How Motion Pictures Industrialized Entertainment

Motion pictures constituted a revolutionary new technology that transformed entertainment—a rival, labor-intensive service—into a non-rival commodity. Combining growth accounting with a new output concept shows productivity growth in entertainment surpassed that in any manufacturing industry between 1900 and 1938. Productivity growth in personal services was not stagnant by definition, as current understanding has it, but instead was unparalleled in some cases. Motion pictures’ contribution to aggregate GDP and TFP growth was much smaller than that of general purpose technologies steam, railways, and electricity, but not insignificant. An observer might have noted that “motion pictures are everywhere except in the productivity statistics.”