ALEXI HOROWITZ-GHAZI, HOST:
This is THE INDICATOR FROM PLANET MONEY. I'm Alexi Horowitz-Ghazi, in for Stacey Vanek Smith. She'll be back next week.
AMANDA ARONCZYK, BYLINE: And I'm Amanda Aronczyk, visiting from Planet Money. Alexi, nice to see you over here.
HOROWITZ-GHAZI: Nice to see you, as always - and at the end of a long week.
ARONCZYK: And it is a big week. It's Academy Awards week - the Oscars.
HOROWITZ-GHAZI: But there's kind of a big question looming over the Oscars this year, like it did for other award ceremonies. Will anybody actually be watching? - because it's probably not going to be the same, you know, over-the-top, glamorous affair that it usually is.
ARONCZYK: I also - I didn't even really notice that it was happening. But since we did this story, I think I might watch. You going to watch?
HOROWITZ-GHAZI: I don't know. Usually - I used to live with people who forced me to join a betting pool. And so I always had money on the line, and I basically had to watch. But that's kind of out right now, so I still don't know.
ARONCZYK: Right. Right. Right, no. And I haven't been paying attention to the movies. I would usually watch it for the red carpet shenanigans that go on. But the Academy Awards are more than just glitz and glamor. It's actually one of the key reasons the movie industry became such an economic powerhouse in the first place.
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HOROWITZ-GHAZI: Today on the show, we are going to travel back in time to hear the origin story of the Academy Awards, how a group of scrappy outsiders used the Oscars to take over the American entertainment industry and how history seems to be repeating itself as a new group vies for control of the silver screen.
ARONCZYK: Love scrappy outsiders.
HOROWITZ-GHAZI: I feel like we're a couple of scrappy outsiders ourselves.
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HOROWITZ-GHAZI: So to understand the Oscars' shifting role in the entertainment industry, we're going to take a trip back to the early days of Hollywood, before the film industry had a reputation for the glitz and glamor of the red carpet. To do that, we called up Scott Eyman. He's a writer and professor of film history at the University of Miami.
SCOTT EYMAN: The men who founded the American movie industry were basically Eastern European Jews because no one else wanted it, and they didn't see any shame in working in an industry that other people regarded as a peep-show embarrassment.
ARONCZYK: Scott explains that in those first couple of decades after the invention of moving pictures, film was widely seen as a passing fad by more established members of the entertainment industry.
EYMAN: The guys in the theater and vaudeville couldn't be bothered. It was low-class. It was demeaning. They didn't take it seriously, so it was there for the taking.
ARONCZYK: And one of those takers was the man credited with coming up with the Academy Awards - guy named Louis B. Mayer.
EYMAN: Louis B. Mayer was an idealist, a pragmatist, a showman. He was whatever he needed to be at any given moment.
HOROWITZ-GHAZI: Mayer had emigrated from Russia to Canada as a kid in the 1880s, grew up collecting scrap metal for his father's junk business. And by the time he was in his early 20s, he'd moved to Massachusetts, where he used some of that scrap money to help buy a defunct old burlesque theater and turn it into a movie theater.
ARONCZYK: Over the next few years, Mayer learned the ropes, acquiring several more theaters, and he took careful note of what kind of movies were drawing big audiences.
EYMAN: What really made his fortune - he bought the New England rights to "The Birth Of The Nation."
HOROWITZ-GHAZI: "The Birth Of A Nation" - this is the notoriously racist 1915 D.W. Griffith film which romanticizes the early history of the Ku Klux Klan. At the time, screening rights for films were often negotiated region by region. And when Mayer heard it was starting to fill movie theaters, he decided to make a play for the exclusive right to screen the movie in his part of the country. It turned out to be a pretty smart business move, ethics aside, to profit from this very popular, very racist movie. "The Birth Of A Nation" became one of the first blockbusters in film history - because America.
EYMAN: Mayer pawned his wife's jewelry to get the New England rights.
HOROWITZ-GHAZI: Wow (laughter).
EYMAN: And under the contract, he was obligated to give Griffith a portion of the proceeds. But he almost certainly underreported the proceeds...
EYMAN: ...As one does.
HOROWITZ-GHAZI: The birth of Hollywood accounting.
EYMAN: Exactly, the birth of show business accounting. And 18 months later, he uses that money to move to LA, and he starts making his own movies in Hollywood.
HOROWITZ-GHAZI: Do we know how his wife felt about him pawning her jewelry to make this first big investment?
EYMAN: I suspect she got an even more impressive collection of jewelry after that.
HOROWITZ-GHAZI: (Laughter) That's right. It was more of a loan.
EYMAN: Exactly. You know, you can always buy more diamonds. You can't always get another film that's going to gross, you know, $10 million in 1915 money.
ARONCZYK: Mayer took that pile of 1915 money west, and he proceeded to build Metro-Goldwyn-Mayer - you know, the lion that's inside the gold circle.
HOROWITZ-GHAZI: (Imitating lion growling).
ARONCZYK: That would eventually become arguably the most successful movie empire of Hollywood's golden age, kind of a blueprint for the industry.
HOROWITZ-GHAZI: But as he was building the studio in the 1920s, he faced a couple major problems. First, the whole studio enterprise depended on keeping the movie stars happy so they would obligingly help the industry to keep cranking out up to 500 movies a year.
EYMAN: You're dealing with egos. You're dealing with creative temperaments.
EYMAN: You're dealing with actors and actresses.
ARONCZYK: And acting still wasn't widely seen as a respectable profession, and Mayer wanted to find a way to elevate their achievements.
HOROWITZ-GHAZI: Problem No. 2 - the threat of organized labor. The introduction of sound into the movies - the talkies - meant there was a huge new demand for writers to script dialogue. And many of those writers came to Hollywood from the East Coast, where unions had a tighter grip.
EYMAN: By importing all this talent to California, it really lit the fuse for the union movement in the movie industry.
HOROWITZ-GHAZI: So in 1927, Mayer and his collaborators come up with the idea for a new organization that would solve both of these problems at once - the Academy of Motion Picture Arts and Sciences.
ARONCZYK: It would help coordinate the industry in its dealings with nascent unions. And by putting on an annual awards ceremony, it would stroke the egos of the studio's stars, whose charisma and carefully manicured public images were what actually put butts in those theater seats.
HOROWITZ-GHAZI: Scott says the first Academy Award ceremony in 1929 wasn't much of an event, more of an industry dinner party. Tickets were just $5. The presentation of the prizes took only 15 minutes. And the winners had been revealed months earlier, so there wasn't any envelope-tearing suspense when they announced that Janet Gaynor had won the first Best Actress award for her performances as Diane in "7th Heaven" and as The Wife in "Sunrise."
ARONCZYK: Classic films.
EYMAN: There was no media there.
EYMAN: There was no television. There was no radio there. It was just a bunch of movers and shakers having a dinner and passing out some awards.
ARONCZYK: But Scott says things changed quickly. By the mid-1930s, the awards were being broadcast around the country on radio. And that was the beginning of its transformation into this highly produced, self-congratulatory spectacle that we know today.
EYMAN: It was as if suddenly, the movie industry changed their brand to Tiffany's.
EYMAN: The Academy Awards - it was all class. It was tuxedos. It was the respectable people asserting that this is the movie industry I know and love and work in. It was like a movie within a movie. It was a movie about the movies.
HOROWITZ-GHAZI: And that basic formula for the Academy Awards has essentially stuck around since. Audience numbers continued to grow, peaking with some 55 million viewers in 1998, when "Titanic" won Best Picture.
ARONCZYK: Around the same time, another origin story in the entertainment industry was taking place. A couple of tech industry outsiders were setting their sights on the glamorous world of Hollywood - Netflix; may have started as a mail-order DVD service. But over the past decade, it has become a juggernaut in the entertainment industry.
HOROWITZ-GHAZI: And unlike the traditional studio model, which depends on getting real physical butts into real physical theater seats...
HOROWITZ-GHAZI: Netflix and its streaming competitors can continuously rake in the cash from subscribers all around the world, from Denver to Dundee.
ARONCZYK: And they have used that enormous pool of money to hire some of the biggest names in filmmaking and blanket academy voters with campaign advertising. And so far - seems to be working.
HOROWITZ-GHAZI: For the second year in a row, Netflix garnered more Oscar nominations than any other studio or streaming platform in Hollywood. Like the studios before them, they're using the Oscars as a way to signal their legitimacy, to court high-level talent with the allure of prestigious awards and, of course, as a star-studded gilded advertisement for their films.
What do you think the kind of originators of the Academy Awards would make if they were watching whatever is going to happen this year?
EYMAN: They wouldn't like the movies.
EYMAN: I think that's a safe assumption. They'd be really interested in the business. I would love to be able to talk to them about, OK, now, how would you compete here? What would you do to compete with Netflix and Amazon?
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HOROWITZ-GHAZI: Of course, Louis B. Mayer might have sided with the streaming companies in this fight. Scott Eyman says their strategy to crush the competition under an avalanche of money - that's a page straight out of Mayer's playbook.
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HOROWITZ-GHAZI: This episode was produced by Brittany Cronin with help from Josh Newell. It was fact-checked by Sam Caiand edited by Kate Concannon. THE INDICATOR is a production of NPR.
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