Geography meets Film History: Urban economics in the early Hollywood era

I recently wrote about how the multidisciplinary nature of Geography encourages an exploration of other fields of study and the building of synoptic links between them. One such example is Film History. While film can itself be a method of geographical investigation, the film industry is also a particularly fascinating topic of study within the field of urban economics. This is something I have looked at in a recent piece of coursework.

In this paper I argued that vertical integration and localisation economies of scale, which characterised the Hollywood studio system, enabled much faster and more widely adopted innovations in the film industry than when it was centred in New York. This was done through a comparison of the swift and widespread incorporation of sound into cinema during the Hollywood era - in the space of a year, films went from being almost all silent to entirely spoken - with the more disparate and localised advancements that occurred on the East Coast.

Hanssen’s (2010) defines vertical integration as the process by which a business manages its entire supply chain. The Hollywood studio system clearly demonstrated vertical integration from its earliest days. This dates back to 1915 when Adolph Zukor merged the distribution company Famous Players with the Laksy Company and Paramount Theatres and moved to Los Angeles. The business born out of this would manage all three key stages of the film industry: production, distribution and exhibition*.

Localisation economies of scale, as defined by Storper (2013), occur when clustered companies of the same industry experience greater productivity and innovation. Scott and Soja (1996) explain why Hollywood is seen as the archetypal localisation economy of scale. Here companies are able to hire talented and short-term employees from a large labour pool, something of particular benefit in the project orientated film industry. Additionally, companies are able to learn from one another through ‘knowledge spillovers’ which is of particular significance when considering why innovations spread so quickly in Hollywood (Glaeser et al. 1992).

The rapid adoption of sound by the film industry is a perfect example of vertical integration and localisation economies of scale at work. While the technology for sound had been around since the 19th century, a previous inhibitor of this incorporation was the potential magnitude and cost of wiring studios and theatres for sound synchronisation and amplification. Without a guarantee of theatres that could play your films or a steady supply of talking pictures for your theatre, nobody wanted to take the first step (Sklar 1975). However once they owned both the theatres and studios, film companies were finally able to facilitate the transition at both the production and exhibition end. In addition to this, an ability to learn from surrounding companies through localisation economies of scale played a key role in the transition. A salient example of this is the boom microphone, first used to capture Clara Bow’s voice in The Wild Party (1929). This was swiftly adopted by other companies who quickly learned about the technology either through observation, spying or labour transfers (Mayne 1995). Thus, without these processes it is unlikely that the adoption of sound into cinema would have occurred in such a rapid and widespread manner.

To demonstrate this further, I examined the film industry when it was spread around the state of New York. During this time there were advancements in film, prominent examples being increased film lengths, large format film and panning camera shots (Sklar 1975). These innovations do however differ in their nature. Without vertical integration or economies of scale, such advancements were disparate and more locally fixed within the confines of the company that had pioneered them instead of being spread across the entire film industry.

Thus the film industry creates an interesting backdrop to examine the role of urban economics in the creation and growth of businesses in a certain time and space. This further demonstrates the interconnectivity of Geography as a field of study that expands into many others, in this case Film History.

*This ended in 1948 when the US Supreme Court’s anti-trust rule broke down the Hollywood oligopoly.

References

Hanssen, F. (2010) ‘Vertical Integration during the Hollywood Studio Era’, Journal of Law and Economics, 53, 3, 519-543.

Glaeser, E., H. Kallal, J. Scheinkman and A. Shleifer (1992) ‘Growth in Cities’, Journal of Political Economy, 100, 6, 1126-1152.

Mayne, J. (1994) Directed by Dorothy Arzner, Bloomington: Indiana University.

Scott, A.J and E.W. Soja (1996) The City: Los Angeles and Urban Theory at the End of the Twentieth Century, Berkeley: University of California Press.

Sklar, R. (1975) Movie-made America, New York: Random House.

Storper, M. (2013) Keys to the City: How Economics, Institutions, Social Interaction, and Politics Shape Development, New Jersey: University of Princeton.