[Adam Mossoff, guest-blogging, May 3, 2009 at 11:36pm] Trackbacks
The Sewing Machine Combination -- A Fountainhead of Innovation:

In this last of the purely historical posts, I'll discuss the success of the Sewing Machine Combination, not just in ending the Sewing Machine War but also in serving as a fountainhead for further innovation by its members.

Altough the Sewing Machine Combination was repeatedly attacked in court and in the popular press as a "grinding, pitiless monopoly" that engaged in "oppressive conduct," it served a vital commercial function beyond simply resolving the Sewing Machine War. Even more important, it freed the sewing machine manufacturers to get down to the business of making and selling sewing machines. This was especially true with respect to Singer, who found motivation for his business acumen in "the dimes, not the invention." Thus, he and his business partner, Edward Clark, were able to use the legal and commercial freedom secured to them by the Combination to create and to profit from several innovative marketing and business strategies.

First, Singer recognized very early on that the success of the sewing machine was predicated on his convincing the public that his new sewing machine was not merely a repeat of the past failures of prior inventors. He thus pioneered mass marketing and advertising; in essence, he was the nineteenth-century equivalent of Billy Mays and the "as seen on TV" approach to advertising. One historian has noted that, at that time, Singer's mass marketing techniques represented an entirely "new concept of selling." This entailed a concerted and sustained marketing campaign directed to bringing his sewing machine to the public's attention and to convincing them of its practical virtues. He traveled the country, giving free demonstrations at fairs, carnivals, and in rented halls. In addition to these free demonstrations, he performed renditions of Thomas Hood's Song of the Shirt, reminding his audiences of the toils from which seamstresses would be freed by his new invention.

But Singer also recognized that he had to do more than just sell the public on the practicality of his sewing machine, he also had to address the prejudice that women were incapable of working machinery, or, if they could, that it was improper and unwomanly for them to do so. Driven by his own pursuit of fortune, and thus setting aside his own personal bigotry, Singer hired women to demonstrate his sewing machine, as well as teach other women how to use it. One of I.M. Singer & Co.'s first employees was Augusta Eliza Brown, who was hired in 1852 for solely these purposes.

Demonstrations of the sewing machine by Ms. Eliza and other women not only disproved the widespread belief that women could not work machines, they also played an important role in Singer's new concept of splashy, eye-catching marketing. In 1852, Edward Clark wrote to a company agent that "we have got possession of a front window under our office [in Boston] at the moderate rent of one thousand dollars a year, and a nice little girl is operating a machine in it, to the great entertainment of the crowd."

In addition to his innovative marketing campaign, Singer and Clark also pioneered novel business practices to increase the company's sales and profits. A significant barrier to the widespread adoption and use of the Singer Sewing Machine was its price: It cost $125, which may not seem like much today, but in the 1850s, the average American family earned less than $500 per year. In response to this problem, Clark invented a new business method for selling their sewing machines: the installment-purchase program. The company's newspaper, the I.M. Singer & Co. Gazette, explained the purpose of Clark's rent-to-own sales program:

Why not rent a sewing machine to the housewife and apply the rental fee to the purchase price of the machine? Her husband cannot accuse her of running him into debt since he is merely hiring or renting the machine and under no obligation to buy. Yet at the end of the period of the lease, he will own a sewing machine for the money.

This was the first such installment-purchase program in American history, and it was a brilliant solution to the price problem in selling Singer Sewing Machines. In combination with Singer's novel marketing schemes, this program should have had a tremendous impact on I.M. Singer & Co.'s bottom line. It did indeed have an impact, tripling the sales of Singer Sewing Machines from 1855 to 1856, but such successes were tempered by the massive expenses imposed on the company by the now-raging Sewing Machine War. Sales of Singer Sewing Machines were dismal from 1853 to 1855, which, in comparison to the explosion in its sales following the formation of the Sewing Machine Combination in 1856, is perhaps a result of the uncertainty surrounding the Singer Sewing Machine caused by the legal dispute between Singer and Howe, and then the start of the full-scale Sewing Machine War in 1854.

Following Potter's creation of the Sewing Machine Combination in November 1856, Singer and Clark's innovative efforts at commercializing their patented invention began to realize their full potential. In fact, the year after the Combination was created, Clark invented another new business method to further secure I.M. Singer & Co.'s place in the soon-to-be exploding sewing machine market: he conceived of a trade-in plan in which I.M. Singer & Co. would accept any older version of a Singer Sewing Machine, or any competitor's sewing machine, in exchange for a $50 credit toward a new Singer Sewing Machine. Again, this was a brilliant marketing stratagem, as it killed two birds with one stone for I.M. Singer & Co. First, it reduced the price of a new sewing machine, increasing overnight the number of purchasing consumers (and revealing an implicit understanding of elasticity of demand on the part of Clark). Second, it effectively prevented the rise of a second-hand market for used sewing machines that would compete with sales of new sewing machines.

Singer and Clark's innovation in both creating a sewing machine market and then securing I.M. Singer & Co.'s place as a dominant firm within this new market is a palpable example of the commercialization benefits secured by property rights in patented inventions. With the end of the Sewing Machine War and the formation of the Sewing Machine Combination in 1856, I.M. Singer & Co. immediately began reaping the fruits of its labors. Despite the severe economic recession of 1857, the members of the Combination flourished, including I.M. Singer & Co., whose sales almost doubled from 1857 to 1858. And, despite the tremendous economic and political tumult of the Civil War, sewing machine manufacturers continued to experience tremendous sales growth, helped in part by the fact that their machines were clothing Union soldiers. During the war, I.M. Singer & Co., which was renamed the Singer Manufacturing Company in 1863 (see the postscript below for an explanation of this), watched its sales grow each year from 16,000 machines in 1860 to 23,632 in 1864.

As a result of its constant focus on innovation, made possible by its patented inventions and its participation in the Sewing Machine Combination, the Singer Manufacturing Co. eventually overtook Wheeler, Wilson & Co. in 1867 as the top-selling sewing machine firm. By 1876, the Sewing Machine Combination's records reveal that the Singer Manufacturing Co. sold more than double the number of sewing machines than that of its closest competition. When the Sewing Machine Combination terminated in 1877, the Singer Manufacturing Co.'s sales accounted for more than half of the total sales of sewing machines, and the company controlled 75% of the world market for sewing machines. In sum, Singer and Clark's commercial innovation, made possible by Singer's patented improvements to the sewing machine, not only ensured the success of Singer Manufacturing Co., it was largely responsible for the success of the American sewing machine industry writ large. By all accounts, Singer's company was the most successful sewing machine company, and it justifiably served as the public face of the Sewing Machine Combination.

In my next couple posts, I will discuss some of the policy insights we may draw from this historical case study of the incremental invention of the sewing machine, the first patent thicket, the first "patent troll," and the first patent pool. In so doing, I'll also discuss and respond to some of the issues raised by commentators over the past week.

POSTSCRIPT: Some readers may be wondering about the 1863 name change of I.M. Singer & Co., to the Singer Manufacturing Co. This was a result of Singer's characteristic intemperate nature — and his polygamy. After forming their business partnership in 1851, Clark and Singer worked very well together until 1860, when a public scandal erupted after one of Singer's wives, Mary Sponsler, discovered Singer with one of his other wives, Mary McGonigal, in the middle of Fifth Avenue in New York City. Following this confrontation, Singer nearly choked Mary Sponsler to death, and he then fled to Europe for a brief respite from the public uproar. He eventually returned in 1863 to marry another woman, Isabella Boyer. Clark was of high birth and he could not abide by such behavior. Following Singer's return in 1863, they formally dissolved the I.M. Singer & Co. partnership. Clark then incorporated the Singer Manufacturing Company, with Clark in control of the company and its assets and Singer receiving guaranteed income from his ownership of 40% of the stock.