Do You Know What Business You’re In?

Rachelle Gardner

Blogger: Rachelle Gardner

What Publishing 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. It’s crucial 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.

Kodak filmIn 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 exactly what our business is.

2. Don’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. Find new ways to generate revenue by 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 that for many readers, the value of a “book” lies not just in the experience, but also in the ownership of a physical product.

What we can’t do is assume we’ll all be able to continue 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 Kodak. Some questions for you:

• What business do you think we’re 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?

Part 2: Do You Know Your Customer?

Part 3: Are We Ready For Change?

Sources: Forbes (here and here), CBS News, Information Week, Tech Crunch, and Mashable.

Visit Rachelle’s personal blog here.

44 Responses

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  1. […] through Wednesday, I’m blogging over at Books & Such. Click through to read the whole […]

  2. Beth K. Vogt says:

    Wow, Rachelle. Lots to digest here. I was so struck by Point #1 (Identifying the business we’re in), I can’t even tackle points #2 and #3. You’re point is well-taken: We are not in the book business, we are in the business of storytelling.

  3. You’re exploring the right questions.
    I’d like to add that readers want more than entertainment, they want an experience and that is not defined by fiction or nonfiction.
    I’d also like to see your thoughts on a new profit model that isn’t defined by the bottom line of a balance sheet.
    I’m fascinated to see the next posts.

  4. Jillian Kent says:

    Couldn’t sleep tonight and now after reading this it may take a while longer. Great proactive post, Rachelle. I’ve never read about Kodak’s demise, and holy cow is right! We are in the business of storytelling, a form of entertainment for all ages. But all ages have to be considered because they like to read in different ways.

    As far as the cannibalizing goes, as I understand this, it would make sense for publishers to possibly sell both the printed book and the digital book together, you get both for one price.

    Since my first novel just came out last year I’ve wondered what my future in publishing might look like with all the changes that keep on coming. There are already smaller advances for many authors, book signings will not be as frequent or worthwhile. We will have to tweak our attitudes and consider what the business of storytelling is all about in this new era. Book signings may be replaced with meeting readers on Skype, which is already happening. So for instance, when there is an online contest on a blog it may be that instead of getting a book sent out to the winner, they get a digital copy and Skype time for the winner and their friends. My 2:39am thoughts. 🙂

  5. Daniel Davis says:

    As someone trying to break into the writing business, this article makes me profoundly sad. The concept that, like film, the companies that make the nigh-immortal printed word will slowly fade away as a perceived “better” product pushes it away.
    Since I was a small child holding my first Dr. Seuss book in my hand, up to now when I gaze at my collection of rare first printings, the dream of being a writer has always been in my mind. Not just someone who puts things down on a screen, but a true, printed writer- a writer of a book that can be read, pored over, enjoyed for decades or even hundreds of years. I feel that the rush to “digitize” everything will have lasting, profound consequences down the road. Where will a digital book be in a hundred years? Two hundred years?
    The permanence of paper- something that you can just open to any page, regardless of battery life or format or whatever fruit-named company made it… that permanence is being washed away.
    Today I took out a copy of Rudyard Kipling’s Kim and read a part of it to my son. It’s as it was written back then- not edited, chopped up, or changed in any way. And decades down the road, that book will still be there for his children to read.
    Where are our treasures going?

  6. Amanda Dykes says:

    “Is there any risk for writers of cannibalizing their own businesses as they seek to keep up with changing market requirements?”

    I think it helps to view it as a transition period, working to remain relevant and reachable in the evolving storytelling business, rather than viewing it as competing with our own products. I’m beginning to view this print vs. digital era as somewhate of a Venn diagram, where most of our marketing actions must dwell in the happy overlap area where the two worlds “collide,” but some marketing actions will inevitably (and should inevitably?) lie in each of the the far reaches of the solitary circles, to be either phased out or embraced fully as the industry continues to change. Risk? Sure, but an exhilarating (though sometimes frightening) time, to be sure.

  7. Rick Barry says:

    A somewhat similar lesson comes from Henry Ford. When he introduced his Model T automobile, it was state-of-the-art. Ford led the industry in auto sales. But Ford was a myopic businessman and clung to his “Tin Lizzie” design for years while other auto makers constantly improved on speed, reliability and comfort. Ford was fixated on the Model T business, while other manufacturers were in the modern transportation business, and they soon left Henry in the dust and trying to catch up.

    Thanks for a fine post, Rachelle.

  8. “We are in the business of storytelling.” I love this. No matter where the industry takes us, there will always be storytellers.

  9. What a great analogy! I know the book industry is compared to the music industry but I love this one even better.

  10. My opinion:

    1. Storytelling.

    2. Whatever media the story is printed on doesn’t cannibalize what writers do, which is tell stories. If we’re counting money instead then, yes, we may make less per book, but make up for it in bigger sales volume as the digital revolution puts a book reader within easy reach of anyone.

    3. I think publishers will try to take a larger slice of profit from writers. Since profit margins will be thinner, they may lean towards writers capable of delivering a steady stream of books. As a result, I think self-publishing will continue to boom (iAuthor by Apple has just been released), and don’t forget the big Gorilla wildcard: Amazon. Hopefully writers will benefit from the turf wars between the retail giant and the publishers.

    Great post, thank you,


  11. Otin says:

    I’m in the construction business, unfortunately. Maybe one day I can say that I’m in the book business.

  12. Sue Harrison says:

    I love the idea that we are in the business of selling our stories, Rachelle, that story-telling is at the heart of what we are and what we are doing. With our modern technologies, stories can be conveyed to readers in so many ways. What a joyful time to be a story-teller!

    I also believe that almost every one of my readers wants to be a part of a family. I’m learning new ways to let my family of readers know they are in my heart and in my mind as I write new stories. I’m doing this through my FB group as they help me plot my next novel, and through my blog as I share sunset photos taken from my front deck and in my new Wednesday ‘Your Pet’ posts. All these efforts say, ‘FAMILY!’ to a group of people who have given me the incredible gift of their time and attention.

    • Rachelle Gardner says:

      Sue Harrison » Sue, I love your idea that your readers want to be part of a family! How true this is. Terrific insight for all writers.

  13. Kodak isn’t the only one who got caught with their pants down on the film thing. When I took four rolls of film in for development last fall (I’d had ’em for a while) I was totally flabbergasted 1) by how hard it was to FIND someplace that developed film and 2) how very expensive film developing had become. I was forced out of film mode by lack of services and the ultra high cost of the end product. Yet my recourse is simply not to take pictures–I need time to research the digital photography realm and save up money for a digital camera (once I know the kind I want–I’m having problems giving up my wonderful 35mm SLR).

    There’s a direct parallel for me to the world of printed books. The printed novel, at an average of about $16 a pop, was unreachable for my budget. With digital publishing, I had to buy an e-reader, the equivalent of a digital camera and now I can access most books at more reasonable prices and can now buy more books.

    But even digital books are going to continue to change and evolve so I’ll have to stay on top of that too.

    Technology is wonderful and tiresome at the same time.

  14. As I seek out agents, I am dividing them into two camps first–those who are actively thinking about the digital possibilities for clients, and those who don’t.

    I think there is this whole other field in which we can grow and explore and create, and I think that writers who aren’t thinking about how the digital world has opened up what we can present to readers, then they will be at a disadvantage.

    Can you speak to whether publishing houses are actually changing with the new model? It is clear that some agents are embracing all the digitalization has to offer. It’s harder for me to see the signs of which publishing houses are thinking forward. (Although I have heard rumors of narrow language in contracts restricting writers from alternative publishing, even if it might boost sales to the traditionally published work…)

    In short–do you see that publishing houses are changing their ways? Or are they holding onto their film?

    Maybe I should wait until you get to post 2 and 3 to ask this question!

    Thanks for the thoughtful post!

  15. 1. What business do you think we’re in? If not “the book business,” then what?

    I agree we’re in the “story telling” business. Humans have been telling each other stories for as long as there’s been language.

    I think the key element for authors and readers is distribution. While publishers may have controlled the press for half a millennium, what that really boils down to is controlling distribution. Authors could still tell stories, but nobody could hear them unless one of the gatekeepers passed it through and put it into the distribution chain.

    The parallel with Kodak seems clear. When the only way to instantiate your image was on film, the film makers held the keys. If the only way to instantiate your story is through the publishing house that can put your story in the hands of readers, the publishers held the keys.

    Digital changes everything, but mostly it changes distribution. Now anybody with a story to tell has a means to deliver it to a global audience for the price of an internet connection.

    2. Is there any risk for writers of cannibalizing their own businesses as they seek to keep up with changing market requirements?

    If a writer’s business is story-telling, I’m not sure where the cannibalization happens. As a writer, I don’t care where/how people find my stories — ebook, paper, audio, podcast. It doesn’t matter. What matters is that they find them and enjoy them enough to share them with their friends. What box they buy it in doesn’t matter to me as long as they buy it.

    This idea of cannibalization that publishers have talked about for so long is a symptom that they still think they sell books and that “books” are interchangeable goods — as if the market for hardcovers is the same as the market for paperbacks is the same as the market for ebooks or audio.

    All publishers appear to be accomplishing is opening the market up for people who understand that people are not buying the box. They’re buying the contents. The smart money will make the same amount from that sale regardless of what package it comes in.

    I’m not discounting all those “you’ll have to pry the lovely pages out of my cold dead fingers” people. It’s not an either/or proposition. Print-on-Demand means people who just can’t live without that new book smell can still buy the hard copy and get their fix of glue and non-refreshable cellulose displays.

    Now, bookstore shelves are another endangered species but that’s another post, I think.

    3. What problems can you foresee for writers in developing new profit models, and what ideas do you have for possible solutions?

    I see two main problems.

    a. The existing models appear to be exhaustive. People deeply invested in the current paradigm have insufficient perspective to see new paths through the forest.

    b. Gaining traction for a new model takes time — perhaps years. That idea seems counter-intuitive in a marketplace that changes monthly. Any new model needs to be flexible enough to adapt/adopt to a rapidly changing market.

    So far, I think the best new ideas involve examining the friction points in the current market. In no particular order I see these as:

    – time to market. any story that takes more than six months from the time it’s done to the time somebody can read it is at a disadvantage.

    – pricing. any story that costs more in digital formats than the market is willing to support is doomed. Pricing an ebook at a substantial fraction of a physical book is going to meet significant market resistance. Perception is reality here and I think people see the ebook as “lower value.” Charging the same price is a problem.

    – ease of purchase. selling a book on my website is never going to be as easy as buying from a service that downloads to my device. finding ways to smooth this and make it less intrusive is a key element.

    – cost/benefit analysis. writers need to take a hard look at the path-to-audience and how much it costs vs what it might bring.

    I think we need people talking about new models of marketing and promotion, models that are not predicated on “mass market” or bookstore shelves. The digital chain opens new doors and social media provides new channels for communication. Niche markets of a few thousand readers give new life to midlist authors, but reaching those markets using the mass market models is exhausting, inefficient, and counterproductive.

    Models like “Big frog, small pond” and “A Thousand True Fans” have little traction but provide excellent starting points for authors, artists, musicians, and other creatives to develop their own brands and distribution channels. Understanding the differences between broadcast media and social media is one key component, I think. Too few people are paying attention to that in their push to out-shout the competition.

    That’s probably a subject for a different post.

  16. Rachelle Gardner says:

    Beth – yes, storytelling! Doesn’t that help to keep focused? I like it much better than “book business.”

  17. Rachelle Gardner says:

    Terri, you’re so right, readers want an experience. I did mention in the post that I think “storytelling” can be understood to encompass entertainment, information, ideas, creativity, inspiration, and intellectual exploration.

  18. Dennis says:

    Thanks for a great post. I think the answer to the first question is important in the process of freeing us from holding on to the current model for too long. The business of storytelling predates the published book, going back to the oral traditions by which things like history were passed down. We moved from the oral tradition to the physical book. Now the evolution of storytelling into modern forms should be embraced just as we embrace the book. You post is a reminder that we should prepare to follow the path of this evolution.

    Who do you think will eventually drive these changes (author, reader, agent, publisher)?

    • Rachelle Gardner says:

      Dennis » Great point, “business of storytelling predates the published book.” And to your question – technology is driving the changes, but currently authors are the ones jumping on the new models.

  19. Great post, and yes, we’re here to tell stories, regardless of how they are delivered, and it’s incumbent on all of us to figure out newer and better ways of reaching our readers. That’s the most important relationship.

  20. Rachelle Gardner says:

    Nathan, you’ve said a lot here – a whole post of your own! Thanks for the thoughts. It will take me some time to digest them. Great points about distribution, marketing, and the fact that “cannibalization” is only an issue if you think you’re in the “book” (or film) business.

  21. Debbie Moorhouse says:

    What will I pay for, as a reader? Editing. Correct spelling and grammar.

  22. Lisa Fender says:

    I agree with you, and what about the still millions out there that enjoy holding a book in their hands, instead of reading it on a kindle? I prefer a book, the physical book, reading from kindles bother my eyes and gives me headaches. I don’t think that it’s good for the eyes and I think in the long run all the young ones out there will find themselves with eye problems earlier than they would have normally. Sometime I think we screw ourselves with technology. I want my book to be available in both a physical copy and kindle.

  23. Yes! Yes! Yes!

    It’s not about books, it’s about stories. For booksellers to survive, they must become storysellers. For the existing publishing industry to survive, it must continue to pursue connecting people with stories. For writers to flourish, we need to begin loosening (not necessarily eradicating) this connection between story and dead-tree book.

    I have been thinking these thoughts for some time now, and you’ve put my thoughts into words. Thank you for that. Now please get out of my brain.

  24. ‘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.”

    This is why Books and Such will survive and thrive in the new era. One of the best single statements I’ve read on this in a while. It seems that agents and publishers are in a pickle: you need the relationships to make the deals, yet you’re increasingly becoming competitors. Only the strong survive?

  25. Being in the “book business,” sounds so left brained and regimented that one is in danger of losing the soul in the forward march to conduct everything in a businesslike manner. “Storytelling,” on the other hand, sounds creative and free – spiritual. Yes, there has always been, and always will be risk involved in creativity. And, risks are just what we try to minimize when we veer toward business.

    The good news is, reading is a behavior. Behaviors are addictive. While I favor the smell of a book and the actual, tactile experience of the turning of a page (and the underlining of a well-turned phrase), others are just as addicted to scrolling and clicking and reading an electronic screen.

    Perhaps the risk here is that the lion’s share of profit may go to the technology owners and providers rather than to the creator of the story.

  26. I’m struck by the fact that Kodak even had their “real business” embedded in a fabulous slogan — the “Kodak Moment” — but they didn’t listen to their own wisdom.

    If that’s not some sort of parable of the answer being right before one’s very own (very blind) eyes…

  27. Sorry about that.

    After I posted it, I thought “TL;DR”

    But it’s a complex issue and I was on my first cuppa so I wasn’t quite awake.

    Didn’t mean to hijack the thread. 🙂

  28. Carol Boley says:

    We are wise to “discern the times” and learn some hard lessons. We cannot hold too tightly to means and methods that worked in the past but may not be the most helpful now. The end result is what we must keep in mind- hearts touched,lives changed,God glorified-by our words. Our message is timeless, the method of delivery timely.Thank goodness we no longer put our clothes through a wringer washer to clean them!

  29. Film, movies, and books are all victims of new technology. In the past I was so limited with film. As an artist, I use my photos to paint from. Until I had a digital camera, it was hard to do that. I can take dozens of pictures without the worry of expense. Now I take photos with wanton abandon. Things are changing fast. The movie industry is going to suffer as well as the book industry. Who wants to go see and awful movie; pay too much, walk on sticky floors, listen to people cough and chatter, pay too much for snacks, and be let down by extreme mediocracy?
    I see publishing changing fast. Brick and mortar book stores as well as book printing are going to be things of the past. It’s a new century.

  30. Jenn Bailey says:

    Loved this post. There are always lessons to be learned when an innovative company like Kodak looses its way. I think you totally nailed it. They forgot what they actually sold – moments. I think what readers are looking for is that deeper experience. With technology they have been able to satisfy their need. There are Fan Fiction groups, Fan Art, blog posts that “cast” the movie of your favorite book as well as people forming “teams”for their preferred hero. Technology has given passionate readers a voice, a forum and an outlet. Writers are going to have to find a way to stay immersed in their stories and perhaps help guide and guard that deeper connection that fans are looking for.

  31. John says:

    This is exactly what I was thinking when I decided to self publish my book. My thought was: Why am I pursuing the “old” model of trying to find an agent and then hoping to get published. Why not just publish myself? Yes, it was much harder than I thought, and I think that might book would have been a bit better in the traditional publishing route. But now I can spend this year selling and marketing my book rather than begging an agent to take it. And, with the Kindle, publishing is even easier. (Be warned: formatting for the Kindle is not child’s play!)

  32. Diana says:

    This reminds me of an ancedote my marketing professor told in the 1970’s. A buggy-whip manufacturer saw the end of his business looming when the automobile became popular, and horse-drawn carriages began disappearing. Unlike other whip manufacturers, he was able to keep his business open and grow it. How? By defining his business as the production of flexible cables. If we define our business too narrowly, we will find ourselves out of work when technology changes.

  33. Diana says:

    This reminds me of an anecdote my marketing professor told in the 1970’s. A buggy-whip manufacturer saw the end of his business looming when the automobile became popular, and horse-drawn carriages began disappearing. Unlike other whip manufacturers, he was able to keep his business open and grow it. How? By defining his business as the production of flexible cables. If we define our business too narrowly, we will find ourselves out of work when technology changes.

  34. Robert Lynch says:

    There is a new generation out there that just doesn’t care about what many of us may still be hanging on to as important. The heft of a good book. The feel of quality paper. The satisfaction of pulling the pages open with our favorite bookmark. Everything in their lives is based on the new technologies. They (the new generation, as well as the technologies) are the future, and we had better get on board.
    As a writer hoping to get his first novel published soon, I have to force myself to consider that my desire to see my book in print may in fact be nothing more than my ego speaking. How I would love to hold that book. To place my first novel in the hands of my mother. To sign copies for my beta readers. I must remind myself that the bottom line is to make it available to as many readers as possible. If that means putting it on the 99-cent shelf on Amazon, then perhaps I’ll need to swallow my pride and go along for this new ride. It could be equally as exciting as the glamor of the traditional publishing route.
    Of course, finding an agent who believes in me and my work, and a publisher who is willing to take a chance with this unknown author would certainly be nice. But I guess that’s just my ego surfacing again.

  35. Ed DeCaria says:

    Rachelle: Terrific post, and an effective analogy. Ultimately, companies like Kodak who fail to adapt despite numerous structural advantages suffer from a failure of top leadership. But they also suffer in part from a failure within the walls of the company and its extensions into the partner ecosystem to effect and advocate change. One way or another, the INDUSTRY will adapt to provide what customers want. That is inevitable. But how the individual players adapt — publishers, writers, illustrators, editors, agents, scouts, reviewers, printers, merchants, etc. — is more interesting, because those players are most at risk of being completely (and quickly) replaced if they don’t.

    I’m really looking forward to reading your insights in parts 2 and 3.


    -Ed D.

  36. Mira says:

    Terrific post, Rachelle! I think this is the voice of leadership.

    I believe the first thing publishers need to do is change their perspective toward authors. Instead of seeing the author as an employee, they need to see the author as a client. If they do not change that perspective, they will not survive. They are quickly becoming optional and if they cling to the old way of viewing the author, they will lose their business.

    The good news is that changing that perspective alone will help direct them toward new models of service and delivery that will be effective.

  37. […] the publishing industry can learn from the decline of Eastman Kodak Co. Yesterday we started with the importance of knowing our business. Today – three more lessons from Kodak. What insight can we gain about knowing our […]

  38. […] agents, and writers can learn from the decline of the Kodak company. Monday we discussed knowing our business, and yesterday we looked at knowing our customer. Today let’s talk about dealing with change. […]

  39. […] Rachelle Gardner asks if you know what business you’re in, with good points about businesses like Kodak failing because they didn’t  respond to […]

  40. Excellent, Rachel! I heard a great podcast on “Planet Money” about how Sony is losing money on Katy Perry. Why? Because she has an old-school contract, one based on selling records. In new contracts, the record companies get a big piece of tour revenue and merchandising, where the real money is made.

  41. […] Do You Know What Business You’re In? by Rachelle Gardner. Cool post on questions authors, publishers, and agents should be asking themselves in these changing times. […]

  42. […] Gardner has looked at this from the perspective of the publishing industry. She writes: Film had high profit margins and was seemingly as necessary to humans as […]