Taking digital snapshots to the next logical step in the storytelling process, Webshots.com has become the first photo-sharing site to allow its users to upload videos as well.

If the new feature draws well, the CNET Networks (NASDAQ:CNET) site will welcome the growing pains. Webshots remains a hotbed of digital photography, but year-over-year traffic has fallen over the past few quarters. It's been a drag on the company. Last month, CNET posted a 13% gain in top-line growth for the third quarter despite a 13% dip in page views. The reason? Webshots has been the eyeball fumbler, since the balance of CNET's content empire is actually still inching forward.

The video offering promises a 50% larger viewing area and nearly three times the bitrate quality found at the established video sites. Over the weekend, I spoke to senior VP of community Martin Green, who assured me that broadband users will have no problem streaming the videos despite the chunkier specs.

The new video service was officially announced this morning, but it wasn't exactly a burning secret. The company invited its Webshots user base to upload videos last week. It had pitched the service as "coming soon" back in August.

CNET is figuring that folks who are shutterbugs with digital cameras probably have some digital video, too. Most cameras and cell phones that take snapshots often double as rudimentary video cameras as well. Combining the two platforms makes perfect sense, and Webshots may set the new standard if folks come to expect the convergence of photographs, moving pictures, and text in their media-sharing experiences.

Breathing new life into a laggard
What happened to Webshots? The easy accessibility and intuitive interface that won it an audience a couple of years ago, when photo-sharing sites were run by companies like Kodak (NYSE:EK) or Hewlett-Packard (NYSE:HPQ), may also be the same reasons why the site fell out of favor.

Users may have flocked to Webshots to escape the hard sell on buying digital prints that one found on photo-sharing sites like HP's Snapfish, Shutterfly (NASDAQ:SFLY), Kodak's Ofoto, and even Yahoo! (NASDAQ:YHOO) Photos. Unfortunately for Webshots, nobody wants vanilla these days.

These days, consumers don't just want to tell stories with their snapshots; they want to continue the process by letting some personality ooze outside the border. This is why folks are sharing their pictures through more customizable social networking sites like Facebook and News Corp.'s (NYSE:NWS) MySpace. Yahoo! caught on early, snapping up the tag-happy Flickr site despite having its own eponymous photo-sharing site.

So video coming to the rescue at Webshots can only help at this point. A recent remodeling of the Webshots site made it easier to use (with more thumbnail previews per page, a slicker look, and 10 different categories to sort through), but it still has an uphill battle. Earlier this year, Webshots tried to compete with Facebook by launching a College Live section of its site, but the coeds have decided to perform their keg stands elsewhere. Martin concedes that it has been a disappointment, and that Webshots is now working with Facebook instead of against it.

This won't be the first time that CNET has turned to video to get a leg up on the competition. The slickly produced tech news and gadget reviews that stream on CNETTV.com are giving CNET's editorial team camera time, and that's a good thing. It is going where its rivals can't. CNET critics argue that smaller tech-based blogs are scooping CNET's News.com, but you will probably never see something as elaborately crafty as CNET's Buzz Report put out by the maven wordsmiths at TechCrunch and GigaOm.

Webshots is naturally going in a different direction, relying on its registered users to populate the site with content, but CNET is also raising the stakes here with the launch of Project Spotlight.

Yes, it sounds like Project Greenlight or the Fool-enriching AOL Greenhouse, which help seek out and finance aspiring filmmakers and webpreneurs respectively. That's pretty much what this will be. In a few months, Martin hopes to have the first five properties under contract. Helping fund investigative journalists and budget-strapped makers of online serials is the secret sauce in the video playbook at Webshots.

Winning directors will grant Webshots exclusivity, at least initially, in exchange for monetary and promotional help during the incubatory process. That is something that has been missing at YouTube, as some of the hits that site has birthed have moved on to sites that help monetize popular submissions. Lonelygirl15 and AskANinja turned to Revver.com's ad-sharing allure. Sam Has 7 Friends is relying on broader distribution through iTunes.

CNET isn't alone here. General Electric's (NYSE:GE) NBC has bankrolled the hilarious sketch masters of Barats and Bereta and Nobody's Watching. Who can deny the influence on NBC's Saturday Night Live since the three members of The Lonely Island were hired to join the staff last season?

It is way too early to take bets on the caliber of talent that Project Spotlight will round up for CNET's Webshots. The only sure thing is that it will take just one viral hit to catapult Webshots into stardom as the exclusive sugar-daddy-providing source.

Webshots has lacked personality for far too long. Now it's got a shot. Superior resolution should win over videophiles. Project Spotlight may make Webshots the modern-day version of Schwab's Pharmacy, the Hollywood soda fountain where acting hopefuls hung out for a shot at stardom in the 1940s.

Even if Webshots may still be running skimpy on the social-networking features of more popular sharing sites, at least it's going in for the mother of all screen tests. After all, the best way to help the storytelling process along is by telling better stories.

CNET is an active recommendation in theRule Breakersgrowth stock newsletter service. Yahoo! has been singled out toStock Advisorreaders.

Longtime Fool contributor Rick Munarriz is a fan of CNET and finds himself hooked on watching CNETTV. He does not own shares in any of the companies in this story. He is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.The Fool has a disclosure policy.