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Friday, 3 May 2013

Lessons for Big Publishing from Kodak

Whatever happened to Kodak? Recently I treated myself to a new digital camera (a Canon ixus 500 HS, since you ask, and I'm very pleased with it). This morning a thought popped into my head; why, when I was browsing the internet for cameras, were there no Kodaks there?

At one time, Kodak was the big name in cameras and film. In 1900 they launched the Box Brownie at $1.00, which brought photography within the reach of the masses. The brand was huge throughout the twentieth century. 

Last year they went bankrupt.

I bet you didn't know that in 1975, a Kodak engineer called Steve Sasson created the first digital camera, which took photos with a modest 10,000 pixels. Kodak went on to patent many digital technologies which are used in modern cameras, but it wasn't till 1995 that they launched the DC40, their first digital camera. What happened next? Not a lot. Kodak was afraid of cannibalizing their own business - 90% of film sales, 85% of camera sales in the US - so digital was left on the back burner, while other manufacturers rushed in to fill the gap. Digital boomed, while legacy photography dwindled, and Kodak dwindled right along with it.

Does any of this sound familiar? When ereaders appeared, Big Publishing hoped they were a passing fad, ignored the opportunities digital offered, and colluded to keep ebook prices high so as not to impinge on print sales. Meanwhile Amazon flourished and self-publishers became a force to be reckoned with.

Let me quote Pete Pachal's conclusions from his interesting article on the subject:

"The most immediate takeaway from the fall of Kodak is clear: Don't be afraid to cannibalize your own business in the name of progress. This is seen time and again in the digital revolution: Sony's reluctance to develop a competent digital Walkman left an opening for the iPod. Blockbuster laughed off Netflix in the early days, then went bankrupt when it couldn't compete with its Web-based competitor. And iPads may be eating up some Mac sales, but Apple's bottom line is stronger than ever.

"True innovative spirit is much more often found in smaller companies and startups rather than old-school behemoths of yesteryear. After all, if you don't have much to lose, you tend to make many more all-in bets. But, as Kodak has shown, if all you do is play it safe, the cost just to stay in the game will whittle you down until you've got nothing left."

9 comments:

Stephen said...

When I was growing up, "the Kodak" was synonymous with "the camera." Ordinary folk looked no further. (Looking back at the photos we snapped then, I'd say we were easily pleased, but nevermind.)

But the thinking you describe here is something we all might need to consider. I started out pricing my ebook rather high, because I didn't want it to undermine hard copy sales. Someone convinced me to think of them separately and drop the price way down. I still wish the printed copies sold better, but the ebook is now doing rather well. And that is good.

Shawn Stjean said...

Lexi:
As I personally know several current and former employees, some of them patent-holders, of Kodak (it's not defunct) in Rochester, NY, I'm in a position to present a brief counterpoint to your post. Your title "Lessons" and scattered words like "progress" and "innovate" imply that Kodak has somehow been proven wrong.

They are not the giant corporation they once were, but commercial success can be defined in several ways.

Even now, there's a fierce debate in Hollywood over whether film or digital is better. Digital will "win," sure--make more money--but only because Americans are conditioned to favor style over substance (Harley Davidson) and cheap/quick/easy over quality (McDonalds).

You haven't done more than imply what's to be learned by big publishers here. But just as film will continue to be the medium of choice for pro artists (versus consumers,) I imagine the big booksellers will begin to consciously define and promote themselves more and more by the consistent and historic quality of their products--such as it is.

I'm expanding ideas about the future of publishing on my own blog in articles coming soon.

rodgriff said...

I seem to recall that the French called a camera a kodak when I was there as a kid. Times change.
I'm sure your parallels with the book trade are a fair comment. It's not just ebooks that are a disruptive technology, digital printing has as many possibilities, there is surely no law of physics that says that litho will always be cheaper. There is bound to come a point where POD is as cheap as mass runs. once that happens the whole warehouse, distribution system comes down like a house of cards. It wasn't long ago that hot lead and typesetting was the order of the day.

Lexi said...

Stephen, I too was advised to lower the ebook price of my first book, after which sales took off and I made considerably more money. After all, at point of sale, ebooks cost nothing to produce.

Shawn, can you be serious when you say, "I imagine the big booksellers will begin to consciously define and promote themselves more and more by the consistent and historic quality of their products"? Random House handed out bonuses all round (except to their authors, naturally) because of the bumper year they enjoyed after signing EL James. I don't think the quality of 50 Shades mattered to them in the slightest.

Rod, I'm surprised litho is still cheaper than POD, when you add the returns system to the distribution and storage. Perhaps cheaper book espresso machines would be the answer.

Shawn Stjean said...

Lexi, pointing to an exception and drawing conclusions from it is what we call an inductive leap.

I didn't say they _had_ defined themselves by quality of authorship, anyway--only that they _will_, whether they have it or not. How else would you--or any author/self-publisher, for that matter, define yourself in a radically competitive market, against any other? If you can't say you're better, what do you have? As things tighten up (more supply means relaxed demand) everyone will have to play their own version of the quality card: "Film has NO resolution issues! vs. Digital is more portable!" "Random House has authors you KNOW and TRUST! versus "I'm (Lexi, Shawn, or some new guy you never heard of) better, gimme a try!"

Lexi said...

Of course publishers could make quality their selling point. It would be a radical departure from their business methods of the last few decades, though. Anyone who's been on television can get a book contract, while many good writers can't. And Penguin and Simon & Schuster have just bought up vanity presses; the cynicism takes one's breath away.

Also, I can't tell you who published the last book I read. I can tell you the author, no problem. This won't help publishers establish a reputation that will lead to sales.

quantum said...

I seem to recall that Kodak and Ilford dominated the photographic film market. When automatic cameras came in with infra-red range finding and focussing, the Japanese dominated the cheaper end of the camera market. Now that digital cameras dominate the popular market the need for film has largely gone, hence the demise of Kodak. Japanese cameras still rank highly though!

Any company is in business to make money and it is the big boys who have the resources to invest in research. Small companies tend to have a single idea and capture a niche in the market. If they make good they grow and start to invest in research. If Kodak really had patents on digital cameras and failed to exploit them then there were likely problems with the management!

I have to say that when I see e-books priced higher than the paper version then I walk away. No-one likes being ripped off. Sometimes I also find that American digital books are not available in the UK ... apparently US publishers have problems with European VAT rules.Though this is rapidly changing now.

I was in the Hereford Cathedral chain library recently and was fascinated to see that all the priceless manuscripts are being converted to digital to make access easier for scholars.

Any publisher fighting digital is doomed .... Though there will always be a (small) market for paper books but they will increasingly become collectors items IMHO LOL

Lexi said...

I think the tendency of management when you control most of the market is to get sluggish and smug - publishers certainly did pre-Amazon - which makes you vulnerable to innovation.

I admit to preferring print books myself. Though you can't beat the convenience of digital, I'll always want my favourite books in print.

You made me look up the Chained Library and take a virtual tour here: http://bit.ly/10bFTvh. Fascinating. I imagine it is just the text they are converting to digital without the illuminations.

quantum said...

Lexi,I think they photograph complete pages and then create a PDF from the images. If editable text is needed then the PDF can be run through an OCR (optical character recognition) program such as FineReader

Thanks for the link. The virtual tours are very impressive!