Blinded by the Studio System

The studio system which dominated the film industry before the introduction of television and various anti-trust suits was based on vertical integration.  The big studios of the time owned just about everything involved with producing and presenting their movies, from contractual ownership of their stars, down to the very theaters that the movies were played in.  It is the ownership of theaters in particular that I think is important, because it caused big studios to not be very attentive to the actual quality of the films they made. 

There may not seem to be a connection at first glance between ownership of theaters and the quality of a film, but back in this "golden age" of movie-making, a prevailing practice in the movie industry was "block booking" or "blind booking."  With this practice, big studios insisted that their theaters purchase movies in large quantities (essentially an "all-or-nothing" deal), in many cases without even having seen them.  Even if a movie was bad, or a "B movie," the studios didn't need to worry about the quality, because they knew the movies would be bought and shown in theaters anyway through their block booking system. After this system was outlawed by the government in 1948, the studios could understandably no longer afford to produce films haphazardly, as they did before.  They had to be more careful with their money and the films they made, as they were no longer assured to bring in profits through the theaters.

A good example of this can be found in Richard Koszarski's book An Evening's Entertainment: The Age of the Silent Feature Picture, 1915–1928.  In this book, Koszarski writes about how Paramount, who at the time had all the top stars in the nation under contract, began using the block booking system to leverage theaters to buy their other "modest" quality films (which, otherwise, would probably not make it into theaters) in which new stars were being "developed," along with their popular films.  In light of this, it was fitting that, when this practice came under legal scrutiny, it was Paramount who was at the center of the block booking anti-trust suit US v. Paramount Pictures, Inc.