Kodak is wading into the digital world and placing a big bet – and its name – on cryptocurrency, an idea that now seems like less of a sure bet than it did just a few weeks ago.
At CES 2018 in early January, Kodak announced a digital currency called KodakCoin, billed as “a photo-centric cryptocurrency to empower photographers and agencies to take greater control in image rights management,” that blockchain technology to create inviolable ownership records.
The announcement at CES 2018 led to a 200% rise in Kodak stock. “This is not a dog food company that’s creating a currency,” Kodak CEO Jeff Clarke commented. “This is a real solution around digital rights management that Kodak has been involved in for many years.”
The idea is to let photographers can upload their images to a KodakOne platform, generate a blockchain-based license for each image, and use web-crawling software to troll the internet looking for copyright violations. In addition, photographers can be paid in KodakCoins instead of cash.
The 130-year old company has teamed with UK-based WENN Media Group to carry out the initial coin offering (ICO). Kodak also plans to install rows of Bitcoin mining rigs—called the Kodak KashMiner—at its corporate headquarters in Rochester, New York that lets users generate their own cryptocurrency with customers paying up-front to rent them.
“For many in the tech industry, ‘blockchain’ and ‘cryptocurrency’ are hot buzzwords, but for photographers who’ve long struggled to assert control over their work and how it’s used, these buzzwords are the keys to solving what felt like an unsolvable problem,” stated Clarke. “Kodak has always sought to democratize photography and make licensing fair to artists. These technologies give the photography community an innovative and easy way to do just that.”
The New York Times is skeptical. “First, despite the name, KodakCoin is not actually a Kodak project. The company behind the offering, WENN Digital, is a California-based affiliate of a British photo agency that specializes in paparazzi photo licensing. Under their licensing agreement, Kodak will not receive any direct revenue from the public offering. It will receive a minority stake in WENN Digital, 3 percent of all KodakCoins issued and a royalty on future revenue.”
Cameron Chell, a lead adviser to the KodakCoin project, was a motivational speaker who once opened for Tony Robbins, then re-imagined himself as a blockchain expert.
Clarke spoke of KodakCoin as a digital currency trying to “democratize photography and make licensing fair to artists,” but The Times points out the coins “will be available only to so-called accredited investors in the United States. An accredited investor is defined as a person with a net worth of $1 million or more, or an annual income above $200,000.”
And in a nascent market, cashing in or redeeming digital coins may prove difficult and no businesses have yet signed on to accept them.
As for the patented KashMiners, they’re actually a rebranded version of a current Bitcoin-mining machine that can be bought for less than the rental cost. The KashMiner operation will be run by Spotlite and Halston Mikail told the BBC, “Bitcoin could be a bubble. But the blockchain industry is not a bubble. It’s a solid platform built on mathematics and it will survive.”
David Gerard, author of Attack of the 50ft Blockchain, is skeptical of the whole endeavor. “Storing the information in a blockchain doesn’t protect your copyright any more than copyright law already does. Notice how they’re marketing it: they state a problem, then say the blockchain can solve it. But there’s no mechanism by which the blockchain could do that. This doesn’t do anything that signing up for Shutterstock or Getty Images wouldn’t.”
So is Bloomberg. “Kodak wants to run a web crawler and a central database of photographs. You don’t need to do that on the blockchain. It also wants to run a marketplace to match buyers and sellers of photographs. Again you don’t need to do that on the blockchain. You certainly don’t need your own currency to do that; lots of markets — the stock market, the supermarket, the existing market for photographic licensing — run on dollars, and what is convenient about dollars is that if you get dollars for licensing your photographs you can spend them at the supermarket.
Fortune weighs in, “it’s hard to say exactly what will happen. But analysis of the new offerings and their context suggests that Kodak could drive value with them. The business just has to remember that “first announcer” of a new platform doesn’t necessarily get first-mover advantages and network effects. Those usually go to an early player with the highest-quality offerings.”
Kodak held on to its film heritage too long, which in large part led to it filing for bankruptcy protection in 2012. The aggressive move in crypotcurrency is apparently an attempt to not repeat that mistake.