Economics

Managing the Road

• Daniel and Charles Frohman, with Abraham L. Erlanger and others created the Theatrical Syndicate in 1880s.
• Controlled bookings for theatres, giving exclusive rights in each city.
• Controlled or owned major theatres in major cities, and set up circuits between which promised consistent bookings to theatres if they would book exclusively with The Syndicate.
• Productions they didn't like, or which wouldn't make enough money, couldn’t get bookings on the circuit, so they couldn't get from city to city economically.
• Much controversy and conflict from 1900 on as major producers such as Belasco and others tried to break the grip of The Syndicate.
• Eventually many teamed with the Shubert brothers, who created a comparable and competing system.
• The Shuberts eventually broke The Syndicate about 1920, but only to become as controlling as The Syndicate.
• Shuberts eventually broken in the 1950s by the same anti-trust decisions that broke the grip of movie studios on both production and exhibition.

Decline of The Road

• 1910 to 1925 the drop in legitimate theatres outside metropolitan areas was from 1549 to 674.
• In the 1920s most critics blamed movies, the Syndicate, the Shuberts.
• Unquestionably a large part of the audience was abandoning legitimate theatre, often due to being 2nd rate on the road.
• Average dramas and comedies were having the most trouble, while musicals, spectacles, and first rate dramas with literary reputation were successful.
• These were the only offerings for which there was not a satisfactory substitute in motion pictures.
• Rising production costs reduced 1-night stands.
• Producers demanded higher guarantees or larger percentages of the gross, and managers then turned to movies and vaudeville.
• Prices remained around $2 from 1900 to 1930. Audiences could see movies for 50 cents and $2 did not necessarily buy them a good performance.
• Auto travel took people to the metro areas instead of seeing the local touring productions.
• Radio also provided casual evening entertainment.
• One source — a study of "Middletown", a typical American community, showed average monthly attendance at the local "opera house" in 1890 was numerically 2/3 of the total population of 12,000.
• By 1923 it was 1/13 of a population of 38,000.
• The numbers for the movies were reciprocal.

The Effect of Movies:

• First took the audience with the lowest income.
• Drove "popular priced" theatrical shows out of existence.
• Second took the gallery seats - cheap unreserved sections.
• Movies actively sought to convert or acquire theatres to eliminate the competition.

Boom and Decline in New York

• Broadway productions:
• 1900 87 productions
• 1920 144 productions 56 theatres
• 1928 264 productions 76 theatres (at peak)
• 1924 to 1929 26 new theatres constructed or converted on Broadway. No new ones built since.
• Theatre weeks began decline in 1926.
• Sound movies not competitive until 1929.
• Growth in New York due to
• Increasing movement of upwardly mobile to urban centers,
• Improved urban access by auto and public transport,
• Urban prosperity after WWI along with rural depression.

American Commercial Theatre Economics

• "The collapse of the entire commercial theatre was brought about, ultimately, by three major problems: growing cost, growing risk and growing competition from movies."
• 1913 to 1928 production costs nearly tripled
• Real costs allowing for inflation rose about a fourth, primarily attributed to increased production standards and development of theatrical unions.
• Unionization brought improved standards for theatrical workers, including such things as pay for rehearsal.
• Increasing division into hits and flops
• -Low-grossing shows closed earlier
• -Longer runs needed to break even due to costs.
• Movies provided the mass distribution answer to economic challenges for the theatre.
• Essentially the entertainment industry followed a pattern taken by the rest of industry: increased costs of creating a single product were met through developments in mass production.

Mass production:

• Requires significant original investment [Risk]
• Standardization of product==all copies are nearly the same, and of the same quality [Standardization]
• Requires broad distribution and many purchasers [Broad appeal].
• Can be offered at a price lower than for a single example of a product [Low unit price].
• Because unit costs are determined by number of units produced, unit price is more often determined by market value than by a cost-plus determination.

Progress of mass production principles in theatre:

1. Colonial companies did repertory as a form of mass production: the efficiency was to use the same company and scenery to produce several plays.
2. Companies moved to another town to distribute the product more widely (lowering unit cost).
3. Travelling stars with the resident company represented another large initial investment in a higher quality standard product widely distributed at a lower price than going to see the star at home.
4. Increase in theatre size in the mid-1800s allowed greater distribution .
5. Combination companies ["The Road"] was the next step up: larger initial investment in a higher quality even more standardized product, more widely distributed with centralized control.
6. Cultural/technological advance: Rail transportation.
7. The long run allowed greater distribution.
8. Cultural/technological advance: automobiles and streetcars.
9. Film: Full-fledged mass production through technology.
10. Television replaces B films.
11. Video now replacing A films.

Economics for the Audience: 1929:

• Theatre tickets $3.85 to $6.60;
• Film $.60.

Economics for the performer: 1928

• Top star on Broadway $1000/week
• Featured player in film $3000/week
• Star in film $7500/week

Gradual change 1918 to 1940

• Increasing satisfaction with film at low price
• >> less frequent attendance at theatre at higher prices.
• Choices in theatre for fare with higher expectation of satisfaction
• >> increase risk for flops, need for promotion.
• Increasing income from industrialization, especially for the educated, continued demand for quality theatre product
• >> less interest in 3rd rate road companies.

Industrialization and "the best for everyone"

• Industrial Revolution gradually brought improved production and improved wages:
• >> significant social leveling in the 20th Century.
• Improved distribution and income equity:
• >> raised the possibility that everyone could have the very best.
• Since the best was limited it had to be spread around.
• -Because of the large initial investment it became necessary to actively market "the best,"
• -Which grew with the birth of advertising and growth of print media in the late 1800s.
• -Which followed earlier technological improvements in print media.
• -Greatest marketing was to create a cult around the product through "hype" and fame. The star system feeds on itself.