Pho­to­bucket pay­ing for de­ci­sion to charge a fee

The Denver Post - - BUSINESS - By Ta­mara Chuang

When John Cor­pus took over as chief ex­ec­u­tive for ag­ing Den­ver in­ter­net com­pany Pho­to­bucket in late 2015, he had one main task: Turn the on­line photo-shar­ing site into a sus­tain­able busi­ness.

By July 6, Pho­to­bucket’s 100 mil­lion reg­is­tered users found out how that was go­ing to hap­pen. Overnight, mil­lions, pos­si­bly bil­lions, of pho­tos up­loaded to hobby sites, mes­sage boards and niche fo­rums in the past 14 years were re­placed by an im­age of a me­ter run­ning at 100 per­cent. To see the orig­i­nal im­age, one needed to “un­lock your ac­count” by up­grad­ing to the new $399 plan.

The cus­tomer back­lash was bru­tal. Users vowed to can­cel ac­counts rather than pay a fee. Many ac­cused Pho­to­bucket of hold­ing their pho­tos for ran­som. A man in Lon­don even started a pe­ti­tion to de­mand that Cor­pus re­vert back.

Cor­pus, a Bay Area res­i­dent who trav­els ev­ery other week to the com­pany’s head­quar­ters in Den­ver, said Pho­to­bucket had to plow ahead. Three-fourths of its costs paid for third-party host­ing for non­pay­ing users.

“There is no way to make 100 mil­lion global peo­ple happy,” said Cor­pus, in an in­ter­view with The Den­ver Post last week. “It wasn’t an easy de­ci­sion. When we look at the com­mu­nity we’ve built, which is a great com­mu­nity, we want to make sure we have a sus­tained path to prof­itabil­ity so that we can con­tinue to take care of this com­mu­nity for years to come.”

Some users un­der­stood. Enough have paid the an­nual fee in the past few weeks to see “our rev­enue dou­ble since we’ve launched this ini­tia­tive,” he said. Oth­ers? Not so much. “I feel like other users and my­self have been pun­ished for sup­port­ing the site through­out the years, with this hefty fee,” said James Cann, a 10-year Pho­to­bucket user who started the pe­ti­tion. “It’s a shame that such a dras­tic mea­sure has been taken and I wish John and Pho­to­bucket the best for the fu­ture, but un­less some­thing is done, I won’t be con­tin­u­ing with my ac­count and I ex­pect this will be mir­rored by frus­trated users world­wide.”

The pe­ti­tion had 647 users as of Thurs­day af­ter­noon.

While the price was shock­ing, many were more up­set at how Pho­to­bucket rolled out the new pol­icy. There was no ex­pla­na­tion. No men­tion of eco­nom­ics. And to many, it was with too lit­tle no­tice.

Michelle Rogers-es­table said the only no­ti­fi­ca­tion she had from Pho­to­bucket was in an email on July 7. As a di­rec­tor of a cen­ter that mixes tech­nol­ogy and ed­u­ca­tion at the State Univer­sity of New York in Oneonta, she has of­ten rec­om­mended the ser­vice to fac­ulty and stu­dents. No longer.

“So charg­ing is not what I found dis­con­cert­ing. It was the shift in price that was ex­tremely dis­con­cert­ing. To go from free to $399 a year for the same level of ser­vice shows a com­plete and ut­ter lack of con­sid­er­a­tion for long­time users of the ser­vice,” she said, adding that many stay-at-home moms and stu­dent blog­gers can’t af­ford to pay. “What Pho­to­bucket did was ba­si­cally strong-arm peo­ple into hav­ing to pay, at least those who had re­lied on it a great deal for many years. There is no ex­cuse to treat one’s long-term clients in this man­ner.”

Cor­pus said Pho­to­bucket started no­ti­fy­ing users in early June but ad­mit­ted many emails bounced or were never opened. Dis­cus­sions to ad­dress cus­tomer out­rage are on­go­ing. What’s im­por­tant, he said, is a cus­tomer’s en­tire photo col­lec­tion is still avail­able. They must log in and if they de­cide not to up­grade, they can down­load their im­ages and go else­where. Cor­pus con­firmed that Pho­to­bucket has no plans to im­pose a dead­line to up­grade, and the com­pany won’t delete any pho­tos.

“I be­lieve that some of the things we’re go­ing to be do­ing in the fu­ture, we’re go­ing to be ad­dress­ing some of the ques­tions and con­cerns and tak­ing care of the cus­tomers in a much bet­ter way,” Cor­pus said. “There are a lot of re­ally pos­i­tive things you can do with sus­tained prof­itabil­ity.”

Was the cus­tomer back­lash ex­pected?

Cor­pus paused. For 12 sec­onds.

“No,” he fi­nally said.

Strug­gling to sur­vive

A visit to Pho­to­bucket’s Blake Street head­quar­ters in down­town Den­ver last week showed a shell of the com­pany it once was. The loft-like space with ex­posed brick walls and wood-beam ceil­ings looked bleak with only a half­dozen em­ploy­ees milling around. The com­pany em­ploys 20 peo­ple, in­clud­ing a few in the Bay Area.

Just two years ago, there were about 60 peo­ple in the same space. Its web­site was at­tract­ing 60 mil­lion unique vis­i­tors a month. Pho­to­bucket ap­peared to be in a re­vival, thanks to a re­cent $10 mil­lion in­vest­ment and ac­qui­si­tions in­clud­ing star­tups like so­cial video and ad­ver­tis­ing site Mi­ly­oni, which Cor­pus started.

But, ap­par­ently, mak­ing money was never the pri­or­ity that it is to­day.

“Pho­to­bucket has not had a sus­tained pe­riod of prof­itabil­ity,” Cor­pus said.

Since its start in 2003, Pho­to­bucket was all about shar­ing pho­tos on­line. It be­came a val­ued free re­source for blog­gers un­will­ing to pay their own blog­ging com­pany $4 a month to host their pho­tos, ac­cord­ing to a 2005 Wall Street Jour­nal story that de­scribed Pho­to­bucket as “the most pop­u­lar on­line photo des­ti­na­tion” with more vis­i­tors than the photo sites of Ko­dak and Ya­hoo.

Other photo sites at the time fo­cused on get­ting dig­i­tal pho­tos printed on paper. Pho­to­bucket wasn’t in­ter­ested in prints, a mar­ket that peaked in 2010, with 16.6 bil­lion prints, ac­cord­ing to Key­point In­tel­li­gence, a mar­ket re­search firm.

On­line photo shar­ing was the growth in­dus­try. It went from 1.8 bil­lion pho­tos shared on­line in 2010 to 103 bil­lion last year.

“For the most part, all the per­sonal photo shar­ing be­tween friends and fam­ily is done on so­cial net­works,’ said Alan Bul­lock, Key­point’s as­so­ciate di­rec­tor in con­sumer pro­fes­sional imag­ing ser­vices. “And Face­book is by far the lead­ing site.”

Ad­ver­tis­ing was the rev­enue stream for Pho­to­bucket, even if the com­pany was crit­i­cized for highly ob­nox­ious ads that by­passed some ad block­ers. But as ad­ver­tis­ing rev­enues dwin­dled — “We’re not that pre­mium brand that war­rants and gets those pre­mium ad­ver­tis­ing dol­lars,” Cor­pus said — the com­pany looked for new rev­enue sources.

Rev­enue sources

Pho­to­bucket now sells prints and photo gifts so cus­tomers can get their pho­tos printed on blan­kets, pil­lows and pet bowls. The com­pany is also test­ing a new store called Pho­to­bucket Deals, which is a mar­ket­place of ran­dom odd­i­ties such as a toi­let night light or a cover for your mar­garita glass. Both print-on-de­mand mar­kets and dis­count marts are very com­pet­i­tive in­dus­tries, but Cor­pus said he hopes to high­light Pho­to­bucket busi­nesses in the fu­ture.

Pho­to­bucket still of­fers a free, ad-sup­ported plan that is lim­ited to 2 gi­ga­bytes of storage and no host­ing. Ad­free plans are also avail­able for $2.49 a month, but again, with no host­ing. The site at­tracts 35 mil­lion unique users a month, down from 60 mil­lion two years ago, Cor­pus said.

“That’s still great for Pho­to­bucket, but it’s still in de­cline,” Cor­pus said. “Peo­ple would love 35 mil­lion unique month­lies.”

On­line im­age host­ing is a dif­fer­ent beast. None of the pop­u­lar photo-shar­ing sites stepped up to take in wary Pho­to­bucket users. Smug­mug al­lows it, start­ing at $3.99 a month. Ya­hoo’s Flickr also has a free plan, with ads. And while Imgur is a pop­u­lar third-party host­ing plat­form, its terms of ser­vice for­bid the prac­tice.

Peo­ple who have up­loaded thou­sands of im­ages over the years to fo­rums or old blogs are un­likely to pay the $399. But ex­pect­ing busi­nesses that rely on im­age host­ing to pay up seems rea­son­able, Bul­lock said.

“While $400 is a lot more than noth­ing, it could be some­thing small to pay as a busi­ness un­til you find some­thing else,” Bul­lock said. “But when you find some­thing else, they may start charg­ing, too.”

Pho­to­bucket must now also im­prove its rep­u­ta­tion.

“They’ve got to look at their op­tions. I don’t blame them for that,” he said. “But now they’ve got a self­in­flicted black eye that I think will be dif­fi­cult to re­cover from.”

Ta­mara Chuang: tchuang@den­ver­ or visit­mara

Gabriel Scar­lett, The Den­ver Post

Pho­to­bucket CEO John Cor­pus poses at com­pany head­quar­ters in Den­ver. Pho­to­bucket is strug­gling to bal­ance prof­itabil­ity with a cus­tomer base that was ac­cus­tomed to the site’s free photo host­ing but is now be­ing asked to pay.

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