Don't Protect Your Property

It all started in 1885.  Grover Cleveland was president of the United States when George Eastman introduced roll film, the invention that paved the way for the development of the motion picture. The film business was such a good business, in fact, that Eastman's company, Kodak, went on to form an entirely new company whose sole purpose was to manufacture the chemicals needed to develop their film. In 1936, Kodak went on to introduce 35mm film and life was good...

But then in 1975, the Kodak did something horrible: they invented the digital camera.  You heard me right, Kodak invented the digital camera in the 1970s.  This was not good.  Fearing their new invention would eat away at film and chemical sales, Kodak worked to suppress the new technology.

Kodak made the biggest mistake possible.

As Zig Ziegler said, "people don't buy drills, they buy holes" and Kodak ignored the hole to protect the drill. Instead of building a business around why people use film, they set out to protect the film itself. No company can suppress an advancement in technology, and certainly not for such a selfish reason as to preserve the status quo to maintain sales of one piece of intellectual property.

And in 1999 it all started to unravel. Just as digital photography was starting to gain momentum, Kodak's stock traded at about $80. It has been a steady decline since and now their stock rarely goes beyond between $4 - $5 a share.

The massive loss of money notwithstanding, Kodak has been forced to lay off thousands of workers to stay in business.  All because they focused on what they were selling at the expense of why people were buying it.  Imagine if Kodak embraced the reason the film existed and let go of the film.  They would be THE pioneer in digital photography.

To paraphrase Seth Godin, the goal is not to find customers for your products, it's to make products for your customers.

Sadly, other industries were too busy protecting their drills while ignoring the holes to notice what happened to Kodak. The music industry was too busy trying to protect dvds and an album culture as the world around them moved to an mp3, song culture. They tried to suppress the spread of mp3s by running around suing 13 year olds. Even my own publisher, Penguin Books, which is now living in a digital book world, refused to let me give away my book on Kindle for free for a week for fear that it would, and I quote, "eat away at hard cover sales." People don't all want a paper-bound book, they want the ideas contained within that book.

Companies obsessed with protecting their intellectual property forget that people are actually buying the application of their intellectual property, why the product exists.  The ones that understand this are the ones that find new and different ways to help people get that application they want regardless the form the intellectual property takes.  Call it open source, if you want, the companies who embrace the philosophy are the leaders and the innovators.  Kodak, publishing and the music industry...they are the dinosaurs.   

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Comments

[Account Deleted]

Excellent article Simon, According to me, The greatest danger in the forfeiture of intellectual property is that the truly innovative people with great ideas are not valued..
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[Nyc Web Developers]

If you have a wireless network in your house and don't protect it, you could be doing just that. As they come out of the box

[ray ban]

Well, I guess they did realize it, but they certainly didn't act on it. Why else would they let Netflix run away with their business.

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[iPhone Application Developers]

Now, I am definitely going to save this to my own files, just in case;) Thank you, thank you, thank you!

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Excellent points, Simon. Blockbuster is (or was) a good example too. They've been protecting tapes and discs for years, when they should have realized that people buy movies. Well, I guess they did realize it, but they certainly didn't act on it. Why else would they let Netflix run away with their business.

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[D. Reed]

For those who actually own intellectual property, the format in which consumers receive it really isn't the same thing as telling them to not protect their property.

What do you suggest, all music, movies, art, books, technology and other intellectual property just be given away for free? That won't work.

Even with your book, you only wanted to give it away for 1 week. Then what? What if I copied that book, removed your name, put my name on it and sold it as my own?

See the problem?

Piracy is more complex than this.

Just as I'm sure you do not speak for free at all of your events, those who create can not be expected to simply give their art away, as it often costs money to create that art. And most of all, everyone has to eat.

And while there have been some success stories, such as Nine Inch Nails and Radiohead giving their latest material away, allowing their fans to pay what they want, if at all, generally speaking this does not work on a grand scale, rather only as exceptions.

As a society we can't simply have everything for free simply because we don't want to pay for things. Where would that end?

The internet has conditioned people to get everything for free, from software to e-books to music to skin flicks. Pandora's box has been opened.

Kodak simply protected a format of delivery, not intellectual property itself. They did not sue everyone who created film.

While I don't have a solution, I know it is not what is suggested in this article. It is not that easy.

Since you mentioned that people buy holes and not drills, I will leave you with this question...

What do you do when someone steals your holes?

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[FactChecker]

I completely agree with companies that don't adapt, but there can be a downside , for instance many mp3's have crappy sound quality, video clips on youtube are so garbled and compressed, a dvd video looks like heaven compared to an HD video. Of course this isn't anti-technology it just creates a niche, similar to the CRT monitor which looks better than LCD or LCOS which is ending which was much cheaper and just as great as plasma by thousands of dollars.

The music industry however does not learn its lesson in fact, look at dvd-audio , its supposed to be copy protected which is true but it is a failure because its not widely adopted due to limiations, and the need to run analog outputs, embrace superior technology but don't try to "protect" all the time.

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I posted the article because I felt a good discussion about it was called for. As you will note at the intro, I cut out several paragraphs that I felt were over the top and not substantiated, and some images that were not originals and could not be sourced.

[Roy Jaleco]

Another great article, Simon!

[monica]

Good post Simon. I remember reading this quote when I was a very little girl, "if you love something set it free..." for some reason it stuck with me (dunno know why, probably puppy love or something)Whatever the case, I have learned that holding on tightly to something doesnt allow it to breathe, express or live.

BTW, I am so happy that I found you! Learning or re-learning "the why" is an important life lesson.

[Emily Lutzker]

Great post, Simon! What you've touched on falls into a much bigger discussion surrounding intellectual property and the products produced from it. Kodak's downfall is that they forgot their "why" (to use your term) and focused on the "what." The greatest danger in the forfeiture of intellectual property is that the truly innovative people with great ideas are not valued, encouraged, or rewarded for their independent thinking. Great innovative ideas should be protected -- but maybe we need to call it something different than "property" in the future. I don't have any suggestions, but what I do know is that the stuff we humans dare to dream and make should only be viewed as a real commodity and treasure and treated as such.

[Ole Kassow]

Excellent points, Simon. Blockbuster is (or was) a good example too. They've been protecting tapes and discs for years, when they should have realized that people buy movies. Well, I guess they did realize it, but they certainly didn't act on it. Why else would they let Netflix run away with their business.

Back to Kodak, who may be starting to finally grasp it. I recently bought a Kodak Zi8 and it has literally doubled the amount of video footage in our family tenfold. Imagine - they could have done that ten or twenty years ago.

By the way, "unprotecting" your intellectual property is also relevant when it comes to your employees. I was struck by the similarity in headlines of a post I wrote about a year ago: "Don’t protect your intellectual property" http://olekassow.com/2009/08/25/dont-protect-your-intellectual-property/. There's no point in holding onto your diamonds :-)