Exploitation of the Kinetoscope

Edison shifted the manufacture and sale of kinetoscopes and films from his laboratory accounts to the Edison Manufacturing Company, which he completely owned, on April 1, 1894. Expenses incurred to that date—for the development of his motion picture system, the building of a photographic building and the Black Maria, the manufacture of twenty-five kinetoscopes, and the taking of various films—totaled $24,118.^[28] Henceforth and for the next eighteen years, the Kinetograph Department at the Edison Company (as it was commonly called) was responsible for the inventor's motion picture business. As this new enterprise was starting up, Thomas Edison hired William Gilmore as vice-president and general manager of this and other Edison companies. Gilmore also commenced April 1st, replacing Tate as the Wizard's business chief.

Edison relied on three different groups to market kinetoscopes and films. The first and most prominent was a consortium that included Edison's former sec-

retary and business manager Alfred O. Tate, phonograph executives Thomas Lombard and Erastus Benson, Norman C. Raft, Frank R. Gammon, and Andrew Holland.^[29] Through Tate, they had a long-standing order for the first twenty-five kinetoscopes. As soon as these were completed, ten machines were immediately installed at 1155 Broadway, near Herald Square in New York City, where the kinetoscope had its commercial debut on April 14th. A Chicago kinetoscope parlor, using another ten machines, opened in mid May, while the remaining five had a San Francisco premiere at Peter Bacigalupi's phonograph parlor on June 1st.^[30] During one thirteen-day period in late June and early July, the San Francisco parlor brought in $961.20 against $249.60 in expenses (including the month's rent of $175).^[31] Similar openings followed in other American cities, with consortium members either exhibiting in lucrative territories or making special arrangements with businesses like the Columbia Phonograph Company, which exhibited the machines in Atlantic City and Asbury Park, New Jersey, and later in Washington, D.C. In August the Holland Brothers opened a kinetoscope parlor in Boston and hired James H. White to assist them. White was soon helping them fit up new arcades with the nickel-in-the-slot machines. Among other undertakings, White and fellow employee Charles H. Webster "installed a plant of kinetoscopes in the Flower Show at the Grand Central Palace, New York City."^[32] After this four-week November show, the duo bought the machines, and for the next ten months they traveled to different cities exhibiting films.

Edison initially sold kinetoscopes and films on a first-come, first-served basis.^[33] Customers included Thomas L. Tally, then based in Waco, Texas, and William Gilmore's brother-in-law, William H. Markgraf. The disorganization that resulted soon forced Edison to rethink this laissez-faire marketing approach. In mid August, he assigned exclusive responsibility for selling regular kinetoscopes within the United States and Canada to the original consortium with Norman Raft and Frank Gammon acting as its principal agents. Through the newly formed Kinetoscope Company they agreed to purchase approximately ten kinetoscopes a week from Edison for $200 a machine. These machines were in turn sold for as much as $350, with discounts of $25 per machine when several machines were purchased. (Sales to consortium members, however, remained at $200 or $225 per kinetoscope.) This contractual agreement could continue in effect for as much as three years.^[34]

From its early contacts with customers, the Edison Company developed relations with two other groups that subsequently assumed major roles in marketing its machines. One began its activities in May when Otway Latham, a manager for the Tilden Company, a pharmaceutical firm, ordered a group of kinetoscopes. Joined by his brother Gray Latham, his father Woodville Latham, and Enoch Rector, a fellow Tilden employee, Otway arranged with Edison to show films of prize fights by expanding the kinetoscope's capacity to 150 feet

and reducing the camera and projection speed to 30 frames per second. The increased running time of slightly more than a minute enabled them to show abbreviated rounds. Their enterprise, which eventually became the Kinetoscope Exhibition Company, commenced its exhibition activities in late August.^[35] Franck Z. Maguire and Joseph D. Baucus, heading the other group, made their first purchase in mid July.^[36] By September they had incorporated the Continental Commerce Company and acquired the exclusive rights to sell and exhibit the kinetoscope overseas—so long as they worked the territory to Edison's

satisfaction.^[37] They were expected to dispose of thirteen machines a week for six months and eight machines a week thereafter.

For the business term from April 1894 through February 1895, the Edison Manufacturing Company had kinetoscope sales of $149,549, film sales of $25,882, and "kinetoscope sundries" sales of $2,416. With motion picture sales totaling $177,847, the three groups were responsible for at least $143,620 or approximately 80 percent of Edison's film-related activities during this period.^[38] Corresponding profits totaled $85,338. Although their sales were substantial for the next few months, the companies' purchases slumped badly during the summer of 1895 and never recovered. Their activities were responsible for almost all of Edison's motion picture sales for the 1895-96 business year, when total profits for Edison's film-related business fell to $4,141.

Edison Company expenses included substantial fees for W. K. L. Dickson and William Heise in recognition of their important contributions to the development of Edison's motion picture inventions. Dickson received at least $3,150 and Heise at least $850 between August 1894 and February 1895. Dickson continued to receive about $100 and Heise about $40 a week until the end of November 1895. These substantial sums may have been in addition to their regular salaries.^[39] The cost of film stock was not assumed by the Edison Company until July 1894 and totaled more than $6,000 by March 1, 1895.^[40] Raw stock purchases amounted to $8,460 for the following business year, with their size falling during the summer and increasing again during the winter. Almost all stock was purchased from the Blair Camera Company; contrary to received opinion, none of it came from George Eastman's company. After having shouldered the financial burden for taking the early subjects, Edison (perhaps with Gilmore's urging) shifted these costs to the three groups responsible for commercial exploitation. Each financed its own subjects, which it alone could use unless proper arrangements were made among the various groups. Both Raft & Gammon and Maguire & Baucus indicated their ownership by including small signs with their initials—R (Raft & Gammon), MB (Maguire & Baucus), and C (Continental Commerce Company)—within the scenes being photographed.