On Hollywood: The Place, the Industry

Published by EH.NET (October 2005)

Allen J. Scott, On Hollywood: The Place, the Industry. Princeton, NJ: Princeton University Press, 2004. xiii + 200 pp. $39.50 (hardback), ISBN: 0-691-11683-0.

Reviewed for EH.NET by Mike Haupert, Department of Economics, University of Wisconsin – La Crosse.

On Hollywood is a well written and exhaustively researched example of location study applied to the movie industry. In that regard, it will be of interest to those with a passion for geographical studies or an insatiable appetite for the movie industry. It adds little to the knowledge base of economics, however, and has even less to offer to historians and economic historians. Except for one chapter on the origins and early growth of the movie industry in Hollywood and a brief section on the evolution of Hollywood labor unions in another, the research focuses on the geography of the contemporary movie industry.

Allen Scott (Professor of Policy Studies and Geography at UCLA) conducted an impressive amount of primary research to assemble some of his data. For that alone his efforts are to be lauded. The data are presented only in aggregated form or in regression results, so they are not readily available to other scholars who may find them useful. Aside from chapter two, this is more of an analysis of the current labor market from the perspective of a geographer rather than an economist. Instead of looking at the kind of questions that might interest an economist, such as wages, labor markets, productivity and the impact of the heavily unionized movie industry on the market, we read about the distribution of workers within a given geographic area and how that may have changed over time. Unfortunately, even this is of limited interest, given that it is presented in a vacuum. I am not sure, for example, what to make of the fact that 69 percent of the U.S. total of digital visual effects firms are located in Southern California (p. 105). How does this compare to other industries? Is Hollywood unique in this way? And what implications does it have for the digital visual effects labor market?

Scott opens the book with a chapter focusing on the question why Hollywood? Why did the movie industry grow here and not elsewhere? As he tells us, his objective is “to provide an empirical description of the genesis, changing fortunes, and current market reach of Hollywood, and to offer a number of general contributions to the economic geography of the cultural economy at large” (p. 1). He does just that. Unfortunately, those contributions to geography are too specific and I think unconvincing to be of much use to economists.

For example, we don’t really learn much when Scott regresses the physical size of studios on the distance from downtown Hollywood and dummy variables for ownership by a major studio and a TV network (p. 93). He concludes that the further from downtown Hollywood, the larger the studio is likely to be — hardly surprising given the price and availability of land in the greater Los Angeles area. Given that some major studios, such as Fox and Warner Brothers, are also television networks, it would have been useful to know how this colinearity problem is handled. This is but one example of the type of data analysis upon which Scott bases some of his conclusions.

His primary thesis is that the movie industry, once it established a foothold in California after moving from New York, was and is unlikely to move because of the nature of the business. As part of the “cultural-products” industry, it needs to be located in a large urban area, and clustering of its fringe industries requires close geographic proximity because “the relations between firms cannot be planned over extended periods of time so that useful inter-firm contacts need to be constantly programmed and reprogrammed”(p. 7) In addition, he acknowledges that path dependence plays a part in explaining why Hollywood has maintained its place as the dominant center of the movie industry. Scott argues that the original choice of Hollywood as a location was somewhat random, but that path dependence soon cemented it as the location for the future.

After presenting a brief history of the evolution of Hollywood, the rest of the book focuses on five basic changes to the industry in addition to the major change, which involved the dissolution of the classic studio system after World War II. Scott notes the bifurcation of the movie industry into one of “blockbusters,” produced by a small number of large studios, and all other “more modest” films, created by independent producers. He also notes the merging of studios into global conglomerates, the tendency for on-location filming to spread further from Hollywood, and the growth of related industries in response to changes in technology such as videos, cable television and the computer. Each of these changes is viewed from the perspective of geographic location, not economics, so we do not learn much about the economic impact of these changes, but rather their impact on the physical location of firms in relation to Hollywood.

Scott concludes with a look at the globalization of the industry from various perspectives: conglomerate ownership, production, and consumption, and discusses the possibility that Hollywood could be displaced by some other location, not necessarily in the U.S. He believes such an outcome is possible considering the global nature of the industry, but is most likely if an alternate site can differentiate itself from Hollywood. He argues that monopolistic competition, rather than imitation, is the likely path to long-term viability for industrial agglomeration in the movie industry of the twenty-first century.

Serious movie industry scholars will certainly find something to whet their appetite in On Hollywood. For those looking for more general information on Hollywood or more specific economic analysis of the entertainment industry, this is not the book to read.

Mike Haupert is Professor of Economics at the University of Wisconsin – La Crosse. He is currently researching the financial history of professional baseball.