Flickr of Hope at Yahoo!

You may not see Yahoo! (Nasdaq: YHOO  ) as a fast-growing Internet company, but don't tell that to its photo-sharing site, Flickr. According to Web trends tracker Hitwise, Flickr has catapulted to become the country's second-most-popular snapshot-viewing website, with a 38% surge in traffic over the past four weeks.

Okay, so Flickr has had a little help here. Yahoo! has been softly nudging shutterbugs over to the site after announcing that it would be closing down its own digital photography site. Yahoo! also began incorporating Flickr images into its search-engine results last month.

It also doesn't take much to win the silver medal in photo-sharing. Flickr's 6.4% market share slice is tiny compared to market leader Photobucket's 43.5% chunk of the market. Then again, News Corp.'s (NYSE: NWS  ) recently acquired site is more of a viral critter. Photobucket encourages its 46 million users -- who have uploaded nearly 3.2 billion images -- to spread the word by embedding their uploads into social networking sites, photographic profiles, and personal blogs.

Smiling pretty for the camera
Smaller sites like Flickr and CNET's (Nasdaq: CNET  ) Webshots offer limited portability, preferring to build communities within their own walls. That has opened up the opportunities for sites like Photobucket and privately-held Slide.com -- the bronze medalist, according to Hitwise -- to excel in creating portable widgets to broadcast their images through cyberspace in some pretty cool ways.

So why should you get excited about Flickr's recent rise, especially since it's coming at the expense of the demise of Yahoo! Photos? Well, the more I think about it, the more I realize that Yahoo! Photos is emblematic of what is ailing Yahoo! these days. Sure, it's a heavily trafficked hub, but it has the personality of a stale vanilla wafer.

Too many of Yahoo!'s applications -- like digital photography storage and e-mail -- feel awfully bland. They work well, but only after you get past the formaldehyde scent of the website's sterile environment.

Flickr isn't perfect, but it comes with a stylish veneer that oozes hipness without detracting from its stated objective. Flickr pioneered the art of tagging, which created vocal communities around still life photography. Tagging is also useful in classifying images, a goldmine in image search functionality.

It's Yahoo!, daddy-o, Yahoo!
If Yahoo! begins to take bigger growth steps in the future, it will be because "cool" Yahoo! applications like Flickr and Yahoo! Answers -- rare areas where Yahoo! is light years ahead of rival Google (Nasdaq: GOOG  ) -- ultimately had a halo effect on the rest of the Yahoo! ecosystem.

Really.

It's not enough to simply be functional anymore -- you've got to have style. Sure, beauty is in the eye of the e-holder. Just try MySpace on for size. News Corp.'s social networking behemoth may be home to some of the ugliest profile landing pages -- with eye-piercing layouts and ear-numbing sound clips -- but the ability to personalize has been a beacon to young users who believe that they're unique.

One last freeze frame
If you're still not sold, let's take a look at Hitwise's five most popular photo-sharing sites for one last peek into how the judges are doling out those style points.

Market Share

1. Photobucket

43.5%

2. Flickr

6.4%

3. Slide.com

6.1%

4. Kodak Gallery

3.7%

5. Yahoo! Photos

3.2%

Source: Hitwise, for the week ending July 7, 2007.

We've discussed how Flickr is the slick class act of photo-sharing sites. It's sandwiched between two sites that are driving a ton of their upstream traffic from MySpace. In short, all three medalists are successful because their users have personalities.

Then we have Kodak (NYSE: EK  ) . The photofinishing giant has every incentive to matter on the Web. Digital cameras have dried up demand for film cartridges, yet the company remains a leader in snapshot development. Like Shutterfly (Nasdaq: SFLY  ) , Kodak sees photo-sharing's primary role as a way to drive merchandise sales.

It's a pity, because Kodak was an early entrant in photo-sharing. Just a few years ago, the niche was dominated by companies like Kodak and Hewlett-Packard (NYSE: HPQ  ) that had prints or photo printers to sell.

They strove for functionality, while consumers were deciding that they ultimately wanted flexibility and a broader experience. The end result? Neither is standing on the award podium today.

So relish that silver, Flickr. You may never close in on the gold, but you've got the golden touch to make Yahoo! matter again.    

Yahoo! is a Stock Advisor recommendation. Get the latest snapshots of the Gardner brothers' top Wall Street picks with a free 30-day trial. CNET is a Rule Breakers pick.

Longtime Fool contributor Rick Munarriz thinks a picture is worth a thousand words, but feels that it's often easier to write those thousand words than to click the camera. He does not own shares in any of the stocks in this story. Rick is also part of theRule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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