From Homo Luden to CGI: Hollywood in a nutshell.

The Big Picture--The New Logic of Money and Power in Hollywood (Random House, 2005), by Edward Jay Epstein, is a must-read for anyone interested in the film and television industries. Though "Hollywood" often still refers mainly to the big screen, Epstein knows well enough to include television because, after all, it's all one big business now.

Starting out with "The Two Hollywoods," the author gives a brief but detailed history of moviemaking. The chapter title refers to the vastly different economic systems in place before and after the Justice Department's decision in the U.S.v. Paramount et. al. lawsuit, which ended the studios' monopoly of theatrical entertainment.

Epstein clearly illustrates the economic disparity between the post-WWII era and today. "In an average week in 1947, 90 million Americans, out of a total of only 151 million, went to a movie," and the studios earned over "95 percent of their revenue from their share of ticket sales." But by 2003, the studios had changed into "international corporate empires" that "routinely lost money on [the] theatrical release" of their films. The studios' 2003 earnings from movies--including domestic and international ticket sales, home video, television and licensing--only accounted for an average of 14.3 percent of their total earnings (with Disney raking in 21 percent from movies and General Electric's Universal Pictures counting only 2 percent from film).

This first chapter lays out everything that follows in the book; at the end of it, one feels satisfied--as if Epstein has already touched upon all he has to share--and intrigued. Subsequent chapters dissect the industry, giving details of both the financial and personal realms of entertainment companies and Hollywood players.

Part One, "The New System," opens with Chapter Two, "The Creators." Short bios are given of Hollywood heavy-hitters. One executive who is profiled is Sumner Redstone. To raise money to purchase Paramount, Re&tone partnered with Blockbuster Video. He then realized that the video rental system profited only the studios, not the video stores. Redstone persuaded Disney, Warner Bros., Universal, Sony and Fox to sell videos to rental stores for only $4 each (compared to the previous $65). In exchange for this decrease in price, studios would for the first time receive a percentage of each rental. This way, stores were able to stock more copies, and once a movie lost popularity, stores could sell the tapes back to the studios or to the public as "previously viewed." In this way, Redstone changed the home entertainment industry forever: he not only made video (and later, DVD) rentals profitable for the studios, but also created a monopoly for Blockbuster, since it could afford to buy more copies.

The remaining chapters in Part One cover "Americanizing the World," (the difficulties the studios overcame to make Hollywood films profitable overseas); "The Sexopoly," (the histories and alliances among Disney, Warner, Universal, Sony, Fox and Paramount); and "The Clearing House Concept," (a detailed economic overview of the studios' finances).

Part Two, "The Art of Deception, the Deception of Art," chronicles the steps by which a movie is completed: from "Development Hell" to "Completing the Illusion." Here, Epstein takes readers from the days in which most movies were produced by only six people, to today, when most of a movie can often be created in a computer by CG animators who may never even meet the actors (such as was the case in the Lord of the Rings trilogy).

Part Three, "The Creation of Audiences" focuses on marketing--from creating word-of-mouth to deluging the public with ads for a particular film--just prior to "D Day," its premiere.

"The Economic Logic of Hollywood," Part Four, reveals "The Popcorn Economy," that is, the movie theater's need to file audiences past the concession stands (which are where they make money). Other chapters explain the different economic realities that exist overseas; why DVDs are more profitable than VHS; and the part played by television and licensing in the movie game.

"The Midas Formula" points out that studios have discovered a recipe that works: the top ten most profitable movies of all time are based on children's tales and have fantastic, chaste, moral plots; they feature adolescents, bizarre sidekicks and star virtual unknowns; and they use computer or conventional animation. These top ten movies include the Harry Potter films, Spiderman, the Lord of the Rings trilogy, Finding Nemo, Pirates of the Caribbean and the newer Star Wars films.

Part Five, "The Social Logic of Hollywood," argues that even though the men who created Hollywood--early moguls such as Louis Mayer and Darryl Zanuck--fit economist Ludwig yon Mises' ideal of a Homo economicus (man driven by economics), Hollywood achieved its popular stature because of Home luden (man at play)--such as playboys Howard Hughes and William Randolph Hearst. This section also notes that Hollywood (really, most of Los Angeles) suffers from a feeling of community, so that even local cab drivers can say that they help create movies, because they help the city run. It also profiles "The New Elites," the actors, directors, writers, agents, producers and "suits" (other senior executives) who now--as opposed to during the studio system--enjoy financial and other perks from their jobs. "The Culture of Deception" reveals that the public often believes what it is told--because it is more fun. Examples used include actors "Americanizing" their names to fit in, back-stories being created for an actor so that the public associates him more with the character he plays, and actors claiming to perform their own stunts or not wear make-up.

The last section, "The Political Logic of Hollywood," chronicles how the entertainment produced in Hollywood controls what we see and think. The War Department used movies during and after WWII to control anti-government sentiments. The government has a say in television through the Federal Communications Commission (FCC). Studios control when and where their movies are shown on DVD around the world, thanks to the DVD Consortium and the U.S. Department of Justice allowing agreements between U.S. studios and Japanese and European manufacturers. Also, since studios and television networks are no longer entities in their own right, but part of larger companies such as General Electric, the content they carry is often designed to reflect those companies' values (such as the Fox News Channel, owned by News Corp., whose news coverage has often been accused of being politically conservative).

Epstein manages to cover economic, political and popular aspects of Hollywood--and make them interesting. The sheer amount of research that went into the book is evidenced by the detailed examples and figures he provides. The result is a book that feels as if it was written by someone who has been an insider in Hollywood since Paramount founder Adolph Zukor moved his moviemaking studio to California in 1916--and who has remained on top of technical and economic trends and changes ever since.