It's hard to make a living as a photo-sharing site with photofinishing services if your name isn't Shutterfly (Nasdaq: SFLY ) .
American Greetings' (NYSE: AM ) PhotoWorks is the latest casualty. The site stopped accepting new accounts yesterday and will wind down operations in the coming weeks. PhotoWorks now offers digital shutterbugs $30 in Shutterfly credit if they transfer their snapshots to the rival site.
This may not seem like a big hit for American Greetings, which acquired the photo-sharing site in an affordable $26.5 million deal a little more than three years ago. But why is American Greetings nudging users toward Shutterfly when it still owns Webshots, which it acquired from CNET Networks a few years ago? Is the implication here that Webshots, too, may soon be heading off to the great big darkroom in the sky?
When Yahoo! (Nasdaq: YHOO ) closed down its namesake photo-sharing site, it encouraged users to move their digital photographs to its more popular Flicker. American Greetings isn't doing that, unless Shutterfly is offering enough money for new leads to make it worthwhile for American Greetings to ignore its own offering.
It's hard to survive as a stand-alone photo-sharing website these days. Folks are increasingly sharing snapshots through Facebook. The companies still running popular sites often have grander hardware objectives. Eastman Kodak's (NYSE: EK ) Kodak Gallery is a great way for Kodak to push its camera products. Hewlett-Packard's (NYSE: HPQ ) Snapfish promotes HP's color printers.
Those who enter this space without a monetization endgame aren't here for long. News Corp. (Nasdaq: NWS ) sold Photobucket a year ago. It had originally acquired the site to improve photo-sharing on its MySpace social networking site.
Shuttefly's thriving as a free photo-sharing site that specializes in printing customized products such as photobooks, calendars, and mugs. In its stellar holiday quarter, revenue and net income soared 27% and 35%, respectively.
American Greetings' failure is now Shutterfly's advantage. Then again, the ugliest sectors sometimes have the prettiest opportunities.
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