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192 -^ -^ -cy The Motion Picture Industry
No one plan for percentage pricing was used universally; a few, however, found general acceptance. As a rule, except perhaps for selected honest exhibitors and many circuit theaters, distributors favored a guaranty and split. Where a straight split was used, especially among the smaller and "all film" houses, the division often was 40/60 in the exhibitor's favor. The exhibitor was given the larger amount because out of his share he paid score charges, a fee charged for musical synchronism, the cost of newsreels and other short subjects, as well as the cost of local advertising and exploitation. In many de luxe houses offering expensive stage presentations the split applied to the amount taken in over and above the house overhead, which included all operating charges less the cost of both stage and screen entertainment. Other large houses played on a straight split basis; the split might be, for instance, 25/75 in the exhibitor's favor. One circuit contracted for a straight percentage division of 25/75 in its favor up to an amount equivalent to the house expense plus a small profit and an allowance, perhaps 5%, to the distributor. All receipts over that amount were split equally.
Many exhibitors favored a straight percentage plan rather than a guaranty and split. They were of the opinion that under the latter plan the distributor's profit commenced with the first dollar received and that, to be equitable, price policies should be made so that, if distributors shared the extra profit in successful pictures, they should agree to share losses on all box office failures.
The distributors, on the other hand, were opposed to a general adoption of straight percentage pricing. Under such a policy, they believed, rentals were dependent too much upon the initiative of the exhibitor. They contended, moreover, that under a straight percentage policy there would be a tendency for exhibitors to become lax and inefficient and overly imbued with the needs for economy in advertising and exploitation. Another important consideration was the dishonesty of some exhibitors and the distributors' inability