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PART III: DISTRIBUTION
Chapter I. The Nature of the Division
History and Scoioe of Division
Origin of Film Exchange. Daring the Industry's formative stages, films were purchased outright fron producers and exhibited until worn out or until they ceased to he profitahle. This system later gave way to a more efficient and economical method of distribution known as the film exchange, which was introduced in IS 02 "by Harry J. Miles of San Francisco. This system originated in the functions of maintaining film stocks, which requires the supervising and physical transportation of film, and the inspection and repair of damaged film. The film exchange is in essence a licensing system whereby the films remain the property of the exchange, and the exhibitor merely obtains a license to show a particular film in a designated theatre for a stip.ula.ted period of time, at a charge equal to about half the purchase price.
Developments in Film Distribution. In the early stages, positive films were sold by length on a flat footage basis regardless of the individual picture, actor, or director. No consideration was given to the number of picture; leased, character and size of theatre, and the population of the town or city. There were no distinctions made between first or subsequent runs.
The distributors developed what was known as the "program system," supply? ing the exhibitor with a constant flow of two or three-real pictures, two or three time per week, The public appreciation for better-quality films gave rise to the "star" system, and demands for longer programs featuring such star Pickford, Hart, and Sermett • The exploitation of stars and concomitant effort to attain quality by purchases of expensive scenarios and production extrava— ganda brought on the full-length feature, absorbing the greater part of the entertainment program. Rising production costs led to an upward revision of leasing charges and eventually to the general adoption of a policy of block booking by the distributors,
Another development was the construction of theatres exclusively for the showing of motion pictures, displacing arcades, shooting galleries, and empty stores as well as legitimate and vaudeville theatres.
With the development of the "star" and the "feature" system which gave th pictures individuality, and the construction of theatres exclusively for motio: pictures which resulted in more efficient and economical presentation, distributors began to vary the prices of pictures according to their estimated value Pictures were no longer sold at random on a flat footage basis. Wider geographical distribution came to be considered necessary since it was found that first showings usually exhausted considerable exhibition value of a -picture in localized areas. Thus nation-wide facilities for merchandising, rehandlin§ and servicing a product, which varied in price and quality, became necessary.
National and "State Right" Distribution. The first effort to attain effective national distribution was made by the formation in 1910 of the Gener» al Film Company, controlled by the liotion Picture Patents Company. Independent producers, who were not permitted to use these facilities, distributed chiefly through independent distributors. These distributors, who were scattered
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