The motion picture is not only a means of communication and an art form. In a capitalist-oriented economy, film making is a business—well organized, heavily capitalized, and powerful. A film is often conceived, produced, and marketed in much the same way as many other commodities. One could point to factors which seemingly separate film from other products, but on closer examination many differences would prove illusory. The months, and occasionally years, of work involved in planning a film are analogous to time devoted to styling of autos and to research on development of electronic apparatus. Payments to key stars resemble remuneration to inventors in certain industries, while the copyright on a film is comparable to a copyright on printed matter and to a patent on a device or process. The communality runs even deeper because, like other commodities, the film must be sold.
Film does have a quality, however, which sets it apart from many other marketable items. This is the distinction between the overhead costs incurred in production and the incremental costs which are incurred when film is distributed. Virtually the entire cost of a film occurs in making the first copy. Securing a story, casting it, constructing sets, hiring artistic and technical workers, the weeks (or years) of shooting, editing scenes, preparing background music—the expenses for all of these are incurred in making the first copy. These are considered as overhead costs. The cost of a second copy of the same film, or the nth copy, is negligible compared to that of the first. The cost of an extra copy is the price of the raw stock, duplicating, and processing—the incremental costs. In these terms, a motion picture is a commodity one can duplicate indefinitely without substantially adding to the cost of the first unit produced. This is true whether the film is a multi-million dollar spectacular or a cheap grade B filler for the second half of a double feature. Moreover, no two productions are identical. Each is unique even if treating the same theme or story. The 1962 American remake of the German classic The Cabinet of Dr. Caligari, for instance, has slight similarity, except in name, to the original.
The economic and technological nature of a film compels the manufacturer and his agent, the distributor, to try to achieve the widest possible circulation for it. Extra prints represent little further investment, and it is in their interest to make many, distribute them widely, and attempt to recoup their total costs as quickly as possible. Although additional effort is involved in selling the product overseas, a print sent abroad does not deprive the domestic market of anything. In these terms, a given film tends to be an infinitely exportable commodity; prints exported do not affect domestic supplies nor the revenue resulting from domestic exhibition. We can have our film and foreigners can have it too.
These points are important to the producer and the distributor for they mean that serving an additional market does not involve much more investment than is already in a film. The decision to move into another market, however, does involve other factors. The example of the American industry illustrates what these have been and how they have influenced film expansion.
The beginning of the film industry in the United States was characterized by many small producers turning out one-reelers which were sold outright to exhibitors. Production expenses were recouped and profits were made within the domestic market. Film production in Europe flourished in the first decade of the century on quite the same scale, but the transatlantic trade in films was hardly important. The First World War threw Europe into turmoil, seriously disrupting the structure of existing industries. The picture trade in Europe was curtailed to a great extent during the war as economic pressures forced many producers out of business. The American industry did not suffer this fate. Hollywood continued to produce, and giants emerged to dominate it. The return of peace brought with it a numerical film vacuum in Europe and an opportunity for the American industry to fill it.
The Americans lost little time in turning out the additional prints needed. By 1925, American films had captured 95 percent of the British market and 70 percent of the French market.1 In Italy during this same period, American films accounted for 68 percent of screen time,2 a condition aggravated by dumping and underselling domestic producers.3 In the smaller countries, the situation was quite the same.
While American pictures did penetrate the European market, the resulting revenue still did not compare with that from the home market. The American film continued to be made with the domestic market in mind, and the industry continued to be domestically oriented. Nevertheless, this grasp on the European market was solidified with the coming of sound, an innovation requiring substantial investment. While the silent film continued for a time to hold its position, it was clear that money could be made with pictures that talked. The advent of sound increased both production cost and the need for amortizing investment by selling the product as widely as possible. Whereas the World War had created the vacuum into which American films flowed, higher production costs provided the rationale for entrenchment in the European market. For the European producers, sound was a competitive factor which had to be recognized. Though the larger countries possibly constituted sufficient markets for their own wares, the smaller countries found themselves in difficulty. Their studios, too, had to be equipped for sound, and their films were also subjected to the same dubbing costs as films from larger countries. Their problem is exemplified:
When films were silent and the Scandinavian producers could sell their films—as they did—all over the world, their achievement was remarkable in that they were competing successfully with stronger units in larger countries. When sound reached the cinema … the mere survival of [their] film-making became remarkable.4
Thus, two factors—the vacuum in Europe and the introduction of sound—accounted for the American industry’s initial expansion into Europe. Other events, however, also worked to sustain Hollywood’s penetration.
More recently, the contraction of the domestic United States market has provided important impetus. Average weekly theatre attendance today is but slightly more than half the 1941 figure, while population growth in the intervening years has stretched the imbalance. True, ticket prices are higher and revenue is greater, but the fact is that admissions have lost in volume. Without a doubt, television’s free entertainment has lured audiences from theatres. Other living habits have undergone profound changes in the last quarter century as people motor more than ever before, do-it-themselves more, bowl more—to mention a few leisure pursuits.
While entertainment dollars were being reallocated, the American film industry was being forced to restructure itself. The Paramount case climaxed a long attempt to break the vertically integrated companies. Exhibition was spun off from production-distribution, and dissolution of monopolies of theatres was forced. It outlawed block booking and generated a more competitive approach to film making and film selling. The “sure outlet” Hollywood producers had depended upon for decades vanished almost overnight and distributors became more concerned with markets and marketing.
The cost of production, always an important factor, began to assume an even more significant role during this postwar period. Declines in attendance were followed by declines in production which further aggravated the cycle—there were fewer films to be seen by people who wanted to go to theatres. Hollywood’s economic interest, once it was cut loose from predominant investment in theatres by the antitrust decrees, lay in maximizing its profits rather than exhibition profits. Producers concentrated more on the superspectacular style of film, hoping to lure back the missing millions. With few of the big stars still under contract to studios, the price for their appearance was bid up to fantastic size. Stars’ salaries, location shooting, more elaborate production and filming techniques, these and other costs have generated budgets of such magnitude that $1,000,000 for a film is considered an extremely modest outlay. The Longest Day was finished at a cost of about $10,000,000 while Mutiny on the Bounty, originally budgeted at $8,500,000, was completed for $18,500,000. Cleopatra, probably the most expensive film in history, cost more than $30,000,000 to make.
In theory, the United States market could support this more costly style of production if admission prices were increased drastically and if competitive leisure activities did not exist.5 But this is not the actual situation nor is it likely ever to be. The American industry, therefore, has been forced to spread its production costs over more and more markets. The reliance upon foreign markets has reached the point where now the industry receives slightly more than half of its theatrical revenue from foreign exhibition. While the American film has been present in Europe for half a century, only within the last two decades has this monetary dependence prevailed. As Eric Johnston once declared: “The domestic market today simply does not support a large volume of production in Hollywood.”6
This point is as true in 1969 as it was in the early 1950’s. Data presented to a United States Senate committee revealed that in 1950, 1951, and 1953, Paramount released seventy pictures of which fifty one failed to recoup their negative costs in the United States and Canada.7 (Some companies consider Canada a domestic market.) The vice president of Paramount told the committee that “if the Hollywood producers … had to depend upon revenue from the United States and Canadian markets, neither Paramount nor other companies could possibly remain in business.”8 A representative of United Artists informed the same committee that without foreign earnings “the industry would soon face insolvency and bankruptcy, or would have to change its method of production in such a way that the type and nature of its films would radically change.”9
The implication this has for the content of American films was noted by a vice president of Columbia Pictures. He stated that because few films earn even their negative cost in the American market “it has become necessary to produce pictures palatable to tastes in England, Italy and Japan as well as here at home.”10 The extent to which a producer will go to shape content was revealed by another film executive. “If in making an American story,” he said, “we could insert some incident that might take place in Paris, we would be glad to do it, because it would add flavor for the foreign market. We do a lot of this….”11
The specific mechanics of shaping film content were explained by Eric Johnston when he was questioned by the Senate Committee on Foreign Relations:
A man by the name of Addison Durland in my office handles that in our production code administration in Hollywood. It is his job, every time a script comes for approval by the production code, to read the script, determine if there is anything harmful to the country, or any country in which that picture is likely to be shown. If, in his estimation, there is anything harmful to the country involved, … or some particular situation which might be harmful to that area or to us, he notes it, discusses it with the producer of the picture, and requests that that scene be eliminated or modified…. [Durland] has specialized advice and in addition … he operates with a man in each one of the studios whose job it is also to do that….12
What takes place in the producing companies has been disclosed by a representative of Paramount:
We have in Hollywood a representative of my department…. His name is Luigi Luraschi … and [he] understands very thoroughly the problems that we encounter around the world.
We understand that the time to tackle these problems … is before we make our large negative expenditures in the pictures. Therefore Mr. Luraschi screens every script before it goes on the set, and he battles with the directors and the script writers with regard to scenes that he thinks will either offend a foreign nation or be offensive from the standpoint of placing America in a wrong light. . .
I believe if Addison Durland was to tell our man, from his viewpoint and certainly after consultation with the State Department, that a scene was dangerous, and our man does not agree with him, he would not make a unilateral decision.
This would be taken up with our studio head, with myself, and perhaps with the president of the entire company. We regard it as being that important.13
The role of the State Department should be recognized. Since a later chapter explores the link between the American film industry and the American government, it is sufficient to observe here that the shaping of content is prompted not only by monetary but by propaganda considerations as well.
If films are being made with foreign countries in mind, a logical question is whether films are being made with America in mind. A representative of the Allied States Association of Motion Picture Exhibitors once told a Senate committee that “American producers now rarely make pictures especially adapted to American audiences.” He added that this policy
has virtually eliminated the American family-type pictures and those featuring familiar American sports and customs. Recently I heard an exhibitor bemoan the fact that for more than four years he has not been offered a football picture, although the American people are football conscious for about four months each year. That is quite obviously due to the fact that football, as we know it, is as unfamiliar to foreign audiences as soccer is to most Americans.14
While this is not conclusive evidence, it does point to a trend in content prompted in great degree by the American industry’s dependence upon foreign markets for revenue and dictated by the many coventures involving American and European producers.
The drive to exploit foreign markets has not been confined only to the American film industry. The motion picture is a business and any country’s industry will try to expand if it feels it can create a market for its products elsewhere. The Italian industry has sought consist ently to penetrate the United States. Because of the many American films exhibited in Italy and the revenue they have drawn from the box office, Italian producers have wanted reciprocity and an opportunity to exploit the American market. Their demands were met, in a fashion, when, following lengthy negotiations in 1951, an agreement was reached between an American cartel, the Motion Picture Export Association (MPEA), and the central trade association for the Italian industry, ANICA. The agreement created Italian Film Export (IFE) for the purpose of promoting and distributing Italian pictures in the United States.
According to the MPEA-ANICA pact, a small share of American earnings in Italy over a three year period was to be advanced by American distributors operating in Italy to Italian producers for support of IFE. An influential official in the Italian government has written that IFE’s “special task has been and is to get a footing on the [American] market which, for obvious reasons, is the most difficult for us to enter. It has been up-hill work…,”15 For reasons to be explored in a later chapter, IFE was never successful in the American market and the organization was dissolved. The French film industry tried to secure somewhat the same terms from the MPEA but was unsuccessful. The American companies had always felt uneasy about their agreement with ANICA and firmly resisted any extension of the policy.
The British film industry requires special attention and, indeed, several important studies have been written on its economics and art. One analysis of the industry in 1952 found that the “great hindrance to overseas distribution [is] the predominant position of the United States.”16 The study said that because American films occupied 70 percent of British screen time and had a virtual monopoly of their own home market, it was hardly surprising that America’s success largely explained Britain’s failure to achieve wide foreign distribution. If domestic British revenues were insufficient to support a film industry, the report said, then “viability will depend on overseas earnings.”17 As if answering this, an annual report of the British Film Producers Association commented during this period:
The picture of our overseas film trade is a mixture of great endeavours, frustrations and achievements and if the volume of foreign earnings coming back to this country is not large in comparison with the earnings of American films there is no doubt that a sound overseas business is being built up the hard way. Provided the right pictures are produced and properly exploited, the value of these overseas markets must prove to be a sound investment for the future.18
The British government has recognized the British film industry’s need for foreign markets. In its official journal, the Board of Trade has summarized a speech of its former president, Harold Wilson:
“Export or die” was a maxim which applied as much to the film industry as to the nation. No film industry in the world, and the British film industry least of all, could afford to organize itself on a basis of producing films solely for the home market. The industry must be so organized and financed that its first aim must he the production of an adequate number of first quality films, many of which would cost more than could be expected from home market revenues.19
More recently, distribution of British films overseas has been seen from a different perspective, although recognition of the need to export is still keen. While the attitude twenty years ago was one of trying to buck Hollywood, current British feeling reflects the success British films distributed by American companies have had in world markets. One study notes: “Without the American companies many British films would not be distributed abroad—or even made.”20 In the same way, the Federation of British Film Makers was prompted to declare in a recent annual report that “British films have been outstandingly successful throughout the world….” It went on, stressing the export imperative, to declare that without this success in foreign markets “production in Britain would have collapsed.”21
Certainly the American industry is not the only one interested in foreign markets. The need for additional markets is widespread and the major industries have actively sought to penetrate foreign areas. Furthermore, the rationale for these expansive drives is surprisingly similar. One should recognize, however, that while all industries hope to expand their economic bases, the organization, financial position, and distribution channels of the American industry have been such that its act of expansion had great impact upon foreign industries.
This suggests the following questions: If all industries are trying to export film, what occurs within markets? When domestic revenues are hardly sufficient to support domestic production, what happens when the necessity exists of sharing domestic revenues with imported films?
These matters are particularly pressing for European industries with domestic markets only a fraction of the size of the United States. The answers are complex, for economic solvency, national prestige, and culture are involved. Siegfried Kracauer has pointed out that “films of a nation reflect its mentality in a more direct way than other artistic media….”22 The protection and preservation of national film industries as vehicles for local expression is a subject of great relevance. Because American films by their sheer number have constituted the single largest pool available in the European market, these nations have had to develop systems to protect their home markets and to make them reasonably secure and lucrative for local film production. An examination of these protective plans is the subject of the following chapter.