Digital-Photo Era Changes Industry

By BEN DOBBIN, AP Business Writer

ROCHESTER, N.Y. – Jesse Eisenberg came within a technological whisker of losing all her honeymoon snapshots. The 31-year-old lawyer’s digital images, stored on an online photography site, vanished while she was in the hospital this winter having her first child. She had given up all hope of retrieving them when they suddenly reappeared on her computer more than a month later.

“I can’t believe we got them back!” she exclaimed. “Oh my God, I’m going to be printing all day today.”

It’s a refrain that sets the photo industry’s heart racing.

As the digital revolution sidelines film, the photo industry is having to rely more heavily on high-margin services and supplies – inks, chemicals, paper – that go into making prints.

Yet the picture is not quite as it seems.

While there’s no hint of a falloff in the desire of Americans to freeze-frame the world around them, the overall number of images converted into prints has been slipping since the dawn of the 21st century.

The drop-off coincided with the lightning transition to a world without film. A few years ago, there wasn’t a framework in place to help digital shutterbugs print easily or cheaply.

Digital cameras are now in about 43 million homes in America, and that 40 percent penetration could reach 70 percent by 2007. The more mainstream they become, some analysts argue, the more likely that old printing habits will re-establish themselves.

“Everybody treasures memories, and what makes memories more vivid than a photograph, a print?” said Ulysses Yannas of Buckman, Buckman & Reid in New York. That impulse, he thinks, “will not fade, it’s human nature.”

Bolstering Yannas’ belief is a recent frenzy of acquisitions of online photo startups, which are projected to churn out 700 million prints this year, up from 400 million in 2004.

Others dismiss the notion of shoe boxes filling up to the brim again as wishful thinking.

“The pie isn’t necessarily going to get any bigger,” said Frank Baillargeon, an industry consultant in Eagle, Idaho. “But the pie is going to be sliced up in many, many different ways.

“In the digital era, you can see your pictures immediately, share them instantaneously, store them in a variety of arguably safe ways and print them selectively. My children’s generation is so comfortable with technology that the need to just have a print in your hand or in a shoe box doesn’t sound like a very compelling proposition.”

Manufacturers like Eastman Kodak Co., however, think the meteoric rise of camera phones could turn the lucrative print business into a growth market again, possibly within two years.

Aside from rushing higher-resolution cameras, speedier printers, fancier software and all-purpose kiosks into the marketplace, they’re employing all their marketing tricks to mold consumer habits and transform electronically stored images into prints of all varieties.

Their campaigns run from scaremongering about the perils of letting pictures languish on computers that might crash to behavior-reinforcing TV ads by Rochester-based Kodak in which new digital patrons shout out “Where are my pictures?”

In the United States, prints ordered from retailers and Web sites or made at home fell from a peak of 30.3 billion in 2000 to 27.4 billion in 2004 and could dip to 25.9 billion this year, according to Photo Marketing Association International, a trade group in Jackson, Mich.

Propelled by price wars among retailers led by Wal-Mart Stores Inc. and Costco Inc. and online upstarts like Snapfish and, prints from digital cameras could hit 7.7 billion this year, up from 400 million in 2000, and outnumber prints from film cameras by 2007.

And while an estimated 100 billion images are snapped in America each year – of which about a quarter are turned into prints – that could skyrocket above 1 trillion as camera phones not only proliferate but rapidly improve in quality.

“You’ve got the mass market going digital now and they care about prints more than ever before,” said Raj Kapoor, co-founder of Snapfish, a 13-million-member online pioneer just snapped up by Hewlett-Packard Co., which dominates the ink jet photo-printer market.

Most digital prints are still made at home – 61 percent last year compared with 90 percent in 2000. But online photo services have been whittled down of late to a handful of big players (in the past week, UOL bought PhotoSite for $10 million and Ofoto was renamed Kodak EasyShare Gallery) and retailers look likely to re-emerge soon as the kings of printing – their digital orders tripled to 1.6 billion last year.

While electronic storage “is a great way” to share and save images, consumers need to be aware of the potential pitfalls, cautioned Walter Haug, a marketing manager at Fuji Photo Film Co.

“Hard drives can crash, people sometimes misplace their CDs, media cards can become vulnerable,” Haug said. “If you’re relying strictly on digital methods, you may end up with a problem.”

In 2003, a computer virus wiped out all 350 photos of Eisenberg’s three-week honeymoon in Africa and the Maldives. Luckily, the New York City woman had uploaded them onto Snapfish.

But misfortune struck again in January.

Snapfish issued dire warnings that Eisenberg’s pictures would be deleted if she didn’t fulfill her minimum obligation – order one 19-cent print a year. Instead of taking quick action, she spent weeks creating a honeymoon album. She was just about to order one when she went into labor.

By the time Eisenberg returned home, the photos were gone – she thought for good.

But a call to Snapfish in February turned up her treasured collection. Snapfish, it turns out, keeps deleted files for an extra month or so.

A grateful Eisenberg’s advice to all: “Print early and often.”

sourceAP Associated Press