Eastman Kodak Company (NYSE:EK) which lost nearly $1 billion for the quarter ended Dec ’08 and has seen it’s stock plummet over 75% in the past year, recently sent an email telling its customers that if you have been hosting pictures with Kodak Gallery, you are now  going to have to pay up to retain those pictures or lose them (hope you made backups). This is the recent email from Kodak:

We wanted to make you aware that we have modified our Terms of Service: To more effectively serve our Gallery members, we have adjusted our photo-storage policy to align with storage usage.

How this affects you.

Once you begin storing photos at the Gallery, you must make the following purchases to continue such storage:

– Members with photo storage of 2 gigabytes (GB) or less must make annual minimum purchases totaling at least $4.99.

– Members with photo storage exceeding 2GB must make annual minimum purchases totaling at least $19.99.

Failure to meet this requirement may result in your photos being deleted from the Gallery.

The recession has hit Kodak (NYSE:EK) quite hard as is clearly apparent from their stock price for the prior 12 months.

My sympathies to their shareholders, employees and customers alike but unless this is a last ditch effort, I am not sure what they aim to achieve with this move. Those Kodak Gallery users that stay on will do so only because they are coerced into it–pay up or lose the pictures. Those that have backups will probably ditch Kodak with a bad taste in their mouth and unlikely to return. I am not sure how much money they intend to salvage from this move, but it seems like a downward spiral for Kodak. Must be really desperate times.