Businesses Help Organize Photos

TIP OF THE DAY

 

Businesses Help Organize Photos

 

 

Businesses Help Organize Photos

By BOB TEDESCHI

CAN'T get anyone to peruse the 50 family photos from your new digital camera? Internet companies would love to see them.

As digital cameras continue their sales boom, Web sites have found an increasingly attractive business helping consumers share their photos with friends and family.

Earlier this month, two online photo-sharing services were bought within a 24-hour period. The technology publisher CNET Networks will pay $70 million for a longtime market leader, Webshots, and Google paid an undisclosed amount for a relative newcomer, Picasa.

The announcements came on the heels of a series of improvements from Yahoo Photos that have helped it leapfrog Webshots as the Internet leader in photo sharing.

Why all the activity? Analysts said a resurgence in the online advertising market had helped, along with a seemingly insatiable consumer appetite for digital photography.

"The digital camera adoption rate continues to defy expectations," said Chris Chute, an analyst with the research and consulting firm IDC, who predicted digital camera sales would reach 25 million this year. Including the 27 million camera phones that are expected to sell this year, at least a third of American households will be able to take digital photos by year's end.

Mr. Chute said that 28 percent of digital-camera owners share their pictures over the Internet and that cellphones and devices connected to home networks, for instance, would facilitate photo sharing.

Some online photo sites have had a surge in visitors in the last year, according to comScore Media Metrix, an Internet measurement firm, while others have leveled off. Yahoo and Webshots have had marginal declines in visitors, while Kodak's Ofoto.com, District Photo's Snapfish.com and Shutterfly.com, based in Redwood City, Calif., attracted 25 percent to 30 percent more visitors.

What is more, the value of those visitors has increased as the demand for online advertising has intensified.

Executives said those audience sizes are enticing enough for marketers to open their checkbooks. Narendra Rocherolle, co-chief executive of Webshots, said one reason Webshots chose CNET over other suitors was that it could help the company reach more well-known advertisers, because it already has long-term relationships with advertisers like Canon and Sony. Webshots said it was profitable and expected to generate $12 million to $13 million in revenue this year, half from advertising and the remainder from selling premium online services and photo prints. CNET said it expected overall revenues for Webshots to grow by at least a third next year.

Webshots, like several other photo-sharing sites, lets consumers upload their digital photos to a Web page on the site, free of charge. From there, users create albums, then e-mail invitations for others to look.

Unlike some other sites, Webshots allows users to post their albums publicly, for others to download if they wish. The site's 30 million users have posted more than 60 million photos for others to see. "So if you want to go on vacation, you can find very detailed photos that you wouldn't see at other travel Web sites," Mr. Rocherolle said. (Several Webshots employees scan the site for inappropriate content.)

This is actually the second time that Webshots' owners have sold the company. In 1999, Excite@Home bought it for $82.5 million in stock, only to sell it back to the three co-founders in early 2002 for $2.4 million. The latest deal is another sign that good ideas that were simply premature during the dot-com boom are winning favor now that the Internet economy is strengthening.

Shelby Bonnie, chairman and chief executive of CNET Networks, said most of the Webshots audience had not yet visited CNET's sites, which include GameSpot.com, MP3.com and CNET.com, among others. With Webshots visitors viewing 20 million pages daily, Mr. Bonnie said: "That's a lot of additional ad inventory for us."

Webshots has faced increasingly stiff competition from Yahoo, which has in recent months rolled out a number of new features to enable users to share their photos more easily and decreased the number of places where advertisements appear.

Late last year, Yahoo began a service that allows users to view their photos on wireless phones. "So instead of dad pulling out his wallet for pictures, you can do it all electronically," Jeff Stoddard, director of Yahoo Photos, said.

Even so, the smaller competitors have some advantages. Ofoto.com and Sony's Imagestation.com, for instance, have considerable muscle behind them, while Snapfish.com can rely on marketing support from District Photo, one of the biggest mail-order film processors.

Ofoto, Snapfish and Shutterfly.com have for years helped customers convert conventional photos into digital images they could e-mail to others. Now they, too, enable digital camera users to swap photos, or print them professionally for less than 20 cents an image.

Raj Kapoor, president of Snapfish, said the company recently allowed camera phone users to e-mail images directly to their albums on the Snapfish site. This week the company will vastly expand the merchandise people can order decorated with their photos. The new items include dog leashes, baby bibs and neckties.

In this competitive market, Google's purchase of Picasa is particularly intriguing. Unlike most other services, Picasa is a peer-to-peer sharing application. Users open a window similar to that of instant messaging applications to swap photos.

Google declined to comment on its acquisition, citing the required "quiet period" for companies selling shares to the public. But because Picasa's technology is a cousin of instant messaging software, the acquisition could signal Google's entry into that category, as much as in photo sharing. Google, which has extended its lucrative text advertising service to Gmail, its new e-mail service, could conceivably distribute ads alongside instant messages as well.

Peer-to-peer photo sharing, in itself, could prove a profitable market, in the view of John Mathon, chief executive of such a service, ShareALot, based in San Mateo, Calif. Users of the service need only drag their photos to an icon on the computer's desktop for instant transmission to selected friends. ShareALot displays ads with the photos.

Thanks to the ease of use, Mr. Mathon said, "tens of thousands of people have shared more than a million photos with us" since the company's debut in March.