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Labs See Conversion of Photos to Digital as a Way Back to Profit

IRVINE, Calif. -- Photo labs have seen their future, and it's in the past.

Labs -- still struggling from the free fall of film processing -- have a new and growing source of income: scanning old pictures and converting them to digital images.

Mitch Goldstone runs 30 Minute Photos here in Southern California. He says his business has increased 400% in the last year thanks to a super-high-speed Kodak scanner he discovered.

Kodak sells the scanner mostly to government agencies to digitize checks and tax returns. Goldstone adapted it to zip through large stacks of pictures in seconds.

"Think of the thousands of pictures sitting in closets," he says. "There's an amazing opportunity to digitize them for people at a low cost."

Unlike traditional flat-bed scanners, which can take several minutes to scan one photo, the Kodak i660 scanner has a slot to insert groups of photos. Goldstone says his scanner can copy up to 750 photos in 5 minutes. He charges a flat $49.95 for the service, compared with the $1 per photo-scan charged by many competitors.

Goldstone says he scans 100,000 photos a day. Most orders come from his website.

Film photo-finishing sales fell to $2.8 billion in 2006, from $6 billion in 2000. The industry sees high-speed scanning as a way to generate new dollars.

"Until recently, this hasn't been feasible, because it's so painfully slow to scan pictures," says Gary Pageau, an editorial executive at the Photo Marketing Association. "Now, there's an efficient way to do it. For the retailer, the scans lead to additional products, like more prints, calendars and photo books."

Kodak's scanner was never intended for digital photography. But other photo labs jumped aboard after Goldstone began reporting his success at digitizing old snapshots stuffed in shoeboxes and selling customers new prints and photo books.

Goldstone's scanner cost $40,000. Some 150 photo retailers found a less expensive, and slower, $800 Kodak scanner. Instead of 750 pictures in 5 minutes like Goldstone's unit, the Kodak i1220 can do 150 at a time.

Kodak, also still struggling to recover from the decline of film, is showcasing the i1220 scanner for the first time at the Photo Marketing Association trade show in Las Vegas this week.

However, the scanner now has a heftier price tag: $3,000. Kodak says the scanners are now bundled with software and functionality aimed at self-service customers. The scanner can still be purchased at the lower price, without the software, Kodak says.

"When we first introduced the scanner seven years ago, I knew it was capable of much more, but the digital conversion hadn't happened yet," Kodak Vice President Brad Kruchten says. "People didn't appreciate the need to digitize their earlier photos, and have everything in one place. Now's the right time."

Gary Rodgers, who runs the In a Flash Camera shop in Chester, N.J., says adding the $800 i1220 scanner paid for itself within a week. "I'm seeing customers bringing me four to five hundred pictures at a time," he says.


Worried about losing your photos?

Entrusting precious photos to the mail is a leap of faith for many of Mitch Goldstone's customers.

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