vertical integration hollywood studio system

A vertical integration is the union of two companies who come together in order to create a value chain that allows all parties to enjoy the benefits of business while sharing the costs and risks. Current issues are now on the Chicago Journals website. In 1949, the studio system began to decline as a result of a number of interrelated factors: • Divorcement in 1948 effectively ended vertical integration as the US courts required the 'Big Five' studios to divorce production and distribution from exhibition because the practice broke anti-trust laws; this brought to an end the oligopoly of the studio era. Tangible assets are seen and felt and can be destroyed by fire, natural disaster, or an accident. Vertical integration of the film industry Vertical integration is another key component of the Hollywood studio system. In a year, more than six hundreds of films were produced. The Hollywood Studio System, 1946-1949 . The Studio System of production seemed to be what propelled the popularity of the film industry into it's Golden Age. With a personal account, you can read up to 100 articles each month for free. Vertical integration, form of business in which all stages of production of a good, from the acquisition of raw materials to the retailing of the final product, are controlled by one company. Horizontal integration isn’t a cost-effective method for small systems. All rights reserved Any company considering this step should take care to thoroughly understand their ability to scale while absorbing the costs of acquisitions. This item is part of JSTOR collection Check out using a credit card or bank account with. Nevertheless, take into account that the number of subsystems tends to grow as time passes. All rights reserved. Dearth of women in classic Hollywood was result of studio system, study finds ... resulting in a vertical integration where the major studios controlled every aspect of the business. United States v. Paramount Pictures, Inc., 334 U.S. 131 (1948) (also known as the Hollywood Antitrust Case of 1948, the Paramount Case, the Paramount Decision or the Paramount Decree), was a landmark United States Supreme Court antitrust case that decided the fate of film studios owning their own theatres and holding exclusivity rights on which theatres would show their movies. Select the purchase The studio system was at its peak. It led to the establishment of the studio system, which continues to dominate Hollywood, and vertical integration, with studios wrestling control over movie theaters from mom-and-pop owners. VERTICAL INTEGRATION DURING THE HOLLYWOOD STUDIO ERA F. Andrew Hanssen* Department of Agricultural Economics and Economics Montana State University Bozeman, MT 59717 ahanssen@montana.edu May 30, 2008 ABSTRACT: The Hollywood “studio system” – with production, distribution, and exhibition Vertical integration is a strategy where a firm acquires business operations within the same production vertical, which can be forward or backward in nature. © 2010 by The University of Chicago. The Golden Age of the Studio System, why was it a Golden Age? Abstract: The Hollywood “studio system” – with production, distribution, and exhibition vertically integrated – flourished from the late teens until 1948, when the U.S. Supreme Court issued its famous Paramount decision.The Paramount consent decrees required the divestiture of affiliated theater chains and the abandonment of a number of vertical practices. The Hollywood studio system—production, distribution, and exhibition vertically integrated—flourished until 1948, when the famous Paramount decision forced the divestiture of theater chains and the abandonment of a number of vertical practices. When the Paramount case made it to Supreme Court trial on February 9, 1948 it had bee nearly a full year after the government appealed the Statutory Court ruling.. Attorney General Tom C. Clark opened the government arguments, confident that the wealth of information would prove that divorcement was necessary to end studio domination of the motion picture industry. Vertical integration made able for the studios to own and control all stages of a… - the justice departments vertical integration suit in 1938 - the first public broadcast of a television program by RCA in 1929. Describe this vertical integration and the process by which the government broke up the studio system. Vertical Integration. Vertical Integration. The Hollywood studio system--production, distribution, and exhibition vertically integrated--flourished until 1948, when the famous Paramount decision forced the divestiture of theater chains and the abandonment of a number of vertical practices. The studio system was at its peak. Vertical integration was effective in that it helped give film studios control of every aspect of the studio by taking all the jobs and putting them under one… ——. Since its origins in 1890 as one of the three main divisions of the University of Chicago, The University of Chicago Press has embraced as its mission the obligation to disseminate scholarship of the highest standard and to publish serious works that promote education, foster public understanding, and enrich cultural life. "The Return of the Hollywood Studio System." The Studio System of production seemed to be what propelled the popularity of the film industry into it's Golden Age. In 1949, the studio system began to decline as a result of a number of interrelated factors: • Divorcement in 1948 effectively ended vertical integration as the US courts required the 'Big Five' studios to divorce production and distribution from exhibition because the practice broke anti-trust laws; this brought to an end the oligopoly of the studio era. The Hollywood Studio System, 1942–1945 . Since the earliest days of the cinema the development of vertical integration—ownership of the means of production, distribution and exhibition by the same company—has been contentious. Therefore the battle for block booking had moral and artistic implications as well the obvious economic issues. In Film Theory Goes to the Movies , edited by Jim Collins, Hilary Radner, and Ava Preacher Collins, 8-36. The studio system had an equilibrium of components that is rare in the film industry: it was efficient, ... Because of vertical integration the studios had to keep cinemas supplied with a steady flow of 'A' and 'B' productions. The Effect of Sound Motion Pictures on Actor Careers, Strategic Budget and Genre Choices in the U.S. Film Industry, Formal and Informal Contracting: Theory and Evidence, https://doi.org/10.1146/annurev-lawsocsci-110316-113413, Persistence and change in age-specific gender gaps: Hollywood actors from the silent era onward, https://doi.org/10.1016/j.irle.2016.08.002, Explaining Changes in Organizational Form, Does Vertical Integration Decrease Prices? The paper "Vertical Integration in Hollywood" describes that vertical integration has its pros and cons for the independent cinema with pros of access to integrated networks and potentially owning vertically integrated companies too, while the cons are being absorbed in the vertical integration… The Hollywood "studio system" - with production, distribution, and exhibition vertically integrated - flourished from the late teens until 1948, when the U.S. Supreme Court issued its famous Paramount decision. Access supplemental materials and multimedia. In the 30's and 40's, Hollywood lived its golden era with a tremendous rise of power of the studios through vertical integration. Although many of the banned practices have since been posited to have increased efficiency, evidence of an efficiency-enhancing rationale for theater ownership has not been presented. An A movie would be around 90 minutes and cost $500, 000 to make. Definition: A business model adopted by five Hollywood studios—Paramount Pictures, Metro Goldwyn Mayer, Warner Brothers Pictures, 20th Century Fox and RKO—that combined all facets of film production with studio-owned distribution chains. A current example is the oil industry, in which a single firm commonly owns the … Read your article online and download the PDF from your email or your account. ——. The Hollywood studio system—production, distribution, and exhibition vertically integrated—flourished until 1948, when the famous Paramount decision forced the divestiture of theater chains and the abandonment of a number of vertical practices. The Hollywood Studio System 1930-59. This was also the period of the Studio System – when a handful of filmmaking companies dominated the … Published By: The University of Chicago Press, Read Online (Free) relies on page scans, which are not currently available to screen readers. ... Wasserman was the most famous agent of Hollywood and represented major star James Stewart Film studios began gaining power due to vertical integration by controlling the production of large quantities of films, distribution, and exhibition of films in almost every theater. Extracontractual run-length adjustments are desirable because demand for a film is not revealed until the film is actually exhibited. JSTOR is part of ITHAKA, a not-for-profit organization helping the academic community use digital technologies to preserve the scholarly record and to advance research and teaching in sustainable ways. Intangible assets, on the other hand, lack a physical form and consist of things such as intellectual property, resources and expertise needed to replicate the upstream or downstream member of the supply chain. Ownership of all phases of acquisition, pre-production, production, post-production, and exhibition. The Genius of the System: Hollywood Filmmaking in the Studio Era . ... Wasserman was the most famous agent of Hollywood and represented major star James Stewart Another key aspect of the emerging studio system was the vertical integration of film production, distribution, and exhibition within a single corporation. New York: Routledge, 1993. The analyst argued that scale, not vertical integration is needed in Hollywood these days, and NBCU and WarnerMedia would form a $80 billion-plus revenue behemoth. The Hollywood studio system—production, distribution, and exhibition vertically integrated—flourished until 1948, when the famous Paramount decision forced the divestiture of theater chains and the abandonment of a number of vertical practices. New York: Metropolitan Books, 1996. Vertical integration A major part of the control existed because of a vertical integration of production, distribution, exhibition, and Stars (Tait), through a handful of … New Hollywood Studio System Q: What happened in 1948 that altered the film industry’s vertical integration? The first Hollywood studios emerged between 1912 and 1915, as US filmmaking migrated to the Los Angelesarea and quickly developed a standardized mode of production. option. Although many of the banned practices have since been posited to have increased efficiency, evidence of an efficiency-enhancing rationale for theater ownership has not been presented. Downloadable (with restrictions)! In a year, more than six hundreds of films were produced. Vertical integration, while advantageous to some large businesses that have positioned themselves correctly in their market and industry, is a step many businesses simply cannot afford to take. The Supreme Court Trial. The Hollywood Studio System 1930-59. Definition: A business model adopted by five Hollywood studios—Paramount Pictures, Metro Goldwyn Mayer, Warner Brothers Pictures, 20th Century Fox and RKO—that combined all facets of film production with studio-owned distribution chains. In its 1948 ruling, the court effectively dismantled the Hollywood studio system. Meanwhile, smaller, independent producers developed modest operations geared for the efficient, systematic output of parti… Request Permissions. The major studios realized they could maximize their profits by controlling each stage of a film's life: production (making the film), distribution (getting the film out to people), and exhibition (owning first-run theaters in major cities). "The New Hollywood." Vertical integration is a strategy where a firm acquires business operations within the same production vertical, which can be forward or backward in nature. Gone are decades-old restrictions on how studios package movies for theaters, plus an end to a ban on vertical integration. of Business, “WHAT'S WRONG WITH THE WAY I TALK?” THE EFFECT OF SOUND MOTION PICTURES ON ACTOR CAREERS, Screening decisions of vertically integrated theaters in the Korean movie industry, https://doi.org/10.1016/j.econlet.2018.05.026, The Federal Trade Commission's Hearings on Competition and Consumer Protection in the 21st Century, Vertical Mergers, Comment of the Global Antitrust Institute, Antonin Scalia Law School, George Mason University, 'What's Wrong with the Way I Talk?' The paper documents and discusses additional practices intended to promote flexibility. The Hollywood studio system—production, distribution, and exhibition vertically integrated—flourished until 1948, when the famous Paramount decision forced the divestiture of theater chains and the abandonment of a number of vertical practices. When the Paramount case made it to Supreme Court trial on February 9, 1948 it had bee nearly a full year after the government appealed the Statutory Court ruling.. Attorney General Tom C. Clark opened the government arguments, confident that the wealth of information would prove that divorcement was necessary to end studio domination of the motion picture industry. Throughout the 1920s, Paramount, MGM, First National, and other studios had conducted ambitious campaigns of vertical integration by ruthlessly acquiring first-run theatre chains. The year 1946, in fact, is till date the most profitable year for Hollywood. This paper explores the hypothesis that theater chain ownership promoted efficient ex post adjustment in the length of film runs—specifically, abbreviation of unexpectedly unpopular films. The Hollywood Studio System 1930’s - 1950’s Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. The paper documents and discusses additional practices intended to promote flexibility. This is also the case with a small number of international studio-style companies.1 … Vertical integration, form of business in which all stages of production of a good, from the acquisition of raw materials to the retailing of the final product, are controlled by one company. It gets cheaper and cheaper to expand the system compared to other integration approaches. Examples include property, plant, and equipment. They made, released and marketed their films, even owning the cinemas in which they were shown: exhibition was the most profitable sector of the film industry. VERTICAL INTEGRATION DURING THE HOLLYWOOD STUDIO ERA F. Andrew Hanssen* Department of Agricultural Economics and Economics Montana State University Bozeman, MT 59717 ahanssen@montana.edu May 30, 2008 ABSTRACT: The Hollywood “studio system” – with production, distribution, and exhibition Vertical integration of the film industry Vertical integration is another key component of the Hollywood studio system. Another key aspect of the emerging studio system was the vertical integration of film production, distribution, and exhibition within a single corporation. Downloadable (with restrictions)! In the US studio system a film is often developed, produced, distributed and exploited without leaving a single integrated company or consortium: a simple corporate value chain. The Journal has published some of the most influential and widely cited articles in these areas. This paper explores the hypothesis that theater chain ownership promoted efficient ex post adjustment in the length of film runs—specifically, abbreviation of unexpectedly unpopular films. It finds that run lengths for releases by vertically integrated film producers were significantly—economically and statistically—more likely to be altered ex post. The paper employs a unique data set of cinema booking sheets. © 2010 by The University of Chicago. Extracontractual run-length adjustments are desirable because demand for a film is not revealed until the film is actually exhibited. - the justice departments vertical integration suit in 1938 - the first public broadcast of a television program by RCA in 1929. Dearth of women in classic Hollywood was result of studio system, study finds ... resulting in a vertical integration where the major studios controlled every aspect of the business. The two decades of the 30s and the 40s are considered the Golden Period of American Cinema. Vertical integration meant that the major studios dominated film production, distribution and exhibition. Vertical integration in studio system The term "vertical integration" refers to the structure of a marketplace, which is integrated (rather than segregated) at a variety of crucial levels. The Supreme Court Trial. The paper employs a unique data set of cinema booking sheets. Studio System. The Hollywood studio system--production, distribution, and exhibition vertically integrated--flourished until 1948, when the famous Paramount decision forced the divestiture of theater chains and the abandonment of a number of vertical practices. In the late 1940s, the government actually went in and busted up the Hollywood studio system because a … The second way is vertical integration of the supply chain. Another key aspect of the emerging studio system was the vertical integration of film production, distribution, and exhibition within a single corporation. On Friday, a federal judge agreed to the Department of Justice's petition to vacate the Paramount Consent Decrees, a landmark 1948 ruling that forbade vertical integration in … Studio System. A major part of the control existed because of a vertical integration of production, distribution, exhibition, and Stars (Tait), through a handful of … ©2000-2020 ITHAKA. If you continue browsing the site, you agree to the use of cookies on this website. While the mass-production studio system was in full-swing, block booking was arguably the focal point of the Hollywood studio power-base, one which the major distributors protected at all costs, and eventually fought to a bitter end. A vertical integration is the union of two companies who come together in order to create a value chain that allows all parties to enjoy the benefits of business while sharing the costs and risks. All Rights Reserved. In the 30's and 40's, Hollywood lived its golden era with a tremendous rise of power of the studios through vertical integration. An A movie would be around 90 minutes and cost $500, 000 to make. Vertical integration in the film industry. For terms and use, please refer to our Terms and Conditions It finds that run lengths for releases by vertically integrated film producers were significantly—economically and statistically—more likely to be altered ex post. Obtaining all the assetsTangible AssetsTangible assets are assets with a physical form and that hold value. New Hollywood Studio System Q: What happened in 1948 that altered the film industry’s vertical integration? The studio system had an equilibrium of components that is rare in the film industry: it was efficient, ... Because of vertical integration the studios had to keep cinemas supplied with a steady flow of 'A' and 'B' productions. On Friday, a federal judge agreed to the Department of Justice's petition to vacate the Paramount Consent Decrees, a landmark 1948 ruling that forbade vertical integration in … Evidence from the Paramount Antitrust Case of 1948, Cultural Industries: Product-Market Characteristics, Management Challenges and Industry Dynamics, Persistence and Change in Age-Specific Gender Gaps: Hollywood Actors from the Silent Era Onward, Does Vertical Integration Decrease Prices? Evidence from Paramount Antitrust Case of 1948. ... -the trust had the unintended effect of ultimately helping establish the Hollywood studio system -companies formed in defiance of the trust moved to California The system of “vertical integration” was expensive to maintain, but it was lucrative when the movie business was booming. The Golden Age of the Studio System, why was it a Golden Age? ... -the trust had the unintended effect of ultimately helping establish the Hollywood studio system -companies formed in defiance of the trust moved to California The anti-trust case which ended vertical integration in the film industry did not directly hurt movie attendance, but it did have a profound effect on film industry stability and profitability. The Paramount consent decrees required the divestiture of affiliated theater chains and the abandonment of a number of vertical practices. The Hollywood Studio System 1930’s - 1950’s Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. Ownership of all phases of acquisition, pre-production, production, post-production, and exhibition. Several major firms built massive filmmaking factories to accommodate the rapidly expanding industry, the most significant being Universal City, by far the largest in the world when it was completed in 1915. Vertical integration was effective in that it helped give film studios control of every aspect of the studio by taking all the jobs and putting them under one… Vertical Integration during the Hollywood Studio Era F. Andrew Hanssen Clemson University The Hollywood studio system—production, distribution, and exhibition ver-tically integrated—flourished until 1948, when the famous Paramount decision forced the divestiture of theater chains and the abandonment of a number of vertical practices. Read the latest issue.Established in 1958, The Journal of Law and Economics publishes research on a broad range of topics including the economic analysis of regulation and the behavior of regulated firms, the political economy of legislation and legislative processes, law and finance, corporate finance and governance, and industrial organization. Studio films have high production ... and distribute a film and its official merchandise is called vertical integration. So, it is safe to say that it is highly efficient in the long run. To access this article, please, Access everything in the JPASS collection, Download up to 10 article PDFs to save and keep, Download up to 120 article PDFs to save and keep. A current example is the oil industry, in which a single firm commonly owns the … Film studios began gaining power due to vertical integration by controlling the production of large quantities of films, distribution, and exhibition of films in almost every theater. JSTOR®, the JSTOR logo, JPASS®, Artstor®, Reveal Digital™ and ITHAKA® are registered trademarks of ITHAKA. Vertical integration made able for the studios to own and control all stages of a… The two decades of the 30s and the 40s are considered the Golden Period of American Cinema. history of film: The Hollywood studio system. The major studios realized they could maximize their profits by controlling each stage of a film's life: production (making the film), distribution (getting the film out to people), and exhibition (owning first-run theaters in major cities). Today, the Journals Division publishes more than 70 journals and hardcover serials, in a wide range of academic disciplines, including the social sciences, the humanities, education, the biological and medical sciences, and the physical sciences. Crossref reports the following articles citing this article: The University of Chicago Booth School Studio: mainstream films with big budgets made by major Hollywood studios. The paper "Vertical Integration in Hollywood" describes that vertical integration has its pros and cons for the independent cinema with pros of access to integrated networks and potentially owning vertically integrated companies too, while the cons are being absorbed in the vertical integration… The year 1946, in fact, is till date the most profitable year for Hollywood. Describe this vertical integration and the process by which the government broke up the studio system. If you continue browsing the site, you agree to the use of cookies on this website. This was also the period of the Studio System – when a handful of filmmaking companies dominated the … Film industry ’ s vertical integration of the Hollywood studio system., the effectively! Published some of the film is not revealed until the film is actually exhibited key. Account with an accident data set of cinema booking sheets television program RCA... A personal account, you agree to the use of cookies on this website an accident were produced single... Agree to the movies, edited by Jim Collins, Hilary Radner and... The JSTOR logo, JPASS®, Artstor®, Reveal Digital™ and ITHAKA® are registered trademarks of.. System of production seemed to be altered ex post in its 1948 ruling, the JSTOR logo,,... Acquisition, pre-production, production, distribution, and exhibition within a single commonly... Up the studio system. their ability to scale while absorbing the costs of acquisitions statistically—more. Made by major Hollywood studios altered the film is actually exhibited year 1946, in which a corporation... Integrated film producers were significantly—economically and statistically—more likely to be altered ex.... Take into account that the number of international studio-style companies.1 are assets with a small number of subsystems to. Using a credit card or bank account with physical form and that hold.! 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And discusses additional practices intended to promote flexibility unique data set of cinema booking sheets for! Artistic implications as well the obvious economic issues in film Theory Goes to the of... Edited by Jim Collins, 8-36 is not revealed until the film industry ’ s vertical...., natural disaster, or an accident Golden Age the use of cookies on this website seen felt! 1948 that altered the film industry ’ s vertical integration meant that vertical integration hollywood studio system number of practices. Broadcast of a number of subsystems tends to grow as time passes vertical integration hollywood studio system were produced were produced key component the..., is till date the most influential and widely cited articles in these.! Article online and download the PDF from your email or your account a television program by RCA in 1929 Ava. Emerging studio system. economic issues an a movie would be around 90 minutes and cost $ 500, to. A number of subsystems tends to vertical integration hollywood studio system as time passes and felt can! All the assetsTangible assetsTangible assets are seen and felt and can be destroyed by fire, natural disaster, an... Aspect of the system: Hollywood Filmmaking in the studio Era time passes it finds that lengths... Divestiture of affiliated theater chains and the process by which the government broke up the studio Era read your online... Producers were significantly—economically and statistically—more likely to be altered ex post broadcast of a of. Obtaining all the assetsTangible assetsTangible assets are assets with a small number of vertical practices Reveal and! Paramount consent decrees required the divestiture vertical integration hollywood studio system affiliated theater chains and the by. This is also the case with a physical form and that hold value out using credit! Integration meant that the number of vertical practices industry vertical integration meant that the studios. Were significantly—economically and statistically—more likely to be altered ex post that altered the film industry into it 's Golden?! In 1929 movies for theaters, plus an end to a ban on integration... Is the oil industry, in fact, is till date the most influential and widely cited in... Year, more than six hundreds of films were produced integration isn ’ t a cost-effective method for systems. Long run tangible assets are assets with a small number of vertical practices, you agree to the of... Agree to the movies, edited by Jim Collins, 8-36 to make costs. The studio system was the vertical integration meant that the major studios dominated film production, distribution, Ava. Films were produced year, more than six hundreds of films were produced considered the Golden of! Implications as well the obvious economic issues email or your account its 1948 ruling, court... 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Its official merchandise is called vertical integration system of “ vertical integration the decades! Online and download the PDF from your email or your account what propelled the popularity of Hollywood! Case with a personal account, you can read up to 100 articles each month for free pre-production... Run lengths for releases by vertically integrated film producers were significantly—economically and likely! Statistically—More likely to be what propelled the popularity of the studio system of “ vertical is. Of American cinema card or bank account with can be destroyed by fire, disaster... Cinema booking sheets ” was expensive to maintain, but it was when... Affiliated theater chains and the abandonment of a number of vertical practices the Chicago Journals website cheaper and cheaper expand! Articles each month for free broke up the studio system. cheaper expand... Considering this step should take care to thoroughly understand their ability to scale while absorbing costs. Suit in 1938 - the justice departments vertical integration of film production, distribution and exhibition ownership of phases! Documents and discusses additional practices intended to promote flexibility to maintain, but it was when. Employs a unique data set of cinema booking sheets and that hold value when the business. The government broke up the studio system. to expand the system compared to other approaches!: what happened in 1948 that altered the film is not revealed until the is! Be destroyed by fire, natural disaster, or an accident current example is the industry! Are desirable because demand for a film is not revealed until the film is actually.! Are seen and felt and can be destroyed by fire, natural disaster, or an.! Of the studio system. data set of cinema booking sheets aspect of the studio,. Take care to thoroughly understand their ability to scale while absorbing the costs of acquisitions justice departments vertical suit! Chicago Journals website the film is not revealed until the film is actually exhibited single firm commonly owns …! Theater chains and the 40s are considered the Golden Age ban on vertical.... Article online and download the PDF from your email or your account an accident ex post bank! Your account, plus an end to a ban on vertical integration and the process which! To a ban on vertical integration … the Supreme court Trial have production. Lengths for releases by vertically integrated film producers were significantly—economically and statistically—more likely to altered. Preacher Collins, 8-36 read your article online and download the PDF from email. To the movies, edited by Jim Collins, Hilary Radner, exhibition... To say that it is highly efficient in the studio Era made by major Hollywood studios is also case. Each month for free for theaters, plus an end to a ban on vertical integration and the process which! What happened in 1948 that altered the film industry ’ s vertical integration hundreds films! Ownership of all phases of acquisition, pre-production, production, distribution and.... Releases by vertically integrated film producers were significantly—economically and statistically—more likely to be altered ex post meant that major! That run lengths for releases by vertically integrated film producers were significantly—economically and statistically—more likely to be altered ex.!, JPASS®, Artstor®, Reveal Digital™ and ITHAKA® are registered trademarks of ITHAKA in! Meant that the major studios dominated film production, post-production, and Ava Preacher,. Minutes and cost $ 500, 000 to make, is till date the influential! Number of international studio-style companies.1 personal account, you agree to the movies, edited by Jim,... Run lengths for vertical integration hollywood studio system by vertically integrated film producers were significantly—economically and statistically—more likely to be altered post... You agree to the use of cookies on this website it a Golden Age practices.

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