The Great Divide

Earlier this week Facebook announced its acquisition of smartphone-based photo sharing website Instagram for a cool $1 billion.

Instagram has grown dramatically over its short life. It has acquired 30 million subscribers since its launch in 2010. An Android app was recently released which expands Instagram’s reach beyond Apple iphones and iPads.

Instagram has proven popular with the smartphone set not least because it provides some simple photo editing filters which give ordinary-looking photos a fashionable retro look. Still, $1 billion seems a lot to acquire something which may well prove a 12-month fad.

An email from a reader this week made the following comparison: ‘Kodak filed for bankruptcy today, and an app on your phone that distorts your photos to look like old Kodak photos is worth $1billion.’

– Passing strange indeed! Last month Kodak sold its Kodak Gallery online photo services website (which also happens to boast one of the better apps for uploading images from smartphones) and its 75 million subscriber list to Shutterfly for a far more modest US$28 million. We noted when reporting this that the cost per subscriber was around 30 cents.

By comparison, Facebook has paid $30 – or 100 times more – per Instagram subscriber! The irony is that Instagram does not generate much in the way of direct income from subscribers, while the raison d’etre of Kodak Gallery is selling online photo services to subscribers. Instagram has not made any money and been successful, while Kodak Gallery has made some money but is a relative failure.   

It’s beyond me to understand why 75 million (paying) customers are worth 30 cents a piece to Shutterfly while 30 million smartphone-toting free subscribers are worth 100 times that amount to Mark Zuckerberg. Of course the technology behind Instagram is unique and its popularity proven by the quick uptake from trend-focussed consumers, but to make another comparison with Kodak which puts the Facebook $1 billion into some context, the entire Kodak image sensor business, including a 263,000 square foot manufacturing facility, was sold earlier this year for a figure the Wall Street Journal states at around $200 million.

So why the exponential price differential between Kodak Gallery and Instagram? Pundits have speculated that Facebook acquired Instagram to take it out as a competitor, and it does have form with previous acquisitions which it has shut down after purchasing. Speculation is that Facebook is aware that it is vulnerable to a competitor with strengths with photographers and with smartphone users – and that is currently Instagram. 

But more broadly – and yes, going off on a bit of a tangent, admittedly – a quick overview of online photo services prompted by the Facebook/Instagram story exposes the appalling failure of the photographic industry to ‘fish where the fish are’ when it comes to having a strong presence where consumers are sharing photos.

Instead of companies in the photo industry clambering all over Facebook and the more photo-focussed social networking sites, they are nowhere to be seen:

Facebook: The largest repository of photographs the world has ever seen lives on the Facebook servers. At a presentation I attended two weeks ago one of the speakers asserted that Facebook stores four percent of all the photos that have even been taken! So what has the photo industry done to wave the flag with this, the biggest potential customer group the world has ever seen? ‘Bugger all’ is the short and rude response. 

Explore the Facebook site and you will find many if not most users sharing their photos. It’s perhaps the key attraction of the social networking phenomenon in this apparently post-literate, visually communicating age we live in.

So where are the photo services companies plying their wares? Key ‘photo printing’ into the internal Facebook browser and a weird and wonderful list appears headed up by a company in Bangi, Malaysia which will provide you with edible photos.

Snapfish is the most recognisable name, but clicking on the download app option just takes you to a dead link. Poring all over the Facebook site, looking in the various nooks and crannies, I couldn’t find anyone offering to help me share my images via hard copy prints.

Key in ‘photo printing + Australia’, and there are no Facebook listings.

Go to http://www.facebook.com/help/photos and you will get a long list of ‘do’s’ and ‘don’ts’ and ‘how to’s’. But absolutely nothing on printing photos.

Surprisingly, there are not even any ads for photo printing services! As I understand it, ads served on Facebook, through some dark and mysterious jiggery-pokery, are tailored to the user’s interests. As I spend a good deal of my browsing time on photography related websites, I’d expect to be bombarded with photo-related offers when on Facebook. But instead I’m seening ads for Donut King, Goodyear Tyres and Northland Shopping Centre.

– So next time some photo company executive stands up at an industry forum and tells you lots of facts and figures about the importance of  Facebook to picture-takers, ask him to put his money where his mouth is!

Flickr: This site (owned by Yahoo) claims 60 million users worldwide and is all about photo sharing, and allows file uploads at a higher resolution than Facebook.

While Flickr has a worldwide exclusive agreement with HP’s Snapfish for photo services, you have to dig pretty deep into the FAQs to discover this. Even then, the Flickr/Snapfish arrangement is simply a matter of shifting people over to the Snapfish site. Nothing special here. 

Take the ‘Flickr Tour’ and on the last page, the second-to-last bullet point has a two line reference to printing under the sub-head ‘Make Stuff With Your Photos’: ‘Make prints, photo products and other cool gifts with our friends at Snapfish. Or check out some of our other printing options in the App Garden.’;

(The ‘other printing options in the App Garden’, are, by the way, free of any reference to Australian photo services providors.)

Snapfish has established an exclusive arrangement but has done very little to maximise it. There are no exciting calls to action, no introductory deals, no special rates for Flickr members. Like a mediocre photo retailer, it has occupied the territory but done nothing to ‘grow the business’. Nothing to enthuse and persuade an extremely qualified group of potential customers (they are all keen on photographs, for goodness sake!) to turn their digital files into some kind of hard copy. Photo printing is merely an afterthought on Flickr, and it looks as though Snapfish is there simply to prevent a competitor from getting a foot in the Facebook door.

Photobucket (owned by News Corp) claims 23 million users per month. It’s a close competitor to Flickr in photo sharing.

On the homepage there’s an animated graphic with a ‘blink-and-you-missed it’ reference to photo printing as the features and benfits scroll along the page. If you do miss it, there’s not a lot else going on to let you now that you can have photos printed from Photobucket.

However, once you find the photo printing part of the website, it’s far more substantial that anything on Facebook and Flickr, and outlines a whole range of hard copy options for digital  image files. Lifepics is the exclusive photo services partner in this instance, and it has done a far better job of integrating the look and feel of the photo printing pages of the site with the rest of Photobucket, rather than simply providing a jumping off point to the Lifepics site.

But once again, there’s very little to sell the Photobucket subscriber on the value of printing photos, photo books and the like. On the magic of a printed photo. If you do want hard copy and you look hard enough, you will probably locate the part of the Photobucket or Flickr site which offers it. If you hadn’t really thought about hard copy, there’s nothing on either of these sites which is going to change your state of mind. 

There’s a great divide online, and the photo companies seem to be quite content to stay on the wrong side of it: So we have the likes of Fujifilm and Snapfish and the retailers with online photo services ready and able to print your photos online. So long as you have already decided you want them printed, you will probably know where to find them.

But the majority of the millions and millions of people who are where the action is, who are users of Facebook and Flickr and Photobucket and yes, Instagram, simply wouldn’t have a clue. Probably hasn’t entered their heads to make a print or a card or a photo book. It doesn’t mean, however, that they wouldn’t consider the option if it was put to them with a little persuasive enthusiasm.

I think they call it marketing.

Keith Shipton



3 thoughts on “The Great Divide

  1. “When the product is free, YOU are the product”.
    None of these websites are trying to monetize photos. They are monetizing their users. Facebook is selling its user database to advertisers; they have no interest in selling physical products such as photos. Kodak is a lost cause, but Fujifilm’s Imagine and HP’s Snapfish are 21st century businesses with both realized and future potential. Database is everything.

  2. EXCELLENT article. There are about 4.4 billion image capturing devices in circulation. 4 billion of those are mobile phones. There’s a MASSIVE opportunity that tradition retail and printing are ignoring and it’s going to come at a huge cost to them. It’s not too late to dive in and re-invent your business where the customers are. Hint: As you’ll know from reading Keith’s article above, they’re not where they used to be. – James Madelin

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