Past research has established that large bureaucratic firms are less innovative than other firms. This reduced innovativeness is likely to be exacerbated when large firms engage in market control. In cultural industries, the effects can be especially pernicious, resulting in the failure to provide audiences with artistic quality or product diversity.The authors investigate the population dynamics of one cultural industry: the early American feature film industry. Specifically, they examine the hypothesis that concentration among large generalist firms will be associated with higher rates of foundings of specialist producers and specialist distributors.The authors also investigate the question of whether these specialists are more innovative. Specifically, they examine the hypothesis that specialists were more active than were generalists in the creation of new film genres in the early years of the American film industry.The authors find that increased concentration among generalists had a positive effect on foundings of specialist producers and specialist distributors, and that the specialists were more active in the creation of new film genres.Implications of these findings for future research, both on cultural industries and on the population dynamics of the founding of specialist firms, are discussed.