Free The Oxford History of World Cinema by Geoffrey Nowell-Smith Page B

early as 1909.
    However, Los Angeles did not become the centre of the American industry until the First
    World War.
    Around 1903, the rise of film exchanges led to a crucial change in distribution practices,
    which in turn created a radical change in modes of exhibition. The rise of permanent
    venues, the nickelodeons that began to appear in numbers in 1906, made the film industry
    a much more profitable business, encouraging others to join Edison, Biograph, and
    Vitagraph as producers. Until this time the companies had sold rather than rented their
    product to exhibitors. While this worked well for the travelling showmen who changed
    their audiences from show to show, it acted against the establishment of permanent
    exhibition sites. Dependent upon attracting repeat customers from the same
    neighbourhood, permanent sites needed frequent changes of programme, and so long as
    this involved having to purchase a large number of films it was prohibitively expensive.
    The film exchanges solved this problem by buying the films from the manufacturers and
    renting them to exhibitors, making permanent exhibition venues feasible and increasing
    the medium's popularity. Improvements in projectors also facilitated the rise of permanent
    venues, since exhibitors no longer had to rely on the production companies to supply
    operators.
    By 1908 the new medium was flourishing as never before, with the nickelodeons -- so
    called because of their initial admission price of 5 cents -- springing up on every street
    corner, and their urban patrons consumed by the 'nickel madness'. But the film industry
    itself was in disarray. Neighbouring nickelodeons competed to rent the same films, or
    actually rented the same films and competed for the same audience, while unscrupulous
    exchanges were likely to supply exhibitors with films that had been in release so long that
    rain-like scratches obscured the images. The exchanges and exhibitors now threatened to
    wrest economic control of the industry from the producers. In addition civil authorities
    and private reform groups, alarmed by the rapid growth of the new medium and its
    perceived associations with workers and immigrants, began calling for film censorship
    and regulation of the nickelodeons.
    In late 1908, led by the Edison and Biograph companies, the producers attempted to
    stabilize the industry and protect their own interests by forming the Motion Picture
    Patents Company, or, as it was popularly known, the Trust. The Trust incorporated the
    most important American producers and foreign firms distributing in the United States,
    and was intended to exert oligopolistic control over the industry: Along with Edison and
    Biograph, members included Vitagraph, the largest of American producers, Selig,
    Essanay, Mélièlis, Pathé and Kleine, the Connecticutbased Kalem, and the Philadelphia-
    based Lubin. The MPPC derived its powers from pooling patents on film stock, cameras,
    and projectors, most of these owned by the Edison and Biograph companies. These two
    had been engaged in lengthy legal disputes since Biograph was founded, but their
    resolution now enabled them to claim the lion's share of the Trust's profits despite the fact
    that they were at the time the two least prolific of the American production studios.
    The members of the MPPC agreed to a standard price per foot for their films and
    regularized the release of new films, each studio issuing from one to three reels a week on
    a pre-established schedule. The MPPC did not attempt to exert its mastery through
    outright ownership of distribution facilities and exhibition venues, but rather relied upon
    exchanges' and exhibitors' needs for MPPC films and equipment that could only be
    obtained by purchasing a licence. The licensed film exchanges had to lease films rather
    than buy them outright, promising to return them after a certain period. Only licensed
    exhibitors, supposedly vetted by the MPPC to ensure certain safety and