Edison versus the independents (idea)
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In a “community” now known for its fights over power and money, one of the first big ones in Hollywood was between the Wizard of Menlo Park, Thomas A. Edison, and a group of independent motion picture exhibitors.
Edison had invented the motion picture process in the 1880s, and initially had to be coaxed into developing these new “movies” into something suitable, the Kinetoscope, for public performance. His Kinetoscope parlors had been a success; but like most commercial successes, they attracted many imitators and competitors. When Edison noticed his profits shrinking due to competition, he decided to act.
A VIRTUAL MONOPOLY
Accordingly, in 1907, Edison tried to sue his competitors for patent violations, but the competitors struck back with countersuits of their own. Realizing that he and his company could spend years in litigation, with no assurance of a favorable outcome, Edison decided on a different course. He graciously invited his more substantial competitors to join him in forming a company to defend their mutual interests. Seven of the leading American film companies (Kleine, Vitagraph, Kalem, Biograph, Selig, Essanay, and Lubin) and two French companies (Pathé and Méliès) took Edison up on his generous offer, and together they created the Motion Picture Patents Company.
Secure in their pseudo-monopoly, in early 1909 the partners announced that their company alone owned the rights to complete production of motion pictures, and there would be no licenses granted to anyone else. No one but the Patents Company could, under existing patent laws, photograph, develop, or print motion pictures.
Having presumably sewn up the production end, the partners then turned their attention to the distribution and exhibition of motion pictures. This led to the creation of the General Film Company, which would exercise a virtual stranglehold over the retailing of movies. General Film bought up all the major film exchanges, and exhibitors were informed that in the future they would do business with only General Film. The exhibitors were stuck. They could book only movies from General Film, at the rate of ten cents a foot; on top of that, since only General Film manufactured projectors, exhibitors were required to license projection equipment at the rate of two dollars a week, every week of the year, just to show pictures in their theaters.
Thus, Edison and his partners thought they were set for life. No competition, no worries, no problems with the Federal authorities, and profits rolling in every week just like clockwork. They’d accounted for everything – except for a couple of former exhibitors who had had just about enough of General Film.
THE EXHIBITORS STRIKE BACK
William Fox (one of the founders of 20th Century Fox Studios, itself a forerunner of the Fox Television Network) and Carl Laemmle (founder of what would become Universal Studios) had moved from exhibiting to the distribution end of the motion picture business. They operated independent exchanges, where exhibitors met to trade films their patrons had seen for those they hadn’t yet viewed.
Fox and Laemmle refused to accede to General Film’s demand that they sell their exchanges or get out of the business. Believing that they had a right to operate their businesses as they saw fit, both men at first ignored the Patents Company. Fox later sued and won against the company, but Laemmle decided to fight. His only advantage against the mighty resources of the Patents Company and General Film was the exhibitors’ resentment and willingness to ignore the restrictions, but it was enough.
Laemmle made public every threatening letter he received. When the Patents Company threatened to cut off his supply of films, he created the Independent Motion-Picture Company and made them himself. He made sure that everyone, including the public, knew of the independents' frustrations by using a character called "General Filmco" to spoof the trust's restrictions.
Amazingly enough, the tactics gradually worked. Edison and his partners misread the public’s taste in movies – they believed that the cheap fodder they produced was good enough for everyone. But the independent exhibitors were closer to their audiences and knew better what those audiences wanted. As the independents turned out increasingly better pictures, more exhibitors were willing to pay for them and ignore the output from the trust. The hold of the Motion Picture Patents Company over motion picture production began to weaken, and in 1915 General Film was abolished by judicial decree. For once, just like the plot of an old movie, the little guys triumphed over the faceless conglomerate.