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The prominence of Martin Scorsese's Hugo, with 11 nominations, and Michel Hazanavicius's The Artist, with 10, makes this an unusually self-reflexive year for the Academy of Motion Picture Arts and Sciences and the industry it represents. Both are movies about making movies, about forgotten men called George or Georges, set between 80 and 85 years ago, during a critical period of technological change and economic uncertainty. Both, ominously, have scenes of film stock being destroyed by fire, symbolizing the destruction of movie memory.

Though neither film is exactly a blockbuster ( The Artist has done about $28-million U.S. in North America to Hugo's $67-million), the nominations show how much they speak to the film industry today, facing major technological change, particularly the shift to digital cinema, and a changing audience for what we still call films.

Many commentators have pointed out that, if The Artist wins best picture Sunday night as is expected, it will be the first time since the first Academy Awards back in 1929 that a (mostly) silent picture has won the top award. But, while it has intertitles, slightly speeded-up action and traditional screen size, The Artist doesn't quite resemble movies of the Twenties. Hazanavicius employs faster editing, with more camera movement and close-ups than most 1920s movies. It's a crowd-pleaser. Unlike A Star is Born, from which it borrows much of its plot, it even finds a happy ending, as George is reborn as a song-and-dance man. Like the Pixar movies that Hazanavicius says he believes are the best of modern Hollywood, The Artist depends on wit and charm, and the pathos of the overlooked and cast-off.

The Artist's more serious resonance comes from its backdrop of Hollywood's mythological version of the Fall: the arrival of sound, dramatized in Singin' in the Rain and Sunset Boulevard. In 1926, Jack Warner declared the talkies would flop, because they "fail to take into account the international language of the silent pictures." He was completely wrong. With the release of The Jazz Singer (1927), the box office boomed and within a few years, almost all films were shot with sound.

Many lamented the changes. Filmmaking changed in the early years by becoming both less international and less cinematic, shot on sound stages, with flat lighting and limited camera movements. Stars of the previous era – Lillian Gish, Douglas Fairbanks, Mary Pickford, Louise Brooks – went into decline. The new technology was seen as a betrayal of film's essence. In his 1930 survey of film history, Paul Rotha declared that perfectly synchronized sound and speech was "a degenerate and misguided attempt to destroy the real use of the film." Alfred Hitchcock and Charlie Chaplin also held that sound compromised cinema's purity.

There are obvious aesthetic and economic parallels to what's happening today, with the game-changing effects of digital technology. For most of movie history, movies were shot, developed, edited and projected on celluloid. That has changed dramatically, mostly in the past year. Our equivalent to The Jazz Singer is James Cameron's Avatar. Before Avatar was released in late 2009, only 15 per cent of global screens were digital. Last year, that had changed to about two-thirds, and by 2013, all commercial theatres in North America are expected to use digital projection. One of the driving forces, besides the increased cost of silver, is the popularity of 3-D films: It's much easier to synchronize two digital cameras for a stereoscopic image than it ever was using film.

Once again, purists lament that something essential has been lost in the medium. In The New York Times last year, critic Manohla Dargis pondered the vanishing of film. She quoted film theorist D.N. Rodowick, who says that the disappearance of film has "had profound aesthetic and historical consequences," because film, by making an image of the past, gives us a "metaphysical contact from the world from which we have become separated," while digital images are infinitely malleable data.

Less abstractly, the movie industry is in a wild spin. While digital technology has facilitated the spread of cinema – more and more people are seeing "films" on smartphones, tablets, computers and home entertainment systems, or interacting with characters on their game consoles – physical cinemas are in decline – box-office revenue has fallen for the past two years straight. Film cameras are no longer being made. Last July, giant film labs Technicolor and Deluxe, competitors for the past century, struck a pact to subcontract each other's work, causing 178 employees in Mirabel, Que., to lose their jobs, and no doubt there's worse to come.

Which leads us to the question of why Martin Scorsese, an esteemed auteur, cinema historian and advocate for the preservation of old film (which survives better on celluloid than in digital formats), is planting himself firmly in the camp of the barbarians. Hugo, shot in 3-D with digital cameras, is the story of the real-life film pioneer Georges Méliès, his rise and fall, and happy late-career rediscovery. And Hugo, named after its 12-year-old title character, is a children's film – the world's new favourite genre. Méliès, most famous for his 1902 film, A Trip to the Moon, was a former stage magician whose creation of fantasy and special effects treated the film screen as a place of infinite manipulation, a precursor to the movies of James Cameron, Pixar and the Harry Potter films of today. Partly, Hugo is a plea for film preservation (one of the things the Academy does with its lucrative television earnings). It's also unabashedly educational: A key scene shows two children in a library, while the history of early film comes alive to them from a book.

From the film industry's perspective, Hugo is conciliatory, bridging reverence for the past with enthusiasm for the future, positions that may be less far apart than people imagine. Scorsese's savvy enough to understand cinema's continuity is not about specific technologies, but often about repeated attempts to solve old problems in new ways. As he mentioned in one interview, the Lumière brothers, who first startled late-19th-century audiences with the image of a train coming into a station, also experimented with 3-D.

The Artist is a postmodern riff on movie conventions, a way of putting the vocabulary of movie history into the conversation of the present. In that sense, it's the perfect awards lead-in movie. Hugo is a grander gesture from a celebrated senior director, embracing the new direction of cinema and illuminating its roots. For everyone who claims The Artist and Hugo are just about nostalgia, that's only half the story. They're nostalgia for cinema's future.

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