How was the studio system organized in the golden age, and what factors contributed to its decline?

The studio system (which was used during a period known as the Golden Age of Hollywood) is a method of film production and distribution dominated by a small number of "major" studios in Hollywood. Although the term is still used today as a reference to the systems and output of the major studios, historically the term refers to the practice of large motion picture studios between the 1920s and 1960s of (a) producing movies primarily on their own filmmaking lots with creative personnel under often long-term contract, and (b) dominating exhibition through vertical integration, i.e., the ownership or effective control of distributors and exhibition, guaranteeing additional sales of films through manipulative booking techniques such as block booking.