Who killed the Hollywood musical?

I've got a great idea. Remember the hit comedy East is East? I'm going to turn it into a musical. It's perfect: big cast, boisterous, upbeat, sad, funny, it's about culture clashes, there's heaps of opportunities for songs and... oh damn! Someone did it already. It was called Fiddler on the Roof.

OK, so Fiddler is Jewish, but its great coup was to take the particular (the story of a Jewish community) and make it universal (a community under threat from more powerful neighbours). Furthermore, when (most of) the songs were so characterful, you didn't have to be Jewish to get it. And a lot of people did. Released in 1971, it took some $40m (about £60m), making it one of the hits of the decade.

Plotwise, we've been here before. It's Jewish Jane Austen, the tale of a family in reduced circumstances trying to marry off five daughters – Pride and Prejyiddish? – but the most peculiar thing about the movie is that it's virtually unique.

Hollywood was largely founded and run by Jews. The only major mogul who wasn't Jewish was Darryl Zanuck at 20th Century Fox and it was he who made the first major Jewish film, Gentleman's Agreement (1947), in which Gregory Peck went undercover to expose anti-semitism.

Just as many Jews chose to disguise their Judaism for wider acceptance, going undercover has been the way in for Hollywood's Jewish movies. In the accidentally hilarious Shining Through, Melanie Griffith nips off to wartime Berlin as a spy on the unassailable grounds that she can speak German and bake strudel. (I'm not kidding). She was at it again going underground in the Hassidic community – yes, you read that correctly – in Close To Eden, which surely marked the nadir of Sidney Lumet's directing career.

There are two exceptions to this. Holocaust movies like Schindler's List and musicals. Barbra Streisand sang and played Jewish in Funny Girl and Hello, Dolly! and, you should pardon the expression, she went the whole hog writing, producing, directing and starring in Yentl. (She may even have done the catering). But in terms of all-singing, all-dancing Jewry, Fiddler got there first.

By the time Norman Jewison filmed it in 1971, the original stage version had run for an astounding 3,242 performances on Broadway – that's almost eight years. Once upon a time, that alone would have guaranteed screen success but by the end of the Sixties, there were no guarantees. Look at Julie Andrews.

Post- Mary Poppins and The Sound of Music, Andrews was the closest thing to a gilt-edged investment. She returned in 1968 with Star! which used the most sets ever assembled for a movie – 185, including 14 locations from Manhattan to Massachusetts via the South of France. There were 1,400 camera set-ups and Julie appeared in 1,372 of them. It bombed. (Robert Wise still claims to be baffled as to why, to which I say, re-read the script.)

Two years later she made Darling Lili or Where Were You The Night You Said You Shot Down Baron Von Richthofen? Happily, prior to release they shortened the title. Not, alas, the movie which was co-written by William Peter Blatty, and if you're thinking that's the guy who wrote The Exorcist, you'd be right.

It wasn't just Julie who was losing her touch. By the end of the Sixties, there was little or no new talent on the rise. Broadway was running out of steam.

Camelot tottered on to screen in 1967 with an undeniably fashionable cast – Richard Harris, Vanessa Redgrave and Franco Nero. But there wasn't a singer among them and if none of them understood why they were singing (or being dubbed) why the hell would an audience?

Talking of turkeys, "Talk to the Animals" the, er, hit from Doctor Doolittle won the Oscar for Best Song that year. Can you imagine what the competition was like? Along similar lines trundled Paint Your Wagon. With a toneless cast led by Clint Eastwood and Lee Marvin this was the musical that wished it wasn't.

Fiddler, therefore, came as a breath of fresh air. The cast actually knew what they were doing – Topol had played the lead on stage in London for years – and, more importantly, it had the engaging self-confidence not to apologise for being a musical. From the opening number onwards, Topol speaks straight into the camera addressing us. There's no pretence that this is all a naturalistic event. The symbolic, Chagall-like title figure of the violinist pops in and out never pretending to be a "real" character. The audience is constantly aware that they are watching a film.

There are three scenes which use the same device, as Topol considers letting each daughter marry against his wishes. Each time, Jewison draws attention to the technique, changing shot and zooming out to leave the daughter and son-in-law stranded in the distance and placing Topol in tight close-up.

At the same time, the song switches from being visibly sung to being in voice-over. Song has become the interior monologue of the film.

That technique became increasingly popular for audiences indoctrinated by the naturalism of television. People have grown increasingly uncomfortable with the stylisation of singing.

Singing one's heart out looks "unnatural", especially in close-up. That's why so many musicals are backstagers or, in the rock era, concert movies like The Rose. If the story revolves around putting on a show that means you can film a star singing a big number without the audience worrying about why they're singing in the first place. Which explains the success of Cabaret. People who normally hate musicals love this movie because all the work is done for them.

Bob Fosse's choreographic gifts for space and pace made him a natural film director but he ducks the issue of singing on film. He doesn't expand the musical's possibilities, he contracts them. It's like a brilliant apology in which a spoonful of sugar helps the medicine go down: people singing on film is nasty, so let's sweeten it by giving everyone a solid naturalistic reason to sing. Liza Minnelli and Joel Grey play performers. That's why everyone else – including Michael York's central character – fades into the background: none of them sing.

By the Eighties, just about the only thing that was left was the dance movie in the shape of the footling Footloose and Dirty Dancing. The musical had all but died, killed off by the arrival of rock – too big, aggressive and anti-authoritarian to develop or handle detailed plot or character – and the demand for naturalism. Audiences wanted their screen fantasies to at least look realistic, which explains some of the brouhaha surrounding Baz Luhrmann's Moulin Rouge at the recent Cannes festival.

Luhrmann's screen debut Strictly Ballroom was a musical in all but name. It had no songs but was entirely driven by music and dance. Moulin Rouge goes one further. Like Cabaret, it is set nostalgically in a nightclub (in 1899), but the filming of the songs – a wildly anachronistic set of pop standards – plays every self-consciously stylistic trick in the book.

Suddenly everyone is running around predicting a musicals revival because, as we all know, it died.

Or did it? In fact, some of the most vastly profitable films of the last decade have been musicals: step forward Beauty and The Beast and The Lion King. The reason for their success? Cartoon musicals aren't bogged down by naturalism. Animation means never having to say you're singing. Disney – and Luhrmann – did their homework. Maybe they watched Fiddler on the Roof.