A photo-sharing giant is on its deathbed. It has told its users to make other plans, with its sights set on deleting all user-uploaded snapshots later this fall. The demise isn't getting a whole lot of press because we're talking about Yahoo! (NASDAQ:YHOO) Photos here.

Ever since Yahoo! acquired the Flickr social photography site, Yahoo! Photos has been the Plain Jane sister to the stylish and relevant Flickr. Flickr electrified the niche with active community members, professional shutterbugs, and searchable tagging. Digital euthanasia was the only way out for Yahoo! Photos. It was really just a matter of time.

Even the eviction notices -- urging users to begin moving to another service, downloading their pictures, or buying an archive CD -- attract scant attention. Users have either already moved on to more socially spiked sites like Flickr, MySpace, or Facebook, or they just forgot that they once had snapshots of that blur of a 2003 trip to Rio on Yahoo!.

Take a picture, it'll last longer
The pioneer photo-sharing sites were bankrolled by companies like Hewlett-Packard (NYSE:HPQ) and Kodak (NYSE:EK) as a way to move photo printers or promote digital photofinishing. HP had no problem buying Snapfish two years ago to help beef up its digital presence. Kodak went with Ofoto in 2001, until it rolled that site into its EasyShare Gallery two years ago.

In retrospect, those deals were just big dinosaurs buying smaller ones. It's a collection of sad Web 1.0 companies that never filled out their change of address cards to make the move to roomier, community-driven Web 2.0 digs.

They were too busy trying to sell physical merchandise in a virtual world, when the real emphasis should have been on engaging its users so they would hang out, mingle, and multiply.

You can make that model work. Shutterfly (NASDAQ:SFLY) is a perfect example of a digital photography retailer that has carved out a profitable living by introducing innovative products and aggressive promotional activity. However, Shutterfly has always had personality, something that dorks like HP, Kodak, and a content aggregator like Yahoo! can only giggle about as they spike the punchbowl, far removed from the crowded dance floor they secretly want to be a part of.

This is where CNET's (NASDAQ:CNET) Webshots walks in. It was never hip enough to hang with the sweaty coeds doing the Macarena, but was too proud to hang with the chortling trio of nerds pouring a flask into the sherbet punch. Year-over-year traffic at Webshots has tanked in recent quarters, a telltale sign that having a smidgeon more of personality than Yahoo! Photos is a relative victory and not an absolute one.      

Moving pictures have it going on
The digital photography sites that matter these days are the ones that provide more than just static eye candy. Whether it's the sultry profile shots on News Corp.'s (NYSE:NWS) MySpace or the dorm room bender that winds up on Facebook, a picture can't just say a thousand words. It has to spell them out, too.

The biggest trend these days is to jump on the YouTube bandwagon and begin offering short video uploads. All of the Web 2.0 kids seem to be doing it these days:

  • MySpace has been at it since last year.
  • Photobucket expanded from storing digital stills to offer video and remixed slideshows.
  • Webshots launched its video service back in November and has been recruiting aspiring filmmakers with its Project Greenlight initiative.
  • TechCrunch indicates that Flickr will "soon" jump into the fray.  

The industry has seen the future, and it's clearly in motion. Who has the most to lose? That may be Google (NASDAQ:GOOG). YouTube is still the top "clip culture" draw, but there are now more sites tugging at shirtsleeves until they get noticed.

There will be many winners. There will be even more losers. A crowded dance floor can only put up with so many DJs spinning at the same time. As long as you bring earplugs, you'll be just fine. Go ahead and dance if you want to. Gaze at the shimmering disco ball and get jerky with the flickering strobe. Just keep an eye on where the exits are at.

Oh, and while you're there, you're best advised to avoid the punch.

Yahoo! is a Motley Fool Stock Advisor selection. CNET Networks is a Rule Breakers recommendation. Want to check either newsletter out? The dance lessons are free for the next 30 days with free trial subscriptions.

Longtime Fool contributor Rick Munarriz hates the way he comes out in photographs, even the moving ones. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.