What's Italian for `black tie'?

Thirty years ago, the Venice Film Festival was disrupted by a group of radical young directors and Marxist critics, eager to expose the hidden agenda of such a competitive event. Times have changed. This year, critics and directors rampage through the streets of the sinking city, desperately seeking dinner jackets.

The big talking point of the pre-Festival build-up was not Steven Spielberg's Saving Private Ryan, which opened the 10-day filmfest on Thursday, or the certain non-appearance of Leonardo di Caprio, who stars alongside Kenneth Branagh in Woody Allen's Celebrity. It was the reintroduction of lo smoking for all official screenings, 30 years after such bourgeois signifiers were swept away.

Italians seem to be losing their laudable knack of going for the main chance: despite the advance warning, no fly-by-night black-tie hire operations have sprung up on the Lido. The nearest hire joints, over the water near San Marco, are charging upwards of 150,000 lire (pounds 55) per night for lo smoking; though even at this rate, supplies have dried up. Anxious directors are said to be resorting to boot polish.

That all this has dominated media coverage of the event so far suggests that it might be time to repeat the question of 1968. What are these film festivals for? Venice in particular invites the question, as this 10-day celluloid bunfight - supported by Italian taxpayers to the tune of six billion lire (a little over pounds 2m) - has none of the commercial muscle of France's Cannes. At Cannes, both the beach-babe glam and the art-house solemnity of the official competition are justified - some would say subsidised - by the huge film market, which has its nominal headquarters in the basement of the Palais du Cinema, but which in reality is located wherever a script can be pitched or a contract signed, in any of the smart bars and hotels along the Croisette where writers, directors, producers and distributors meet to sniff one another out.

The Venice Film Festival has traditionally been above all that. Ideas are aired, certainly, and European distributors come to check out the talent. But Venice prides itself on its pure art-house credentials. This year, it is true, the first faltering steps in the direction of the market have been made, with the opening of the Venice Script and Film Market in a large white tent outside the Casino (the association of gambling with experimental cinema has always seemed to me to be peculiarly apt). But, as festival director Felice Laudadio has declared, this is "reserved for high-quality films". Substitute "low-budget" for "high- quality" and you get the picture. Of the paltry 30 or so sales stands, more than half were deserted when I wandered through on the second day of the festival.

Fine, then. Venice is dedicated to pure cinema. It's the festival whose competition is not a sideshow but the main event, unsullied by the sales of Terminator II or direct-to-video soft porn in the basement. The film which carries off the main Leone d'Oro (Golden Lion) prize is, like most high-quality films, usually a box-office flop: last year's Hana-Bi by Japanese director Takeshi Kitano was no exception. In the last five years, the only "commercial" winner was Neil Jordan's Michael Collins, which picked up the prize in 1996.

Of course, there is no reason why the festival judges (who this year include a Venetian favourite, the English actress Tilda Swinton) should pay any attention to a film's box-office prospects. And here we are getting to one of the key justifications for film festivals: they are celluloid nature reserves, dedicated to the protection of rare species which might perish in the dog-eat-dog (or perhaps goat-eat-anything) world of the open market - if the present highly orchestrated movie business can be called "open" at all, that is.

In market terms, the art-house market is a niche like any other - like the bondage niche, say, or the heavy-metal-bands-that-bite-off-the-heads-of-chickens niche. It will continue to be filled by products that could do well if they enjoyed decent distribution (a factor over which festivals have little or no influence). For just as there are good chicken-biting bands and bad chicken-biting bands, so too there is good art-house cinema and bad art-house cinema. At best, a Golden Lion will create a climate of interest; it won't, however, sell a boring film.

If it isn't the prizes, then, what is the point of Venice? That's easy. First, it provides employment for hundreds of people, perhaps thousands. Second, it is a marvellous excuse to spend a few days on the Lido in September. (The Berlin film festival, held annually in February, has been struggling for years to catch up with Cannes and Venice; a change of date and venue would probably help.) Third, without festivals, many talented filmmakers would simply give up. It's difficult enough pitching a script, finding a producer and raising the funds to make an "honest and uncompromising" film. But seeing it disappear at the box office must be heartbreaking. At least a festival screening allows films like the Italian Eternal the Streets of Rome Across the Desert or the Czech Pasti Pasti Pasticky! (no, I don't know what it means, but I'm determined to find out) to have their day of international glory.

There is another, less noble, reason for the continued existence of festivals like Venice. America produces a surplus of films, too many for the domestic market. To turn a profit, the studios need the European box office. And a prestigious festival is an excellent platform from which to launch those intelligent-but- commercial products in which medium-size studios like Miramax specialise. Hence the presence of films like Saving Private Ryan, The Truman Show and A Perfect Murder at this year's festival, all in a special non-competitive section, a few weeks or - in the case of Ryan - days before their first European release. The studios get the exposure, the press corps gets its interviews, and the festival gets the reflected glamour.

But maybe the final reason is the decisive one. What would haute couture do without film festivals? Somebody has to provide lo smoking, after all.