Photo sites see growth through social media
When Snapfish Inc. launched its Web site 10 years ago, the company was hardly the first online photo service. In fact, the San Francisco firm was behind 126 competitors.
“Almost all of them are out of business,” said Snapfish General Manager Ben Nelson. “Zing and PhotoPoint were the leaders at the time. They were considered the 800-pound gorillas.”
Today, the Hewlett-Packard subsidiary celebrates its 10th anniversary and finds itself among the leaders in its field, with fellow dot-com survivors Shutterfly Inc. of Redwood City, and Ofoto, which is now Kodak Gallery in Emeryville.
But now, there’s a new 800-pound gorilla – the growing consumer trend of sharing photos not by printing, but through sites like Facebook, Twitter and Flickr.
Facebook says its 400 million members upload more than 3 billion photos every month. And a recent report by IDC Research forecast that more than 124 billion photos will be shared through social networks by 2013.
Moreover, IDC says the number of photos printed by that year will dip to 42 billion, about one-third fewer than the 63 billion pictures printed commercially or at home in 2008.
But just as they evolved while consumers made the transition from film to digital cameras, services like Snapfish that depend on printed photos for revenue are adapting with the times by emphasizing there’s more to the picture than printing a 4-by-6 glossy.
“Shutterfly, Snapfish and Kodak Gallery are making worthy efforts to change their value proposition to consumers,” said Augie Ray, senior social computing analyst for Forrester Research Inc.
“These sites used to be about the cheapest prints,” he said. “Now, they’re about bound photo books, wall art and keepsake boxes. By changing up the way people think of printing photos, these sites hope to offer something people can’t get on Facebook.”
In fact, Shutterfly CEO Jeffrey Housenbold said his company, boosted by growing photo book and calendar segments, saw record revenue and profits in the fourth quarter of 2009.
“We think we’re part of that social media phenomenon,” Housenbold said.
Shutterfly, which remains an independent, publicly traded firm, and Ofoto, bought by the Eastman Kodak Co. in 2001, both launched Dec. 13, 1999, in Berkeley. By the time Snapfish launched, it was already playing catch-up and employees were just happy to make incremental steps “up the chain,” Nelson said.
Back then, most customers were still accustomed to bringing exposed film rolls into a store to be developed and getting back all 24 or 36 shots as printed snapshots. So online photo services like Snapfish had to persuade those photographers to mail the film in for processing and printing.
“It wasn’t until the holiday season of 2002 when digital revenue overtook film for us,” Nelson said. Palo Alto’s Hewlett-Packard, which also depends on one of its primary products, printers, for revenue, acquired Snapfish on April 14, 2005.
Today, only a tiny fraction of customers’ still mail film for developing, he said.
When consumers embraced digital cameras, they were also freed to take as many shots as they wanted without worrying about wasting costly film, so the nature of sharing those photos changed. And the combined rise of social media and mobile devices made it easy to instantly share photos by uploading them to Facebook or through Twitter links to services like TwitPic.
“Today, between hard drives, memory cards and online sharing and storing, the need to print is decreased,” Ray said. “If you print photos, you can only share them one at a time in real-time, whereas by uploading photos to Facebook, you can share them with all your friends and enjoy a discussion that can occur over days and weeks.”
Although only about 15 percent of photos are printed into 4-by-6 snapshots, consumers are printing more photo books, personalized cards and stationery, which have more lucrative profit margins for online photo services, yet remain an untapped market, Housenbold said. He also said Shutterfly members are creating 15,000 to 25,000 new “Share Sites” each week to share online photo albums of events such as weddings.
emand still strong
Nelson said Snapfish has seen a 500 percent growth in prints and 700 percent increase in photo merchandise since 2005, when the social networking era began to take off. Snapfish, which has processed 10 billion prints in its decade in business, has a partnership with Yahoo Inc.’s Flickr, while Snapfish members can also share their albums through Facebook.
For its anniversary, Snapfish is rolling out a new program to help customers make money from photos or graphic designs used on personalized greeting cards, mugs or other products. The program is similar to the way professional designers and publishers pay for hobbyists’ photos or graphics posted on sites like Flickr or iStockphoto.com.
This month Facebook made a move to beef up its photo-sharing activities by acquiring Divvyshot, a San Francisco startup with technology to group high-resolution photos of one event that are uploaded from multiple users.
Still, Chris Chute, manager of digital imaging research for IDC, said he doesn’t believe Facebook will “cannibalize” profits from photo printing firms. He forecasts the market for creative products like photo books to continue growing.
“The only cannibalistic scenario is if people stop printing at all, and I don’t think that’s going to happen,” Chute said. “I see a multilayered future rather than a zero sum game.”