Web 2.0 is coming to Shutterfly's (Nasdaq: SFLY ) rescue.
The out-of-favor photo-sharing site launched Share Sites yesterday, a surprisingly robust yet unfashionably late attempt to cash in on the social-networking phenomenon.
In just a few clicks, registered users can create free pages, populated with digital snapshots, text, and even the local weather. If the person chooses to make the pages public, other visitors can post comments, add snapshots, and even order prints and Shutterfly's signature photobooks.
It's a fair photo-centric spin on popular social-networking sites such as Facebook, News Corp.'s (NYSE: NWS ) MySpace, and Time Warner's (NYSE: TWX ) Belo. It won't rip the shutterbug street-cred crown away from Yahoo!'s (Nasdaq: YHOO ) Flickr, nor snatch the photo-sharing trophy from News Corp.'s PhotoBucket, but it's nice start for a company that has a lot of catching up to do.
Shutterfly is a master in photofinishing products. The company is a goldmine during the holidays, when digital-camera owners flock to the site to order photographic holiday cards and customized gifts. Unfortunately, its lumpy financials are lamentable the rest of the year. The snapshot specialist historically generates half of its revenue and all of its earnings during the final quarter of the year.
This doesn't mean that the company is simply tweaking its model during the seasonal downtime. Shuttefly posted a wider second-quarter deficit last month. It also announced that it's shuttering one of its costlier production facilities. If that doesn't seem desperate, check the pulse of the company's shareholders. The stock has shed 72% of its value since peaking 10 months ago.
Shutterfly's success in social networking would help smooth out a lot of the lumpiness in the company's financials and possibly kick-start its performance again. I only regret that the company isn't fully embracing the viral nature of the medium by giving its members tools for monetization.
Why isn't Shutterfly offering page creators a piece of the action when visitors order books or calendars from a given user's snapshots? Why doesn't it allow the profile owners the ability to add Google (Nasdaq: GOOG ) AdSense ads on their pages, or set up a system where both Shutterfly and the creator can share some form of ad revenue? These motivational tools can transform a passive experience into an actively promoted one.
You've made a good start, Shutterfly, but you need to look at the bigger picture.
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