Signage is displayed outside the Eastman Kodak Co. film production labs in Rochester, New York, U.S., on Friday, March 31, 2017. Photographer: Luke Sharrett/Bloomberg
It was perhaps the weirdest of Kodak moments.
After attaching itself to the new blockchain fad, Eastman Kodak Co. saw its shares jump 200 percent, with volume up 22,000 percent. Kodak had joined the likes of Long Island Iced Tea Corp., UBI Blockchain Internet and Rich Cigars Inc. in announcing its foray into the burgeoning technology and being rewarded with a stock spike.
Suddenly, the 129-year-old company is a blockchain baby. It could use a boost. When photos went digital, Kodak tried — too late — to catch up, by making everything from digital cameras to digital photo frames. Then, after emerging from bankruptcy in 2013, it turned to business printing services — and lost $25 million in the last 12 months. Revenue continues to decline.
Now it’s embracing a digital ledger technology, first developed to track bitcoin transactions, that’s become the current buzzword. This week, Kodak announced it’s working with a company that promotes paparazzi photos to offer a blockchain-based service that would let photographers get paid whenever their images are being used.
“Kodak has always been about making things easy for people,” Chief Executive Officer Jeff Clarke said in a phone interview. “George Eastman: push one button and we do the rest. Blockchain lets us do this.”
Clarke is a long-time technologist, with executive stints at CA Inc., Compaq, Hewlett-Packard and Red Hat Inc. He splits his time between Silicon Valley and company headquarters in Rochester, New York, and he’s attempting to imbue Kodak’s hometown with a little more of that tech-industry nimbleness. “We’ve been working on this for 90 days,” Clarke said. “And we’ll have this up and running in the next few weeks.”
Clarke said Kodak’s partner, London-based photography agency WENN Digital, brings with it 6,000 photographers, all of whom will begin to use the KodakONE online platform with a digital currency called KodakCoin. Users are supposed to be able to register their work on KodakONE and get automatic licensing payments and tracking to make sure their images aren’t being used online without their permission, all using blockchain technology.
KodakCoins, which will be the tokens used on the platform, are being offered Jan. 31 in an initial coin offering under a Securities and Exchange Commission rule called Regulation D 506(c). That means they’re available only to accredited investors in the U.S., U.K., Canada and a handful of other countries.
“Kodak is really smart about how they’re doing this,” said Darren Marble, CEO of Santa Monica-based CrowdfundX, which has helped structure KodakCoin and dozens of similar offerings. “Kodak is not a startup. This is not an idea. This is differentiated from any other cryptocurrency.”
Not everyone is buying it. “It looks like a marketing play to reinvent Kodak and its business model,” Charlie Hayter, CEO of CryptoCompare, which monitors digital currencies. But he said it’s not as strange as when Long Island Iced Tea decided last month to change its name to Long Blockchain Corp., sending its shares up almost fourfold.
Kodak is betting that the blockchain will succeed where other technology has failed in the internet age by preventing piracy of copyrighted images.
“The cryptoeconomy, and KodakCoin, is giving the idea of building value into creative assets another go,” Lex Sokolin, global director of fintech strategy at Autonomous Research. “I don’t see a compelling reason why Kodak would be the technical winner, other than the branding halo. But why not!”
Kodak enters a crowded field. Photochain — specifically focused on helping content producers get paid for stock photos — is planning its ICO pre-sale for Jan. 25. Po.et has already raised $10 million in a token sale, and is working with publishers. Copytrack is raising money right now. Stop the Fakes is readying an ICO for Jan. 20.
While ICOs are becoming more common — the website CoinSchedule counted 235 last year — Kodak is a rarity because it’s a household name raising money in an unconventional fashion. There’s some evidence that a recognizable brand could have a leg up in an ICO. Kin, the coin issued by popular messaging service Kik Interactive, raised $100 million last fall, and now has a $499 million market capitalization, according to CoinMarketCap.
“As new waves of crypto holders enter, every ICO by an established but mediocre business is a test of the market’s enthusiasm for nominal credibility,” said Galen Moore, CEO of Token Report, which tracks coin offerings.
More brand-name ICOs could be on the way. Instant-messaging service Telegram is planning one. Helios & Matheson Analytics Inc. — the owner of movie subscription service MoviePass –- is considering one while it implements some blockchain technology.
“The public doesn’t understand that we’re on the verge of disrupting not only the way you go to movies, but the whole distribution of content,” MoviePass CEO Mitch Lowe said on Bloomberg TV this week. “Investing in blockchain is one of those things that people seem to consider as making our business valuable.”
The question is whether investors will take these moves seriously or begin to see them as a gimmick.
“It’s extremely rare that the introduction of a free-floating, publicly-traded token actually improves the business model or user experience for one of these companies,” Kyle Samani, managing partner at crypto hedge fund Multicoin Capital, said in an email. It’s “even more rare that the token dynamics are such that value will actually accrue to the token itself, even if the company or platform succeeds,” he said.
Kodak’s Clarke sees blockchain and KodakCoin as a novel approach that addresses a real need: getting photographers paid.
“They’ve been disintermediated by digital,” he said. “KodakONE automates a poorly-administered, manual process that can’t seem to tell when photographer’s images are used — we’re trying to monetize their art.”
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