The shift to a rental system and the production of a substantial number of story films stimulated the rapid proliferation of storefront theaters that characterized the nickelodeon era. The nickelodeons were located in large urban centers and offered programs between ten minutes and one hour in length. By 1906 these "nickel theaters" were the industry's dominant exhibition outlets. Programs at first changed twice a week, but soon many storefront theaters changed their shows every day. Two companies quickly realized that this new mode of exhibition required a rapid increase in film production. Vitagraph used its extensive exhibition service as a base and inaugurated full-scale production of story films. The firm began to sell them to old-line exhibitors and to the newer exchanges in September 1905. By 1907 it had become the largest American production company. Pathé relied on its international network of branch offices and, unhampered by the legal uncertainties that plagued the American industry, dominated the American market. Pathé made more than 35 percent of all films shown in the United States between 1906 and 1908.
Biograph, Selig, and Lubin did not respond as quickly to the rising demand for films during 1906-07. Biograph's rate of production stayed constant. It was hampered by a loss of important production personnel. Some left in 1905 to join Edison while others departed at the end of 1906 to form a new company. Biograph's difficulties were then exacerbated by the nation's sharp financial crisis late in 1907. While the production levels of Selig and Lubin increased steadily, they did not keep abreast of the growing demand for new story films. Edison's renewed activities in the courts further complicated the situation. After the patent on his motion picture camera was reissued, Edison sued Pathé, Vitagraph, Méliès, Lubin, and Selig. These suits created financial uncertainty in the industry and deterred outside investment in film production. At the Edison Company complacency replaced uncertainty. It produced fewer story films in 1906 than in the previous year and did not increase its rate of production until it moved to a new studio in the Bronx in July 1907.
The nickelodeon era began in the Midwest and soon benefited Chicago's motion picture companies. A prominent Chicago distributor estimated that Chicago companies commanded at least two-thirds of the American motion picture rental business during early 1907. These film exchanges advertised in trade journals, mailed leaflets, and hired salesmen to win nickelodeon customers. They also distributed advertising materials provided by film producers and equipment manufacturers, who left space on their covers so that exchanges could stamp their names and addresses. Although most exchanges did not publish elaborate promotional materials, Eugene Cline & Company and the Chicago Projecting Company issued catalogs that serviced this new clientele. The Cline company was a Chicago film exchange that rose to prominence renting to storefront theaters, and the Chicago Projecting Company was a mail-order company that usually catered to traveling exhibitors. Both advertised equipment and accessories that the company hoped to sell. Because many nickel theaters acquired one or two films in the event that rental prints were delayed in shipping, these catalogs also devoted a small amount of space to films that were for sale.
Chicago distributors relied extensively on catalogs when catering to traveling and semi-professional exhibitors, who purchased rather than rented films. These catalogs suggest that showmen often relied on lantern slides as much as motion pictures for their screen programs. The Stereopticon & Film Exchange and Moore, Bond & Company published extensive listings of slides. Standardized programs that combined slides and films were featured in the catalogs of several mail-order companies. These included the Enterprise Optical Company, the Amusement Supply Company, and the Chicago Projecting Company.
Traveling showmen, semi-professional exhibitors, and their suppliers were adversely affected by the proliferation of motion picture theaters, particularly as they opened in smaller towns during 1907 and 1908. Rigid fire codes and insurance policies that were created in the wake of the nickelodeon era made it difficult if not impossible for the traveling exhibitor to function. When film producers agreed to lease rather than sell motion pictures, only a few short films of little value were exempted. This policy institutionalized the rental system and undermined the small-time traveling exhibitor. Reflecting this change, the 1908 catalog of the Chicago Projecting Company listed fewer film offerings. This company, like others, faced an uncertain future. Many, for example the Kleine Optical Company and the Amusement Supply Company, survived by moving into the rental business.
The nickelodeon boom stimulated projector sales. Between 1904 and 1908 sales of Edison's projecting kinetoscope increased nearly six hundred percent. Likewise, Eberhard Schneider and Nicholas Power concentrated on equipment manufacture and prospered. The Viascope Manufacturing Company began to market its viascope projector in 1907 and also met with initial success. Vitagraph and Pathé withdrew from this area of business and concentrated on film production.
At the same time, the demand for new motion picture subjects encouraged people inside the industry to form new production companies. George Kleine of the Kleine Optical Company joined with former Biograph executives Samuel Long and Frank Marion to form the Kalem Company. It was known by the KLM acronym of the owners' initials. George Spoor joined with G. M. Anderson to form the Essanay Film Manufacturing Company. Spoor was a prominent exhibitor and renter, and Anderson had acted or directed for Edison, Vitagraph, and Selig. Late in 1907 a number of owners of film exchanges started small production companies.
46. The early nickelodeon era is examined in Russell Merritt "Nickelodeon Theaters 1905-1914: Building an Audience for the Movies," in Tin Bali, ed., The American Film Industry (Madison: University of Wisconsin Press, 1976), 59-82, and in Robert C. Allen, "Motion Picture Exhibition in Manhattan 1906-1912: Beyond the Nickelodeon," in John Fell, ed., Film before Griffith (Berkeley: University of California Press, 1983), 162-175. An alternate form of specialized film exhibition that became popular at this time, Hale's Tours, is examined in Raymond Fielding, "Hale's Tours: Ultrarealism in the Pre-1910 Motion Picture," in John Fell, ed., Film before Griffith (Berkeley: University of California Press, 1983), 116-130.
47. Jon Gartenberg considers Vitagraph's production activities during the 1905-08 period in "Vitagraph before Griffith: Forging Ahead in the Nickelodeon Era," Studies in Visual Communication 10, no. 4 (November 1984): 7-23.
48. This figure is derived from a survey taken by Joseph McCoy; see Joseph McCoy, Films being shown in New York Area Nickelodeons, Document File, 1908, NjWOE.
49. Edison catalogs for 1905 survive in copyright folders at NJWOE and in NNMOMA's collection of Edison material. Selig material at CLAC was donated by or through Charles Clark, who initially purchased part of the Selig collection. In 1949 he arranged for William Selig to receive a special Oscar. Selig subsequently donated the remainder of his collection directly to the Academy. Four bound volumes of Lubin materials from 1904-09 were located at the Hollywood Museum and later acquired by the Academy. Synopses and stills of Vitagraph films are in the New York Clipper and Views and Film Index.
50. Billboard (27 August 1907): 5.
51. G-515 has the imprint of Oscar Kleine (George Kleine's brother) on the cover and H-145 is stamped with Nicholas Power's name and address.
52. See the catalogs beginning on Y-002 and CC-343.
53. Many Chicago motion picture companies had interlocking ownerships. The Stereopticon & Film Exchange was owned in equal parts by 1. R. B. Arnold, J. W. Bond, William B. Moore, and G. W. Bond—some of whom owned an interest in Moore, Bond & Company. After Alvah C. Roebuck left Sears, Roebuck & Company, he incorporated the Enterprise Optical Company in 1901. In October 1903 he began the Amusement Supply Company with Fred Aiken; see Moving Picture World (3 July 1909): 15. As an outgrowth of this business Aiken and Roebuck started several film exchanges with Samuel S. Hutchinson, including the Theater Film Service, incorporated January 1907. The Chicago Projecting Company, a partnership owned by Edward D. Otis and N. M. Kent, was of sufficient prominence to be sued by Edison. See Thomas A. Edison v. Edward D. Otis and N. M. Kent, U.S. Circuit Court, Northern District of Illinois (1901), Equity No. 25,996, ICFAR.
54. Edison Manufacturing Company, Statements of Profit and Loss, 1904-08, NJWOE.
55. Kalem's promotional material from this period survives as exhibits in Harper & Brothers, et al v. Kalem Company and Kleine Optical Company, U.S. Circuit Court, Southern District of New York, Equity No. 2160, NjBaFAR.
56. These included the Goodfellow Manufacturing Company in Detroit, the Great Western Film Manufacturing Company in Chicago, and the American Film Manufacturing Company in St. Louis.