William Wadsworth Hodkinson opened
his first film exchange in Ogden, Utah in 1907, at the age of 26.
Within a few years he became Special Representative to the General
Film Company representing the Motion Picture Patents Company in Salt
Lake City and Los Angeles.
He envisioned a nationwide distribution
structure that would make states rights obsolete, and provide profit-sharing
with producers to encourage filmmakers to concentrate on higher quality
films that would yield higher box office.
During the pre-studio era (before
the fall of the Edison Trust in 1915), movie releases were generally
handled in one of two ways—either by states rights or by road
show. But the methods proved ineffective for wide-scale feature distribution.
Under the Hodkinson system, the distributor
would provide a cash advance to an independent producer to cover the
costs of producing each feature film. The distributor then received
the exclusive rights to the finished movie, using a network of exchanges
to control distribution and marketing, and even offering to pay for
the producer's film prints and advertising.
Hodkinson kept 35 percent of the box
office as a distribution fee, and gave the rest of the profits back
to the producer. Hodkinson discovered that by financing film producers,
the distributor was guaranteed a steady stream of high-class pictures
without ever having to operate a film camera, while the producers
themselves made much more than they would under the states rights
system. The Hodkinson distribution system proved so advantageous for
all involved that, with slight modification, it has remained in full
practice in Hollywood to this day.
In April 1911, as a test, Hodkinson
began to implement his system by reorganizing the San Francisco area
for General Film. The test market generated fantastic results, but
in 1912 W. W. Hodkinson encountered resistance from the Trust which
refused to enact his new procedure in other regions.
In November 1912 he made two comparative
charts "predicting, in one chart what the future of the picture
industry would be, especially that of General Film, if my methods
were adopted nationally; and what would happen if they were not."
He traveled to New York, for a frustrating
encounter that extended until February. San Francisco representatives
sent telegrams in favor of Hodkinson's reforms. He persuaded two leaders
of the General Film Company, but his policy was refused by the Patents
Company members as a whole.
During this trip to New York in late
1912, Hodkinson established ties with some of the important independents
including Adolph Zukor, who was then struggling under the states rights
method, and was the kind of producer who would benefit greatly by
this new distribution procedure.
In May 1913 the president of General
Film, under pressure from the Trust members, rejected Hodkinson's
proposal, and even asked him to undo his successful San Francisco
reforms. Hodkinson refused which caused him to be released.
Hodkinson formed the Progressive Pictures
Company, a west coast-based operation that distributed films for a
number of independent production companies like the Famous
Players Film Company and the Jesse
L. Lasky Feature Play Company.
Hodkinson decided to expand his west
coast business into a national organization in early 1914, but discovered
another east coast company with the same name as his own Progressive
Pictures. When he went to New York in 1914, he changed his company's
name to Paramount
Pictures, Inc. on May 8, 1914.
Hodkinson immediately had all the
independent producers such as Zukor and Lasky
sign 5 year distribution contracts to assure availability for going
nation wide.
Though the producers were far better
off than they were under states rights, they soon started resenting
the amount of profits they shared with the Hodkinson. And even though
Zukor himself was once an independent producer on the losing end of
an unfavorable distribution deal, he seemed to harbor no sympathy
for the next generation of independents who struggled as he had before.
So Adolph Zukor devised a plan, involving his friend Lasky, that would
turn the tables on Hodkinson.
Only one year into his five-year contract—and
desperately wanting out—Zukor surprisingly renegotiated a new
25 year deal with Paramount on March 1, 1915. By May, Zukor and Lasky
had sold a 51 percent interest in their production companies to Paramount
Pictures. This made Zukor subordinate to Hodkinson's Paramount; but
it also made Zukor and Lasky cash-rich, and opened up a newly extended
line of credit that allowed them to secretly accumulate Paramount
stock.
Zukor and Lasky together acquired
a majority of the capital stock of Paramount Pictures, Inc. They took
control of Paramount and ousted Hodkinson. New directors were elected,
followed by the forced resignation of W. W. Hodkinson and his treasurer
Raymond Pawley on June 13, 1916.
Zukor instituted his own president
Hiram Abrams as the new head of Paramount. On July 19, 1916, Zukor
and Lasky merged their companies with Paramount, and created the Famous
Players-Lasky Corporation, a $12.5 million producer-distributor—the
largest film company at the time.
Hodkinson, who did not completely
sever his ties with Paramount until 1924, had always advocated the
complete separation of production, distribution and exhibition.
After losing control of Paramount,
Hodkinson remained active as a distributor, forming Superpictures
Incorporated in November 1916 with Raymond Pawley. He also served
as president of the Triangle Distributing Company before leaving
to form the W. W. Hodkinson Company, later reorganized as Producers
Distributing Company. PDC, which lasted until 1929.
Hodkinson later served as an airplane
manufacturer, then as a commercial aviator in Central America.
Hodkinson died in 1971.
Hodkinsons' distribution system is
STILL in effect with some minor changes.
