Theatre and music industry
Theatre at the end of the 19th century can best be described as the television of its day. Live performance was the dominant form of entertainment, and also very profitable. Numerous entrepreneurs helped create public demand for new forms of entertainment, combining financial cleverness with a remarkable sensitivity to new markets and changing public tastes. New York had become the starting point for touring theatre shows, which had grown in popularity since its introduction in the 1860s. Helped by the expansion of the nation's railroad network, companies of actors appearing in a single show travelled from city to city, providing its own music, costumes, and scenery. Since New York was already being regarded as the theatre-capital, it is not surprising that it became the headquarters for the touring companies. In 1904 over 400 theatrical companies toured the nation. Times Square was soon dominated by the theatre industry; rehearsal halls, offices of theatrical agents and producers, headquarters of scenery, costume, lighting and makeup companies, theatrical printers and newspapers were concentrated in the area, in addition to the many theatres that displayed the shows before they went on tour. In a few years, New York had more theatres than it really needed, but its expansion continued. In 1910, there were 34 theatres, most of them new, and most of them in the Times Square area. In the 1919-20 and 1929-30 seasons, 50 and respectively 71 playhouses were operating in New York, nearly all of which in Times Square.14

Other entertainment industries that proliferated in the Times Square area were the publishers of sheet music and, for a short time, the production of radio shows. The song-writing and sheet music market were particularly big in the first third of the century. The music industry was then commonly known as "Tin Pan Alley", after Monroe Rosenfeld’s song describing the cacaphonic sound of the area. One of the most successful songwriters of Tin Pan Alley was Irving Berlin, who owned his own publishing firm, and is perhaps best known for his songs Puttin' on the Ritz and White Christmas.15

Movie industry
From around 1910, movies were changing the market and the face of Times Square. Vaudeville houses began incorporating movies into their programs, and moviemakers expanded their offices in the area.16 The Victoria Theatre, the greatest of all vaudeville houses, was torn down to make way for a new movie palace, the Rialto. Theatrical producers shifted their attention from roadshows to developing scripts that could later be sold to movie producers. The number of road companies and legitimate theatres in the US quickly declined between 1910 and 1925, but the number of theatres in Times Square continued to grow, driven by the prospect of selling material to the movies and the vast available audience. The rise of the movies brought many larger theatres, movie palaces and a host of related businesses to the area. Many production companies first produced live shows in their own theatres, then made them into films. Movie producers held their first screenings in Times Square, with its unparalleled access to mass audiences and to the metropolitan and theatre press. Many of these businesses soon moved to Hollywood, although many remained in Times Square because New York continued to provide much of the talent—as well as most of the capital—for the new industry.17

Sex industry
Although generally believed to have moved in after Times Square's golden age, commercial sex had always been around the area.

Entertainment and prostitution moved into the area after the 1850s, when industrialization in lower Manhattan forced the less profitable land uses uptown. Only a few decades before, the area northwest of Longacre Square had been developed as an elite residential area. Wealthy New Yorkers quickly abandoned their well-built brownstones as commerce and entertainment made the area undesirable. By the early 1880s, many of these brownstones functioned as brothels and "parlor houses". Within a few years, prostitutes were a prominent and visible part of the 42nd street community. In the early 1900s, prostitutes paraded up and down Broadway between 27th and 68th street; observers noted that "ten to twenty prostitutes" were "seen nightly on every block."18 Meanwhile, the "sporting male" culture, celebrating male heterosexual sexual activity, had grown more popular and more public. Men of all classes enjoyed the personal freedom, promiscuity, extramarital sex, and physical isolation from the nation's strict Victorian lifestyle that the Tenderloin offered. The displays of heavy drinking, street gangs, sexual aggression, and prizefight boxing in combination with the high amount of sexual services being offered, characterized the sporting male culture. Prostitution became an accepted part of city life, since there was little that could be done against it. As it was being tolerated, many sporting males felt no compulsion to conceal their behavior.19

"As everyone knows," a former police chief concluded in 1906, "the city is being rebuilt, and vice moves ahead of business."20 Indeed, many recognized a strong business enterprise in the organization of commercial sex in the city. The French syndicate even recruited French prostitutes abroad, and Tenderloin brothels made impressive profits, averaging to $25,000 annually. After the passing of the Raines Law, however, the brothels declined in popularity, and hotels became the most profitable habitats of prostitutes. The Raines Law had been passed to prevent liquor sales in saloons on Sunday, but it was legal to sell drinks in hotels with ten or more rooms. As a result, many saloonkeepers opened up hotels, adding thousands of new bedrooms to Manhattan, most of them permanently occupied by prostitutes.21

Needless to say, not everyone tolerated the course of actions. As the police became regarded as corrupt and ineffective against commercial sex, numerous reform organizations began to appear. Fearing the historic association of the theatre with prostitution, the Society for the Prevention of Cruelty to Children successfully lobbied for a child exhibition law that restricted the stage activities of children under the age of 16. In 1897, the Forty-fourth Street Property Owners Association (with the help of the police) were able to close the prostitute-infested Sixth Avenue Hotel. Crime fighting and law enforcement regarding sexual activity noticeably changed with the success and aid of the Committees of Fourteen and Fifteen in the early 1900s.22 Police policy shifted from moral control to more serious crime, leaving the regulation of sexuality to the private reform bodies. The Committee of Fourteen became known for the most successful anti-prostitution campaign in the city’s history. In 1905, the organization succeeded in passing the Ambler Law, which eliminated the majority of the so-called Raines Law hotels.23 Furthermore, the Committee restricted the marketplace of prostitutes; property owners renting to prostitutes and saloons permitting solicitation were criminalized.

Similar organizations, meanwhile, were battling against immoral performances on the theatre stages. Shows such as George Bernard Shaw's Mrs. Warren's Profession and Richard Strauss' Salome were both closed after a single performance.24

By World War I, the Times Square area had visibly changed. The red lights had been replaced by the theatre's white lights, dubbing Broadway as the 'Great White Way'. Where once the elite institutions of culture existed alongside the elements of the sexual underworld, now served as the entertainment center for the masses; young and old, male and female, resident and visitor. References to the neighborhood as the Tenderloin declined, replaced by its official name, Times Square.

Nonetheless, Times Square remained the venue providing exclusive adult shows and entertainment. Theatres continued to produce shows with erotic appeal, clearly to the audience’s taste, but were continually attacked by the private reform bodies. In a "Salon des Arts", visitors could view thirty nude paintings, and watch artists in smock and beret produce fresh masterpieces from the nude model on display. The Hubert's Museum, which replaced the famous Murray's Roman Gardens after its downfall during the Prohibition, specialized in freaks, bizarre acts, and a flea circus, also displayed an exhibition of "Hidden Secrets" of sex, courtesy of the "French Academy of Medicine, Paris."25

While the reform organizations had succeeded in disorganizing the sexual underground economy in the 1910s, prostitution was never eliminated from the area. Prostitution continued to exist around Times Square, albeit more camouflaged. Hotels were required by police to secure the names of male customers with no baggage, as well as prove that the women with them were their wives. Prostitutes were forced to rely on bellboys, waiters, taxi drivers and pimps to recruit customers. Many became call girls, while some even worked out of taxis.

As prostitution in Times Square became less public after 1920, law enforcement turned to the increasing homosexual activity in the area. The theatrical milieu had drawn many gays to the area, offering jobs in restaurants, clubs, hotels, the theatre industry, and more tolerance than most workplaces. Homosexuality was judged by people who were themselves often marginalized because of the unconventional lives they led as theatre workers. Some men could be openly gay among their co-workers, while the eccentricity of artistic and theatre people provided a cover for men adopting gay styles in their dress and behavior. Gay men met at most of the district's restaurants, some becoming predominantly gay and developing a mild gay ambiance.26

Surprisingly, these restaurants and "speakeasies" proliferated and became more secure during the Prohibition.27 All speakeasies, gay and straight, had to bribe the authorities and warn their customers to be prepared to hide what they were doing at a moment's notice. The popular opposition to enforcement and the development of criminal syndicates protecting the speakeasies, made it easier for the gay clubs to survive, since they stood out less.

Visiting Times Square became more of a theatrical experience itself as "fairies" and male prostitutes took to the streets, becoming part of the spectacle. In 1927, the Times Square Building was reported as being a "hangout for fairies and go-getters" that attracted crowds of sailors.28 Although the police periodically conducted roundups of hustlers and fairies on the street, they could not close the streets in way they could close a bar. After the repeal of the Prohibition in 1933, gay bars proliferated, although many were short lived, since they were once again easy to find. The bars serving homosexuals continued to be dependent on systematic syndicate protection, but many gays sought out more secure venues, or places less likely to be raided. Several bars and nightclubs tolerated or even welcomed gays, so long as they remained discreet. Gay men developed a number of codes to covertly alert each other to their identities in public; by wearing certain clothes, introducing certain topics of conversation, and using code words they could carry on extensive and highly informative conversations whose real significance would remain unknown to the people around them.29 As a result, the bar of the Astor Hotel maintained its public reputation as a respectable Times Square rendezvous, while its reputation as a gay rendezvous and pickup bar assumed legendary proportions in the gay world. Similarly, on some nights, the Metropolitan Opera on Broadway at 40th Street, became the "biggest bar in town."

By the late 1930s, the Depression had hit hard upon Times Square. The once-elegant restaurants had been replaced by cheap luncheonettes, and crime kept many visitors away from the area's hotels. Meanwhile, Times Square's white prostitutes were now known as almost the cheapest in the city. Many of the legitimate theatres had turned into movie houses.

Commercial sex became once again visible in the area with World War II. As servicemen flooded into Times Square, so did gay sexuality. After the war, the economically supported revisions of the zoning laws in 1947 and 1954 did little to halt what many writers have called the downward slide of Times Square. From the new zoning laws, adult cinemas and "dirty bookshops" emerged in the area, selling souvenirs over the counter, and pornography in the backroom. The sensational press reported that gays and streetwalkers were more abundant and more conspicuous in their abundance than ever before. In 1959, crime was low in the area with only four drug arrests, no brothels, and only one legitimate nightclub. Male hustlers were mostly seen on 42nd Street between 7th and 8th Avenues, yet most arrests of males in Times Square in the fifties were for brawling.30