Hollywood Vault is the story of how the business of film libraries emerged and evolved, spanning the silent era to the sale of feature libraries to television. Eric Hoyt argues that film libraries became valuable not because of the introduction of new technologies but because of the emergence and growth of new markets, and suggests that studying the history of film libraries leads to insights about their role in the contemporary digital marketplace. The history begins in the mid-1910s, when the star system and other developments enabled a market for old films that featured current stars. After the transition to films with sound, the reissue market declined but the studios used their libraries for the production of remakes and other derivatives. The turning point in the history of studio libraries occurred during the mid to late 1940s, when changes in American culture and an industry-wide recession convinced the studios to employ their libraries as profit centers through the use of theatrical reissues. In the 1950s, intermediary distributors used the growing market of television to harness libraries aggressively as foundations for cross-media expansion, a trend that continues today. By the late 1960s, the television marketplace and the exploitation of film libraries became so lucrative that they prompted conglomerates to acquire the studios. The first book to discuss film libraries as an important and often underestimated part of Hollywood history, Hollywood Vault presents a fascinating trajectory that incorporates cultural, legal, and industrial history.
|Publisher:||University of California Press|
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About the Author
Eric Hoyt is Assistant Professor of Communication Arts at the University of Wisconsin-Madison and co-director of the Media History Digital Library. He designed, developed, and produced the MHDL’s search and visualization platform, Lantern, which received the 2014 Anne Friedberg Innovative Scholarship Award from the Society for Cinema & Media Studies.
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Film Libraries before Home Video
By Eric Hoyt
UNIVERSITY OF CALIFORNIA PRESSCopyright © 2014 The Regents of the University of California
All rights reserved.
The Triangle Frauds and the Birth of the Film Library (1910s)
In 1920, William C. McIntire of the Rose Theatre in Fayetteville, North Carolina, wrote a letter to William S. Hart, one of the world's biggest movie stars. "STARS MAKE A MISTAKE NOT HAVING THE YEAR, STAMPED ON EVERY FOOT OF FILM, And include in CONTRACTS AFTER TWO YEARS ALL OLD PRINTS MUST BE DESTROYED NOT RE ISSUED that is the JUNK killing the business. I have a lot of your old RE ISSUED pictures to meet as COMPETITION in my town." Fayetteville had turned into a nest of "snipers"—the industry's term for an exhibitor who cheaply booked one of a star's old pictures to open the same week that the star's expensive new production opened down the street.
Hart did not need McIntire's letter to know that old films were a problem. From 1917 to 1920, he had engaged in a series of legal disputes to exert control over the manner in which his old films circulated. McIntire, in fact, wrote to Hart in response to an advertisement the star had placed in Exhibitor's Trade Review warning that the "bootleggers of the industry are at it again. Let us hit them right between the horns and prove our gratitude to that motion picture public which supports us." The "bootleggers" whom Hart identified were distributors trafficking in retitled old films. Some distributors had legally obtained the films from their owners; other exchanges circulated pirated prints. Hart's struggle resulted in a Federal Trade Commission (FTC) investigation that established an important precedent—boundaries for the exploitation of film libraries. McIntire supported Hart's campaign against reissues, and he wanted the star to push it even further.
The correspondence from McIntire to Hart challenges our common assumptions about the value of old movies in cinema's silent era. We tend to imagine a growth narrative in which old films were once considered worthless, then consistently rose in value due to the emergence of new technologies, such as television and home video, and new standards of critical appreciation. In popular histories and movies, such as Hugo (2011), we witness the destruction of old films. Yes, it is true that most producers took advantage of the roughly twenty cents per pound they could earn by recycling old positive prints that were worn out or no longer needed. Accountants in the 1910s and 1920s also fully depreciated films as assets within twelve months of release. It is also true that some producers considered the underlying negatives of their old films to be worthless, especially if the films lacked stars or production value. However, McIntire's proposal to destroy all star-driven films after two years speaks to a different marketplace reality. He perceived reissued old films as a competitive threat to the new ones. He wanted to destroy old films not because they were worthless but precisely because they still held market value.
Hart's struggles, three FTC cases, and many of the industry's sniping problems of the period emerged because of the Triangle Film Corporation. Triangle and its successors, more than any other producer of the silent era, exploited their library extensively and widely. In the process, Triangle perpetrated both consumer and financial frauds. The FTC investigated the consumer fraud and unfair competition practices of a secretive Triangle enterprise called W.H. Productions, which retitled Hart's old films and sold them to states rights exhibitors. W.H. Productions was simultaneously part of a financial fraud carried out by Triangle's founder, Harry Aitken. Aitken's fraud and self-dealing resulted in a shareholder lawsuit and illustrated the way in which film negatives, as theoretically worthless assets, were ripe for financial manipulation.
In her recent book Saving Cinema, Caroline Frick insightfully warns against assuming that silent-era producers did not value their old films. "Although apocryphal narratives of film preservation depict an easy villain in the studio decisions and policies that purposefully destroyed superfluous reels of film to reclaim silver before 1927," Frick writes, "the full story of how many films remain from cinema's first decades is much more complicated and difficult to piece together." In this chapter, I attempt to piece together one part of the story. It begins before the creation of Triangle, when several forces converged that forever changed the value of a film negative.
TRANSFORMING FILM'S VALUE: COPYRIGHT, THE STAR SYSTEM, AND THE FEATURE FILM
Hart resented Triangle's program of reissues. The same historical developments that had turned him into a rich man, however, enabled the birth of a market for his old movies. Between roughly 1903 and 1915, four major developments fundamentally altered the value of a film negative, the basis for reproducing positive film prints. These were the growth of motion picture copyright law, the rise of the feature film, the dominance of the star system, and the emergence of new distribution infrastructures. In 1916, a Price Waterhouse and Company accountant noted that the previous several years had witnessed a sea change: a shift from the era of a "cheap negative"—in which the cost of making positive prints exceeded the cost of the negative from which they were based—to the era of the "high cost negative," in which creating the film negative cost far more than striking positive prints. By briefly examining each of the four contributing developments, we can better understand the emergence of the "high cost negative," the source of Hart's riches and problems.
An absence of copyright regulations and an abundance of unauthorized copying marked the moving pictures' early years, from 1895 to 1903. "Copying was as much an industry practice as it was an industry problem," the film scholar Jane Gaines writes. Motion picture companies acquired the positive prints of competitors' films and "duped" negatives from them. The "duper," in industry slang, then used the dupe negative to make positive prints, which were distributed to a hungry exhibition market.
Thomas Edison voraciously duped the works of foreign film producers, but he wanted more protection for his own films. The trouble was that no such thing as a motion picture copyright existed. Edison circumvented this legal gap by printing each individual frame of his films to paper and registering the entire chain under one photographic copyright. When the Philadelphia entrepreneur Sigmund Lubin persisted in making dupes of films that Edison had registered, Edison took him to court. Edison lost his case in the lower court, but the Third Circuit Court of Appeals reversed the ruling. Edison v. Lubin (1903) established that films could be copyrighted by registering an entire film as one photograph. The right to make copies from a film negative, in other words, was legally protectable under copyright law. The practice of registering paper prints for copyright protection also left a fortunate by-product: decades later, archivists at the Library of Congress were able to reconstruct films, frame by frame, that had perished in celluloid form but still existed on paper. Much of the body of early American cinema we can view today comes from the paper prints at the Library of Congress.
Over the following decade, U.S. courts and legislatures enacted a series of changes to copyright law that effectively increased the protectability and potential profitability of a motion picture negative. In 1909, the U.S. Congress revised the Copyright Act, granting copyright protection to mechanical reproductions of music but not motion pictures—the result, Peter Decherney suggests, of film industry lobbying to continue to allow case law and self-policing, rather than statutory law, to regulate the industry. Yet despite cinema's omission from the Copyright Act of 1909, the revision included two changes that would prove essential for the future of film libraries. First, Congress doubled the period of protection. Prior to the 1909 act, copyright protection lasted fourteen years and included the option to extend for another fourteen. The 1909 act expanded the duration of copyright to twenty-eight years plus an optional extension of the same length. Second, the revision granted corporations the right to claim authorship of a copyrighted work, enabling greater leverage for companies producing "works made for hire." Congress amended the act in 1912 and formally recognized motion pictures as copyrightable works in their own right, rather than as photographs that moved, but the extended protection and work-for-hire provisions of the 1909 act carried long-term significance for the film industry, allowing studios to claim ownership of the works its employees created and, subsequently, retain the exclusive rights to exploit those works for a potential fifty-six years.
Between the 1909 act and the 1912 amendment, the Supreme Court heard Kalem Company v. Harper Brothers (1911), a case that held enduring significance for film libraries. Copyright law grants the right to create derivative works—those based on a preexisting work. Ideas, however, are not copyrightable; only their expression is. Kalem v. Harper asked: Did a motion picture adapted from a novel infringe the literary author's copyright? Was a motion picture based on a novel a derivative work? Or could filmmakers liberally lift from the ideas of a novel, including characters, plot, and scenes, as long as they used silent pantomime instead of the literal words—the expression—on the page? Film producers around the turn of the century assumed they could freely take whatever portions of a book or play they desired. In 1907, the Kalem Company produced one such unauthorized adaptation—a one-reel film consisting of sixteen shots depicting scenes from General Lew Wallace's enormously popular 1880 novel Ben-Hur. Wallace's heirs, the novel's publisher, and the Broadway producers who had licensed the dramatization rights sued Kalem for copyright infringement. Kalem lost in the lower court but appealed twice, arguing that the film could not be considered a dramatization because motion pictures were mechanically recorded and not produced live. Writing for the Supreme Court's majority, Justice Oliver Wendell Holmes rejected Kalem's logic and established an important precedent. For Holmes, what was important was not the "mechanism employed"—the moving picture technology—"but that we see the event or story lived." An audience experienced a dramatization of Ben-Hur while viewing recorded images at the nickelodeon just as surely as while watching live actors on Broadway. Similarly, movie producers should have to license the rights to create a dramatization, a derivative work of a novel, just as stage producers were required to obtain the rights.
Holmes's decision formed the basis for a motion picture adaptation right in literary works and forever transformed the value of film negatives and film libraries. What film producers lost in licensing fees, they gained in exclusivity; after obtaining the motion picture rights to a novel, a producer could confidently move forward, knowing that none of his competitors could legally produce a film based on the same work. As a result, producers invested more in the production and marketing of movies based on well-known properties. The name recognition of a famous literary work, combined with the right of exclusivity, functioned to distinguish certain films from the rest of the crowd, a form of differentiation that, like the casting of film stars, enhanced the value of certain film negatives. Kalem v. Harper held additional significance for film libraries: beyond the film negatives, a producer's library included all of the underlying rights that had been acquired to make the film. These rights could be used to produce a remake or a sequel or sold off to another producer. Underlying literary rights have repeatedly proved to be one of the greatest assets of film libraries, but ambiguity over which rights were acquired has also jeopardized library exploitation. As we will see, producers and their contract lawyers through the early 1930s failed to anticipate the full range of uses that their libraries might one day enjoy.
Although motion picture copyright law offered formal protection for film libraries, it was the star system more than any other development that gave producers negatives worth saving and protecting. From the mid-1910s through the late 1960s, the most consistently lucrative films in a library were those featuring stars whose popularity had increased in the years following the pictures' initial release. At first, the film manufacturers (the term producer was later used more) of the nickelodeon era were apprehensive about promoting films based on their stars. Although star systems were present in theater and vaudeville, manufacturers wanted motion picture audiences to stay loyal to the manufacturer's brand rather than to actors, who, if famous, might demand more money or defect to a competitor. Audiences frequenting the nickelodeons, however, formed attachments with the people they watched on-screen. They wrote to the studios seeking to know more about the people they watched. What were their names, backgrounds, loves? By 1909, savvy manufacturers had recognized that centering films on popular actors and supplying the public with information about those actors helped to differentiate their films from the others in the marketplace. In other words, the film negative featuring a star was a more valuable asset than the negative without the distinction of a star.
Several producers in the mid-1910s found themselves in an enviable position, owning negatives that featured actors whose level of stardom (and salary) had skyrocketed since the production of those negatives. Thanks to the work-for-hire doctrine, the producer could capitalize on those old negatives and reissue the films. The Fayetteville exhibitor who proposed stamping dates on every film frame and destroying films after two years resented this practice. A competitor who booked a reissue received the benefit a top star offered—product differentiation—but for a fraction of the price. Destroy old movies, the big exhibitor urged, because they still held market value. For a producer, however, the entire reason to keep old films in the first place was because they might prove to be valuable again. Sure, some filmmakers and stars, including Hart, carried sentimental attachments to their films. But from a business perspective, old movies were worth the storage costs and fire risks only if the producer believed those liabilities were less than the future earning potential of the film assets. Producers knew that some films in their growing libraries would have long-term reissue value. But which films? Which young player whom you hired as an unknown would emerge as tomorrow's star? The answers could not be known at the time of production. Only a handful of films in your library might have future value, but you never could be sure about which handful. Storing many worthless negatives was necessary in order to capitalize on the few that would prove to have remaining market value.
Copyright law gave producers legal control over their libraries, but in practice, pirated prints circulated widely. Producers needed to innovate a new distribution system, one that enabled them to receive a greater share of revenue and exert more control over circulation. The explanation of how this system developed is complex, requiring us to consider the early film business, the rise of the feature film, and especially the rise and decline of the Motion Picture Patents Company (MPPC). Between 1908 and 1915, the MPPC provided stability for the burgeoning film business, expanded the domestic market for films, and innovated several important distribution strategies. It was a monopolistic venture—intended to control the American film industry through the pooling of patents and by demanding that producers and exhibitors acquire the licenses to those patents. Yet this trust ultimately failed, and not merely because the U.S. Supreme Court found that its practices violated the Sherman Antitrust Act. The MPPC's internal conflicts, ineffective campaign of patent litigation, production budget limitations, and distribution structure—based on supplying short films to small exhibitors—made it unable to keep pace with its rivals' booming business of star-driven feature films.
During the nickelodeon boom of 1905 to 1907, the profits for film distributors (known as exchanges) far outpaced those of the films' producers. As Scott Curtis explains, the exchanges operated so profitably because they purchased prints outright from the producers. An exchange might recoup the purchase price after only five rentals; every one beyond that was gravy. To maximize profits, exchanges were known to peddle prints until they literally fell apart, upsetting exhibitors who found themselves with unplayable or "rainy" (the industry jargon for badly scratched) films. Some exchanges did not even bother to purchase new prints: they duped films already in circulation or acquired another exchange's old or duped prints. In this climate, producers had no reason to invest significant money in the production of film negatives. Even for a popular picture, most of the money would line the pockets of the exchanges that owned and rented out the prints. The positive print was king.
Excerpted from Hollywood Vault by Eric Hoyt. Copyright © 2014 The Regents of the University of California. Excerpted by permission of UNIVERSITY OF CALIFORNIA PRESS.
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Table of Contents
List of Figures and TablesAcknowledgmentsIntroduction1. The Triangle Frauds and the Birth of the Film Library (1910s)2. Side Business (1920s)3. Derivatives and Destruction (1930s)4. Postwar Profit Center (1940s)5. Negotiating Television (1950s)6. Seven Arts and Industry Transformation (1960s)EpilogueBibliographyNotesIndex