

December 18, 1908: It was a dark and stormy night ... Okay — maybe it wasn't so dark and stormy. But it should have been, because that was the night Thomas Edison tried to hijack the motion picture industry.

"With his beetle brows, long wispy hair, and beatific look, Edison might have seemed the addled inventor," writes the historian Neil Gabler, "but he was a shrewd businessman and a fearsome adversary who was never loath to take credit for any invention, whether he was responsible or not."

Had Edison succeeded in litigating all of his competitors out of the business he would have killed the motion picture industry, or at least delayed its flowering by a generationEdison assembled representatives of the nation's biggest movie companies—Biograph, Vitagraph, American Mutoscope, and seven others—and invited them to sign a monopolistic peace treaty. Since 1891, when the Wizard of Menlo Park filed his first patent on a motion picture camera/film system, his lawyers had launched 23 aggressive infringement suits against other production outfits.

Sometimes Edison won. Sometimes he lost. But the costs of these battles overwhelmed his rivals, and that was the intent.

"The expense of these suits would have financially ruined any inventor who did not have the large resources of Edison," one of his lawyers boasted, "and it could hardly be expected that he would be able to prosecute simultaneously every infringement as it arose."

Thus his victims sold their patents, making the Edison movie empire ever larger.

But the old man wanted it all, so he assembled his rivals and proposed that they join his Motion Picture Patents Company. It would function as a holding operation for the participants' collective patents — sixteen all told, covering projectors, cameras, and film stock. MPPC would issue licenses and collect royalties from movie producers, distributors, and exhibitors.

To top it all off, MPPC convinced the Eastman Kodak company to refuse to sell raw film stock to anyone but Patent Company licensees, a move designed to shut French and German footage out of the country.

"The negotiations were finalized in December," Gabler notes, and by early January, "the company made its announcement that the old *laissez faire *of the movie business was being abruptly terminated."

Take heed, tech giants of today. Some of your companies or services aren't much older than the Edison Trust Studios was when it collapsed. How much of your current business strategy is based on offering new and original products, and how much of it is based on laws, courts, and the fact that you got there first?

Make no mistake, had Thomas Edison succeeded in this scheme, he would have killed the motion picture industry or at least delayed its flowering by a generation. The good news is that the Patents Company foundered for a couple of years, then was declared in violation of the Sherman Anti-Trust Act by a federal court.

But why did MPCC fail even before its legal demise? We have here an object lesson that the Internet empires of our time ought to consider. In essence, Edison's forces thought that they could dominate their industry via legal control over technology, in tandem with a cynical alliance with morals groups. Giving the public the kind of movies that it really wanted came last on their list of priorities—which was the cause of the Edison Trust's downfall.

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The system

By 1908, the public's demand for silent films was already insatiable. "For the millions of urban working-class people and new immigrants, going to the movies represented not only an affordable amusement but an extraordinary fascination," writes the film historian Eileen Bowser. "It is possible that motion pictures have never had such a devoted and enthusiastic audience since these early years."

*Immigrant-stuffed Chicago was America's number one movie loving city. It boasted 407 theaters in 1909 — in a region of two million people.*To this day scholars struggle to count the number of "nickelodeons" that operated at the time. Most of them ran about three or four short silent films over the course of a half hour and charged a nickel for the service. At least 2,500 operated in that year across the United States. Five years later there were 14,000.

Immigrant-stuffed Chicago was America's number one movie loving city. It boasted 407 theaters in 1909 — in a region of two million people. "The foreigners attend in larger proportion than the English speakers," noted the Saturday Evening Post around this time. "This is doubtless because the foreigners, shut out as they are by their alien tongues from much of the life about them, can yet perfectly understand the pantomime of the moving pictures."

For the mostly lower-middle class Jewish and Catholic entrepreneurs who ran these theaters, the big challenge was providing consumers with a steady stream of new movies. The easiest way to get a film was to buy it from a producer. But individual production outfits took too long to come up with new fare, and given the short shelf life of a film, it was smarter to rent.

Enter the distributor: "It was a logical step for a supplier of lantern slides and optical goods, such as George Kleine in Chicago, to add a stock of films for rent or sale," Bowser notes.

But this was the vulnerable nexus upon which Edison and his allies pounced — the need for a predictable stream of product. The Patents Company created a subsidiary called General Film Exchange to enforce its rules and take its fees. General Film Exchange set up a strict procedure for collection and distribution. On Mondays, its administrators bought a predetermined quota of movies from the same five producers. On Wednesdays, they purchased films from another fixed group.

The compliant trade press told exhibitors what releases would be available when, and that was that. Movie house owners could not choose among these films, especially if they served small towns. They also couldn't hold films over due to popular demand.

"General Film did not usually allow for extraordinarily popular films by buying extra copies," Eileen Bowser adds. "Since an expensive production sold for the same price as the cheapest, the incentive was lacking, for both exhibitor and producer, to improve."

Blue bloods

Edison justified this rigid system as a form of moral quality control. "In my opinion, nothing is of greater importance to the success of the motion picture interests than films of good moral tone," he declared. These remarks pandered to a veritable army of decency reformers, furious that immigrants (who many of them disliked) were enjoying movies without being properly supervised (by them).

Bluebloods occasionally made forays into urban nickelodeons—mostly for the purpose of writing outraged commentaries like this:

The audience also sat still for one or two high-class films without any fuss, although we are sure they didn't understand what they were looking at any more than they would a Chinese opera. ... I would have been more comfortable on board a cattle train than where I sat. There were five hundred smells combined in one. One young lady fainted and had to be carried out of the theater. I can forgive that, all right, as people with sensitive noses should not go slumming. But what is hardest to swallow is that the tastes of this seething mass of human cattle are the tastes that have dominated, or at least set, the standard of American moving pictures.

Patents Company statements assured the public that General Film stood as a barrier against "cheap and inferior foreign films" (especially of French variety) and that its distributors served the "better classes" of the community. The cartel insisted that it was fully in sync with the National Board of Censorship, a coalition of state level film monitoring groups whose activities the Supreme Court would sanction in a crucial 1915 court case, Mutual Film Co. versus the Industrial Commission of Ohio.

That ruling declared that the content regulation of movies did not violate the First Amendment guarantee of free speech, and it would not be reversed for more than 35 years.

The IMP

But looking in from the outside of this system were a younger generation of distributors who did not fit into Edison's rigid model. The most important of these was a rather unimposing man (five feet, two inches tall) who had come to the United States from a small southwestern German village. Carl Laemmle wandered about the turn-of-the-century US doing whatever he could—working in drugstores, farms, clothing stores—until he bumped into a Chicago nickelodeon and found religion.

"One rainy night I dropped into one of those holes-in-the-wall five cent motion picture theaters... " Laemmle recalled. "The pictures made me laugh, though they were very short and the projection jumpy. I liked them, and so did everybody else. I knew right away that I wanted to go into the motion picture business."

It was 1906. He immediately pooled his entire family's resources into a local venture, including the family itself, who sold tickets and performed janitorial services at what Laemmle called "The Coolest Theater In Chicago" (this referred to its well-ventilated structure). Then came a second nickelodeon, which meant greater need for movies on demand.

When a distributor let him down, he started his own rental service. When even his own distribution company couldn't meet the need, he launched a production outfit: the Independent Motion Picture Company (or "IMP," for short).

Eventually Laemmle renamed the firm Universal Pictures. "That's what we're supplying—universal entertainment for the universe," he proclaimed to his collaborators at the new company's founding meeting. Later he admitted that he had glanced out the window during the gathering and noticed a service truck with the logo 'Universal Pipe Fittings' painted on the side.

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Defiance

Laemmle is probably best remembered for the hijacking of Florence Lawrence, one of the first movie stars. Lawrence had signed up at Biograph Pictures. But Laemmle offered her something few performers enjoyed at that point—name recognition. Unlike the Edison Trust studios, IMP's boss understood what the public wanted—longer, more dramatic films, full of actors with whom people could identify.

Cameramen kept several cameras on a set. When detectives arrived, workers would pull out a non-infringing camera. Cameramen also used non-infringing exteriors over infringing internal mechanismsSo he not only whisked his new prospect away from Biograph, he floated a rumor that she had been killed in a street automobile accident. Millions of newspaper readers glommed onto the story as Laemmle announced the good news: Florence Lawrence was alive and well, now in production with Laemmle's newest picture: The Broken Oath.

Around the same time, Laemmle announced that he would not cooperate with the Edison Trust. He would buy his raw stock, films, and equipment from abroad, or from any manufacturer or producer willing to work with him. In response, the Edison Trust bombarded IMP with infringement suits—289 filings that burdened the company with almost a third of a million dollars in legal fees.

Meanwhile, General Film detectives constantly harassed IMP's production sets, looking for non-licensed equipment. IMP and other non-Edison movie companies countered this with evasive action.

"Cameramen kept several cameras on a set," cinema historian Janet Staigler writes. "When detectives arrived to catch them illegally using licensed equipment, the workers would pull out a non-infringing camera. Cameramen also used non-infringing exteriors but installed infringing mechanisms in the camera."

As this set-to-set combat wore on, theater owners and other independent producers openly rooted for IMP. Once cowed by Edison's operation, now they rushed to buy movies from the defiant company.

"Our business grew by leaps and bounds," recalled one IMP employee, "and where during the previous week we had shipped one program to a city, a week later we were dispatching three, four, and five times that many."

Slowly but surely, the Patents Company discovered that even its deep-pocketed legal department could not afford all the infringement suits that it had launched, especially after the independents began sharing lawyers and pooling the costs of these actions.

For the cartel, "costs of pursuing infringers must have been more than any court-ordered repayment," Staigler notes. "For the independents, fines for patent violation were less than profits from filmmaking."

Demanding recognition

But what ultimately did the Edison monopoly in was the assumption that its legal/technological dominance over the trade, and its moral stance, would trump the public's demand for ever more creative motion pictures. Unlike the independents, the MPCC system did not invest in its network. Consumers would simply have to watch Edison Trust fare, the monopoly's principals figured.

They didn't. Instead, they flocked to Laemmle and his fellow independents' "illegal" movies, which were longer and of better quality. Even the Trust's inner circle knew this. "We... pass on pictures we know will get us nothing but unfavorable comments and cancellations," one confided. "We haven't the power to throw out the distinctly bad pictures, nor the courage, because as poor as they are, they represent a certain sum of money invested in negative production."

Edison and his cohorts never understood that they were involved "in much more than an economic battle to determine who would control the profits of the nascent film industry," Neal Gabler writes. This was a conflict between an older generation of Anglo-Saxon Protestant inventors and a new generation of immigrants.

For the Edison group, the movies "would always be novelties." The possibilities for film had reached a plateau, they thought. They could not be improved, and so the Trust established a business model designed to stabilize profits by limiting the number of players and minimizing risks. Since the cartel charged the same predictable fees for the same number and type of short movies, there was no incentive to innovate, which in any event was seen as unnecessary.

But for the independents, almost all of whom had begun as theater operators, "the movies would always be much more than novelties; they would be the only means available of demanding recognition." Laemmle and his colleagues had everything to gain by making better, more technically daring films, and marketing them in new and original ways.

Thus the Edison Trust was sunk, even before a federal court agreed with prosecutors that the Patents Company and General Film had broken every antitrust principle in the book, "terrorizing exchanges and exhibitors" and driving away competitors by "arbitrary, oppressive, and high-handed methods."

The sage took his defeat like a good sport. He was, after all, still America's beloved inventor. At the end of the conflict, Edison dropped by to dedicate Universal's new all-electric movie studio, now located in a pleasant southern California town called Hollywood.

"Show me a thoroughly satisfied man and I will show you a failure," Thomas Edison once warned. He ought to know.

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Further reading:

Eileen Bowser, *The Transformation of Cinema *

Neil Gabler, An Empire of Their Own: How the Jews Invented Hollywood

Janet Staigler, "Combination and Litigation: Structures of U.S. Film Distribution, 1896-1917," Cinema Journal, Vol. 23, No. 2 (Winter, 1984)

Paul Starr, The Creation of the Media

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