant obstacle was encountered in attempting to balance these two factors so that percentages could be of real use in the advance purchasing of films prior to the setting of play dates and the determination of programs.
If this last method was adopted, a percentage figure would be secured for each feature on the program. By an allocation of a portion of the gross to each picture the percentages would be more nearly comparable to those secured for theaters showing singlefeature programs.
Faced with the task of purchasing his 1928-19 29 film requirements, the manager of the Wellington Theater was interested in developing a method of picture evaluation which would reflect the soundness of his program selection and would at the same time indicate the earning power of each picture as a guide to future buying. A partial list of Superior Pictures which were submitted to the manager for purchase is contained in Exhibit 3.
Commentary: This problem involves particular consideration of a method by which an exhibitor sought to obtain a basis upon which he might be better able to determine a fair price to pay for his films, particularly when such payment was made in the form of flat rental.
The essential basis of approach was sound. The potential box office value of a film should properly constitute the basis for the determination of its rental value. In addition to this basic principle, any statistical data which a manager may have should be of value in dealing with salesmen, especially when these salesmen have some definite knowledge of a theater's expenses and gross receipts.
The plan is based on the assumption that instead of placing a particular value upon each individual picture purchased, a basic average price is the sounder policy. This is suggestive of the method pursued