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PhotoLoft's logo. Click here to visit the PhotoLoft website! Dominoes keep falling - this time at PhotoLoft!
(Tuesday, March 13, 2001 - 16:40 EST)

Online photofinisher shuts the door on free photo sharing...

It is beginning to look like March 2001 may be remembered as the time that the cracks really started showing on the online photosharing / photofinishing business models... For some time now, the naysayers have predicted a bloodbath in the Internet photo space, saying that there were simply too many companies all seeking the same market - and seemingly more appearing every single day.

Now we are starting to see what appears to be the first really visible signs of the truth in this line of thinking, be it in the demise of PrintLife.com even despite their unique PhotoBook product, the sudden change of business model from SnapFish.com, or in today's latest such change - the announcement by online photofinisher PhotoLoft.com that they will no longer offer free photo sharing!

PhotoLoft has sent an email out to all members this afternoon announcing that there will now be a membership fee of $2.99 for the service. This isn't quite the whole story, however, as a page referenced from the email lists the full fee structure. The $2.99 membership fee is a monthly fee with a cap of only 10MB of storage and a requirement of a one year membership term, meaning that the total cost will be an annual membership rate of $35.88 for 10MB of photo hosting. As an alternative, a 6 month term is to be offered, but this will cost $3.99 monthly for the same 10MB of storage, for a total of $23.94 for the term, or 47.88 annually.

On top of this, a range of fees are offered for extra storage, although it is not clear from PhotoLoft's page describing these fees whether they are in addition to the base charges and capacities already mentioned. Either way though, fees up to $600 annually for a 12 month term on 1000MB of storage space are defined...

Following is the complete text of the email sent to PhotoLoft members, which makes for very interesting reading:
"March 9, 2001

Dear Photoloft Members,

Today I have an extremely important announcement to make. In the future, there will be a fee associated with uploading photographs to Photoloft.com. Viewing photos, sending e-cards, and using the guest book will still be totally free. As distasteful as this may seem to some, please take a minute to read the following message and at least understand what the thought process is behind such a move.

First and foremost, the charge for having an account in which photos may be uploaded into will be extremely affordable, $2.99//month. However, in aggregate it will greatly enhance our ability to maintain and improve the site. Perhaps a little history is important at this point

When initially launched, Photoloft.com was the first photo-sharing site on the Internet. Since that time, well over $1 Billion of Venture Capital money has been spent, most of it wasted, to create competitive offerings. However, there are no free lunches, the money must come from somewhere and two models for generating revenue have emerged:

1. Revenue from advertising and email solicitation
2. Revenue from the creation of prints and gifts

The first one is getting less and less attractive as a revenue source. First of all, consumers flat out are not interested in the advertisements, thus diminishing the desire for advertisers to pay, but more importantly consumers realize that there is a bit of a bait and switch going on here. "I signed up to share photos, but I'm suddenly on a get rich quick email list." And from an internal resource perspective, the employees of BrightCube would rather concentrate on how to make the service better and not concentrate on how to sneak dollars out of unsuspecting customers wallets.

The second one is a little more interesting. Getting prints made online is a real and tangible benefit that many are already taking advantage of. However, printing photos is a commodity business and has been for some time. Most photos are printed with ink and paper that is made by just a handful of companies.

So the obvious question begs: Can a dot.com company mark up the price of the photos enough to become a profitable middleman? And if that is not enough, can the difference be supplemented by extracting dollars from the personal profile information users invariably leave behind when purchasing online? The rash of closures lately, such as Kodak backed E-Memories would say no. However, a third variable is also involved. What about the people who wish to print at home?

Most people print at least some photos at home. Despite quality problems and price issues, convenience usually prevails. Especially in the case of an amateur digital photograph. That is because the life of the photo is somewhat simplistic, a month on the refrigerator and then on to the recycle bin (or shoebox as the case maybe).

Now, back to why Photoloft.com has made the decision it has made. First and foremost, it allows the company to develop technology without any hidden agendas. It allows us to develop a full array of services and let the consumer choose what they want to do and when they want to do it. For example, we will be able to offer "photo quality" prints from a variety of different sources (and quality/price points) while improving our ability to enhance home printing. Our focus, as it was in the beginning, will be on the experience. No advertising, which we never did well, and no Spam, which we never did anyway. This decision frees the Photoloft development team to do what they do best, create on-line photo sharing technology.

I hope this explains our position and I hope that you will stay with Photoloft as we move forward. It is our firm belief that our customers need photos on-line for a variety of different reasons, and our charter is to enable those services based on customer need. We do not want our time to be spent supporting quasi or hidden revenue channels or supporting only the features that enable particular types of e-commerce. And if history is the best predictor of future behavior, then I would expect many others in our space to follow our lead.

For those who do not wish to remain with Photoloft, your pictures will remain on-line for thirty days. They will remain viewable during the entire time, as they are now. For more information on the specifics of the service, please go to the following link:

Jack Marshall
Co-Founder of Photoloft.com,
Vice-Chairman of BrightCube."
Existing photos will remain on PhotoLoft for a period of 30 days, before being removed from the site, and existing member accounts will be frozen from adding any more images until a membership plan is chozen. What this will do to PhotoLoft's membership base is uncertain, but it seems likely that with a variety of other photo sharing communities in existence which have not yet chosen to institute a fee for storage (or at least, currently offer a certain amount of storage free), PhotoLoft may find a large percentage of its users will choose to move their images elsewhere rather than pay for a service which they are now used to receiving for free.

Source: PhotoLoft.com Inc.

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