Do You Know What Business You’re In?
What the Publishing Industry Can Learn From Kodak
Part 1 of 3
Last month one of America’s most venerable and recognizable companies, Eastman Kodak Co., filed for bankruptcy after a long, steady decline in revenue. I’ve been reading various business analysts’ explanations and deconstructions of what went wrong, and all I keep thinking is, holy cow, I hope everyone in publishing is paying attention.
Writers, agents and publishers can glean lessons from the mistakes Kodak made. I’m not a business analyst, but I’ve managed to put together a list of points I think we should keep in mind, if we don’t want to go the way of Kodak. (This is the first of three posts on the topic.) Today’s focus: Knowing our business.
Herewith, the first 3 things I think we can learn from Kodak.
1. We need to correctly identify the business we’re in.
Analysts seem to agree that Kodak operated as if they perceived themselves as being in the film business, long after film had been pushed out of the way in favor of digital. Even as they were rolling out new digital products, they marketed them as ways to support their film business. They continued on the idea that consumers wanted physical photos, as if “physical photos” were the core of their business.
In fact, Kodak was really in the business of “moments.” The Kodak Moment. Had they embraced this larger truth, they would have been asking themselves “How can we continue to help people capture and share their Kodak moments?” But instead they were asking “How can we get people to continue printing out their photos using our products?”
Publishers, agents and authors need to start from this very important truth: We are not in the “book” business. We are in the business of storytelling. This encompasses entertainment, information, ideas, creativity, inspiration, and intellectual exploration. It also comprises a social element—the relationship between reader and writer. We are in the business of fostering this relationship.
As we figure out ways to move into the future, we will only be successful if we stay focused on remembering exactly what our business is.
2. We can’t be afraid of cannibalizing our own businesses in the short run to make progress in the long run.
This idea of cannibalizing is a popular one among the analysts covering Kodak’s demise. It means that in order to adapt to developing technologies and market conditions, companies often have to put out products that compete with their own existing products—and usually these new products won’t be as profitable.
Publishers are steeped in the “printed book business” and may be reluctant to step out and aggressively market digital products that will detract from their print business. But they must, if they are to innovate and stay ahead of the curve (or at least on it) rather than fall so far behind that they can’t recover.
Agents have the same problem. Spending time helping our clients develop products outside the purview of the traditional publishers clearly subtracts from the time we have to spend on selling to publishers. But many of us already realize that “selling to publishers” isn’t our core business, but connecting writers with readers is. So we are exploring ways to help our clients connect with their readership in all kinds of ways, both inside and outside the traditional publishing model. Yes, it cannibalizes our original business to an extent; but if we are to remain relevant, we have no choice.
3. We should find new ways to generate revenue while serving consumers’ wants and needs.
Part of Kodak’s enormous success for so many decades was the sheer profitability of selling film. There was an insatiable demand for it; everyone needed it; there was no substitute for film—if you wanted a picture, you either had to paint one or you needed film. Film had high profit margins and was seemingly as necessary to humans as air.
Until digital came along.
Kodak apparently kept trying to hang on to the profit model of film, long after it was impossible to maintain or resurrect. They never fully believed that there would have to be a whole new profit model.
These days, revenues and profit are the biggest struggle for anyone involved in publishing. We’re in a tug-of-war as consumers become less willing to plunk down fifteen bucks for a reading experience when so much is available free or very cheap.
We need to be asking ourselves, “What’s valuable to a reader? What are they willing to pay for? What are they NOT willing to pay for? What do they want that they’re not getting, and how can we figure out a way to provide it (for a price)?” We’re faced with the challenge of convincing readers that the value of a “book” lies in the experience, not in the ownership of a physical product.
What we can’t do is assume we’ll all be able to continue indefinitely making a profit from the old printed-book model with its advance-and-royalty structure and physical distribution to actual stores. It’s going to end, so we’d better be ready with alternatives.
Those are some opening thoughts that occurred to me as I’ve been reading about the Kodak debacle. Some questions for you:
- What business do you think we are in? If not “the book business,” then what?
- Is there any risk for writers of cannibalizing their own businesses as they seek to keep up with changing market requirements?
- What problems can you foresee for writers in developing new profit models, and what ideas do you have for possible solutions?