This is a great question. The answer is actually complex.
Years and years ago, they used to have a night time display at the pier. Often times this was the show to see.....Plenty of space, a warm night, a perfect setting...... EXCEPT, the national wave of fire prevention had started to sweep across the nation. This was around 1980 or 1981. Nationally, public displays were revered as a great way to get people away from the fireworks they would light off at their own homes.
But 2 events occurred that changed things for Santa Monica.
1. In 1981, the same production company that performed the show for Santa Monica also ran shows all up and down the coast. In San Clemente of that same year, the company accidentally blew off part of the peir down there (Orange County).
2. The following year, the city did not hire them, but rather a different company that put on a very poor and quick show.
3.The following year, now 1983, there was a storm that destroyed vast portions of the Santa Monica peir, and when the 4th came around, the city was reluctant to risk damaging the peir, so the same crappy company form the year before was hired, and again put on a very quick and dissappointing show.
4. In the next 3 years the numbers of familys dropped dramatically that attended, but the number of gang bangers and losers that attended INCREASED dramatically.
5. In 1987 the city decided that the way to undo the influx of the criminal element was to move the show to a pre-dawn type showing. By this time, the company that had originally destroyed the San Clemente peir was long gone, and fireworks companies of this type were in tight demand. There just weren't that many of them....Note: Many people believe that the fire dept is the one shooting the fireworks off, but its not. Its a private entertainment company.
6. As the years progressed, the pre-dawn show never really caught on, because it was just way too early for the masses to get excited about.
7. At the same time, other cities realized that piers were not the only places you could have fireworks displays, but rather any civic setting would be suitable, and as such, competition for viewers has become very widespread.
8. The city conceded the entire audience of fireworks watchers, to the great dismay of the retail businesses around there. But when retail leaders pressed the city, the city decided that it would be better to put resources into the rest of the year rather than just the 4th. This strategy actually has worked quite well, but the 4th of July's in Santa Monica on the beach are something that I, as a native of Los Angeles, and now almost 40 years old myself, will always remember with great fondness.........
Happy 4th of July. God Bless America!