Paris relinquished the title of cultural capital of the western world many years ago. But there's one realm where the ville lumiere still reigns supreme: cinema. No other city boasts anything like what's on offer here: every week there are over 400 films to choose from in 375 cinemas. This is thanks to the arthouse cinemas, known as cinemas d'art et d'essai in France. This name perfectly describes what they show: the classics ("art") and / or works that try to push the boundaries of expression within film ("essai").

The variety of films on offer is reflected in the diversity of the decoration and architecture of the venues. The interior of the oldest operating arthouse cinema, "Studio des Ursulines", which opened in 1926, is reminiscent of a highly embellished Italian theatre. In "Champo" the audience sits beneath a starry sky of 3,000 small dots, and in the "Cinema des Cineastes" under a ceiling of sweeping metal girders dating back to Gustave Eiffel. Celebrity footprints belonging to Arletty, Jean Marais and Jeanne Moreau lead to "Studio 28" adorned inside with garish floral lanterns designed by Jean Cocteau. There are joint seats for lovebirds in one of the arthouse cinemas belonging to the MK2 chain, and there's a canal between two others across which a ferry shuttles back and forth. But the most exotic is "La Pagode", an original temple from the land of the rising sun. It was acquired there in 1896 and reconstructed in the Rue de Babylone, fusing the Far Eastern exoticism with the charm of the Belle Epoque.

If a cinema d'art et d'essai shows challenging films without primarily focusing on profits, then Jean Tedesco's establishment was the first of its kind. Now the "Theatre du Vieux-Colombier", the venue was run by Tedesco from 1924 until 1930. There you could watch retrospectives, foreign works (Murnau, Sjöström, Robert Wiene…) and avant-garde films like "Le sang d'un poete". Not an altogether harmless venture: in 1930 an audience at "Studio 28" got so out of control during a projection of Luis Bunuel's "L'age d'or" that they devastated the place.

It took three decades for the term "art et essai" to become officially recognised. In 1955, five Parisian cinemas founded the Association Francaise des cinemas d'Art et d'Essai (AFCAE). Today there are 45 members in the capital and over 1,000 across the country! The definition of what a "cinema d'art et d'essai" is has been regularly refined over years of reforms. Today a board of 100 members, set up by the Centre National de la cinematographie (CNC) meets twice a month to put together a list of new recommended titles. These include classics either of artistic or historical interest, films with a novel or experimental character, high quality films that didn't enjoy the success they deserved, as well as works from other countries which don't get shown in France. If at least 70 percent of a cinema's programming covers this type of film, the cinema is deemed fit to bear the title "art et essai." These cinemas receive subsidies from 1,500 – 80,000 euros per year according to how many screens they have, if they show particularly "difficult" works, whether they work together with cultural institutions, youth or elderly groups, whether they organise festivals or theme evenings, etc.

A Parisian arthouse cinema relies on state funding for between 15 and 40 (!) percent of its turnover. There are other sources of revenue apart from the CNC. The 17 cinemas d'art et d'essai who are members of the "Europa cinemas" network receive at least 15,000 euros per year if they show a certain number of European films from foreign countries. The "Mission cinema," founded by the city of Paris in 2002, offers assistance when there's a gap in the budget or when construction work is needed. The majority of Parisian art cinemas were renovated in the last 15 years with the help of the CNC and / or the city. The head of "Mission", Regine Hatchondo, says there are also urban, cultural and political factors at play. A "cinema d'art et d'essai" reinvigorates a district and brings art to its inhabitants, particularly the younger ones who've often only seen American blockbusters.

Still, the Parisian arts cinemas are having a hard time. If it weren't for the funding, many would have had to shut up shop. Rent prices are spiralling out of control. Jean-Jacques Schpoliansky, director of "Balzac" on the Champs-Elysees, says the yearly rent for his 3 screens amounts to 162,000 euros. Jean Henochsberg, who owns a few cinemas in the Latin Quarter including "La Pagode," says he'll take overly greedy landlords (who often tend to be businessmen) to court from now on. He's already won one legal battle. In the case of the "Trois Luxembourg," the court ruled that the rent was not allowed to exceed a certain percentage of the tenant's overall income. In June the city agreed on a new land utilisation plan which set aside specific buildings or parts of them for cinemas. The state has even protected the "Entrepot", "Le Champo" and "La Pagode" as listed buildings. The idea is to reverse a trend which has seen nearly 50 cinemas disappear over the last few decades. Due to the concentration of cinemas in Paris, each with roughly 4 auditoria, the number of screens has remained relatively stable since 1945.

The biggest thorn in the side of the arts cinemas are the two large cinema chains, UGC and Europalace (jointly owned by Gaumont and Pathe). The first Parisian multiplex, "UGC Cine-Cite Les Halles," which opened in 1995 and sells around 2 million tickets per year, calls itself the "the main arts cinema in France, both in terms of programming and audiences." And they're right. The CNC hasn't given them the label "art et essai," but due to the sheer size of the place, more cinema-goers see more "recommended films" there than in any of the other cinemas d'art et d'essai.

If there was once a clear demarcation between films shown in the cinema chains and those reserved for studio cinemas, now the Parisian chains basically show virtually all new releases. One reason is that they want to show films on all of the 19 screens of the "UGC Les Halles" from nine in the morning until midnight seven days a week, and there just aren't enough blockbusters for that. But there are also more and more recommended films which attract cinema-goers en masse (in Paris at least). Films by Pedro Almodovar, Woody Allen or Wong Kar-wai, for example. Since the eighties, the fight over these more highbrow, potential audience magnets has become more and more fierce. Silvia Balea from "Latina" says that arts cinemas need one or two box office hits per year so that they can devote the rest of their programme to more challenging works. But the cinema chains have a stronger hold on the distributors – UGC dominates virtually 50 percent of the Parisian market.

One might say it's in distributors' interests to screen their films in as many cinemas as possible. But most cinemas like to hoard new releases exclusively for their own cinemas, particularly in neighbourhoods where the competition is at its highest, for example in Bastille, Champs-Elysees, Les Halles and Montparnasse. Since 1982 the "mediateur du cinema" can be called up to resolve disputes over where copies are distributed. Occasionally such disputes make the headlines. Once Schpoliansky and Roger Diamantis (click here for bio) protested to the press, saying they'd been promised films which were then withheld by distributors at the last minute.

The greatest blow for the arts cinemas, however, were the season tickets issued by the cinema chains. Since March 2000, cinema-goers can watch as many films as they want in whichever UGC or Europalace cinema they want, for less than 20 euros a month. As a result, the audiences at the arts cinemas dropped by 15 to 20 percent. These then managed to push through a law allowing their cinemas to be part of the season ticket deal. For each ticket used by a season ticket holder at an arts cinema, the cinema chain that issued the it has to pay the cinema between four and five Euros. According to Xavier Blom, board-member of the AFCAE, the profits made by the cinema chains on season tickets is so small they're losing money because of it. But the films are really only a way of getting people to buy their snacks and drinks, which is where the real profits are made.

By now most of the cinemas d'art et d'essai accept tickets bought at the cinema chains. The shockwave from 2000 is finally ebbing away. Yet there were a lot of furrowed brows when the cinematheque francaise moved into a new, high-tech building at the end of last year and suddenly brought its own ticket, the "Libre Pass," onto the market: as many films as you want for just 10 euros per month. In the words of Jean-Marie Rodon, director of the "Action Christine" and the "Action Ecoles," the effect was as "abrupt as the plunging blade of a guillotine. Within a few days they had sold 4,000 'Libre Pass,' and I lost between 15 and 20 percent of my audience." Christiane Renavand from "Champo" concurs, criticising the "commercial" programming of the "new" cinematheque: "They're doing the same retrospectives as I am; Almodovar, Cronenberg, Malle, Renoir! What's the point of giving us funding with one hand when they strangle us with the other?"

It's true that the cinemas d'art et d'essai are squeezed between the cinema chains which take away their new releases and public institutions like the cinematheque, the Pompidou centre and the Forum des Images which specialise in older films. Not to mention competition from DVDs and cable TV, and the more fundamental development: "culture consumerism." Laurent Hebert, head of programming at the "Cinema des Cineastes," sees this as a growing trend, one which views culture purely as a product for leisure consumption, and not as a source of artistic expression or communication. Nothing could be further from a group trip to the cinema than the solipsist, bite-size experience of watching a film on a mobile phone. But the arts cinemas hold the trump: their identity. The more distinctive their profile, the greater their chances of surviving or even blossoming in a niche market.

Many of the arts cinemas have diversified. You can listen in on some classical and jazz concerts in "Archipel" or have a stylish brunch in "Entrepot". Others have focused on geographical themes: The "Action" cinemas have kept two generations of cinephiles happy with classics from the US. "Latina" only shows films from Latin countries (and also offers tango, salsa and sevillana courses). What's special about the "Cinema des Cineastes" on the other hand, is that as the creation of the "Société civile des auteurs, réalisateurs et producteurs," it is a sort of showcase for French films d'auteur. It's also an international meeting place. Representatives of the cinema industry and normal cinema-goers sit in the same auditorium and the same stylish wine bar, where they are served meals with names like "Some like it Hot" or "Delicatessen".

The "Studio Galande" offers something out of the ordinary with their audience-participation screenings of the cult musical "The Rocky Horror Picture Show." At one regular Saturday session the audience and actors of the amateur group "The Sweet Transvestites" hurled water, rice and ribald jokes at each other – definitely worth experiencing at least once in your life. But first prize for entertainment goes to Schpoliansky. In his cinema the audience is treated to concerts performed by graduates from the Paris conservatory, while indulging in home-made cake. The club of friends of the "Balzac" has over 1,100 members, and the cheery, extroverted owner doesn't think twice about calling out to his regulars, reminding them not to forget that they're sitting in the best cinema in Paris. Unashamedly blowing his own horn, you might say. But try finding anything like "Night of the omnivores," one of the recent events, in one of the Multiplexes. From 10 pm until 6 am the cinema showed feature films, documentaries and TV programmes on all different aspects of food, while the usher came round with various culinary delights to nibble on, cooked up by chefs such as Jean-Francois Piege, the two-star chef at Hotel Crillon.

So the President of the AFCAE, Patrick Brouiller, may be right when he says that at the end of the day it's the owners of the cinemas d'art et d'essai who make the real difference. It's thanks to them that Woody Allen, Theo Angelopoulos, Ken Loach, Alain Tanner and many others are more successful in France than they are in their own countries.

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The article originally appeared in German in the Neue Zürcher Zeitung on August 7, 2006.

Marc Zitzmann is a French cultural correspondent for the Neue Zürcher Zeitung.

Translation: Abby Darcy.