VentureBeat

By this point, it has almost become standard for any decent-sized web service to offer an application programming interface — a way for third party developers to build applications that make use of information and distribution channels on a popular site. The most striking example is social network Facebook’s developer platform, which has spawned hundreds of thousands of applications that are now used by millions.

Not to be left out, photo-sharing site Photobucket is publicly launching its own API today. The promise is that developers will be able to access the billions of photos, slide shows and videos on its site, and integrate them into their own applications. The company has around 40 million total unique users, with users from social network MySpace comprising roughly have the traffic to the site. It is one of the larger photo-sharing sites on the web, rivaling popular photo-sharing site Flickr (which has had its own API for years) as well as Facebook, which boasts by far the largest collection of photos on the web.

The API was actually developed a few years back, but had only been privately available to commercial partners. It will let any developer do things like log in to user accounts, upload photos and videos, change metadata like titles and tags of photos, and search publicly available Photobucket content.

The company hopes to make the photos it hosts more commonplace not just on other web sites, but on desktop applications, mobile phones, home entertainment systems and more. Third parties that have already developed applications for the API include Adobe, Tivo, AOL, FotoFlexer, Intercasting, RockYou, Slide, Animoto and Snapvine. FotoFlexer, for example, is a web application (and Facebook app) that lets you make high quality, near-Photoshop quality alterations to photos. The site evolved as a place for MySpace users to store and share photos. (And in fact, it was around a year ago that News Corp. first cut off Photobucket’s access to MySpace, then bought Photobucket). Today, people also use Photobucket to host photos that are displayed on blogs, other social networks and marketplace sites like eBay and Craigslist. The service has continued to expand, adding some 15 million registered users after it was purchased. The site itself, Photobucket.com has also seen increasing traffic, with searches for photos on Photobucket.com counting as the second largest source of overall traffic after MySpace, chief executive Alex Welch tells me.

You can check out a gallery of applications that have already been built by Photobucket partners here.

Updated

When we reported that photo widget site Slide said it was the biggest independent widget maker on the web, with 150 million daily slide-show views, someone anonymously commented and said that RockYou’s numbers were better.

Either way, some bad news for both companies came out earlier today. MySpace is reportedly seeking to acquire Flektor, a scrappy, state-of-the-art new service that directly competes with Slide and RockYou, for an estimated $10-20 million, according to Techcrunch.

The implications for the two companies could be unpleasant on a few levels. While both Slide and RockYou have huge user-bases, they also depend heavily on social networking giant MySpace and other sites. MySpace has made it abundantly clear that it is happy to pull the plug on widgets that lose its favor. If Slide or RockYou try to push more advertising, and compete head-on with one of MySpace’s new properties (Photobucket, and potentially Flektor), MySpace may try to snuff them. How valuable are these terrifically popular widgets when a small competitor can innovate quickly, get scooped up at a much lower price and have a giant platform (like MySpace) to gain distribution?

The news highlights the fundamental problem that widget makers face: No matter how popular they become, they continue to rely nearly entirely on the tolerance of the social networks for their traffic. Any monetization scheme they come up with will require permission from these benefactors, or the masses of independent bloggers, and this isn’t guaranteed. Increasingly, the question is whether these widget companies will be able to make money the way their investors hoped. (VentureBlog has a post that discusses this dilemma.)

Back to the Slide-RockYou skirmish: Seeking clarification, we talked to RockYou founder and CEO, Lance Tokuda, and he said their numbers were stronger than Slide’s, but declined to offer specifics. “We have more,” was all we could get. Probing further, we talked to a contact at a company that partners with both RockYou and Slide, and so sees their incoming traffic. RockYou, this contact said, has a 30% lead.

The commercial analytics paint a different picture (see below). Alexa has Slide (in red) clearly in front, as does Comscore. (Editor’s update: Generally, we don’t use Alexa data because it is unreliable; we do so this time because it is backed up by Comscore. Also, see comment below from RockYou’s Tokuda asserting that stats don’t show the full picture)

Their new potential nemesis, Flektor, is the brainchild of two co-founders of Naughty Dog, an immensely successful video game developer, and offers better features — like the ability to blend in video, text effects, and more to your slideshows — packaged into a slick interface. A spokesperson declined to comment on the MySpace acquisition rumors, and said the company has yet to launch officially, but plans to do so in about two weeks. Meanwhile, RockYou is finally confirming their most recent round  of funding, which we had reported back in March. The amount remains undisclosed.

(Update: Slide has appointed former LinkedIn and PayPal executive Keith Rabois as vice president of strategy and business development. In this new role, Rabois will help set the company’s strategic direction across all content and distribution channels, the company said. Rabois, who led corporate and business development for LinkedIn, also worked earlier for Peter Thiel at Clarium, and is on the boards of Yelp, Xoom, Vendio and Fanlq).

(Update: VentureBeat has now confirmed this with a source, who says details have to be wrapped up before an announcement is made. There is no exact price yet, because that is one of the things still being negotiated. It is somewhere between $400 million, which is Photobucket’s asking price, and $200 million, which is what MySpace asked for. Also, see latest stats below.)

Photo-sharing site Photobucket has agreed on terms to be acquired by the giant social network Myspace, Valleywag first reported.

Despite the lack of attribution, details being linked strongly suggest there’s something to this (and others are now saying the purchase price is $250 million). We’ve just gotten off the phone with Alice Lankester, senior director of product marketing, who said the company is not commenting, but that she’d let VentureBeat know if there was anything to say. Valleywag often gets it material from rank and file employees slipping rumors to the publication. Much of it is accurate. Much isn’t. (Update: In this case, it was accurate).

Photobucket is a convenient service for storing and sharing photos and is used by many MySpace users, who link to their Photobucket photos from MySpace. Photobucket’s robust growth has been a thorn in the side for MySpace, which is jealously trying to offer its own photo-sharing service. See stats below for the latest from Hitwise traffic, which shows Photobucket now commands a 40 percent market share in photo sharing. The two have come to blows several times (VentureBeat’s coverage), with MySpace arguing Photobucket’s marketing strategies violate its terms of service. But the two patched things up recently without explanation — another hint.

Photobucket has called an all-hands staff meeting for 10am PST this morning, ValleyWag reports. Photobucket’s bankers, Lehman Brothers, were reportedly looking for a purchase price of at least $300 million.

This would be a huge deal for co-founders Alex Welch and Darren Crystal, who started the company in 2003, and for Trinity Ventures, which invested $10.5 million last year. Tom Cole, partner at Trinity and Photobucket board member, also said he couldn’t comment. Before last year’s round, Photobucket raised $2.5 million from individual investors.

Here are the stats from Hitwise:

- Photobucket is the number one visited website in its “photography/entertainment” category, receiving 39.63% of visits to that category for the week ending May 5, 2007
- Photobucket is the 22nd most visited website overall in the US among all US websites for the week ending May 5, 2007
- 58.78% of Photobucket’s traffic came from MySpace.com and MySpace Mail combined for the week ending May 5, 2007.
- Based on Hitwise Clickstream data, Photobucket was the fifth most popular website visited after MySpace.com, with 1.7% of the traffic leaving MySpace.com to go to Photobucket for the week ending May 5, 2007.
- MySpace.com was the most visited US domain receiving 5.85% of all US online traffic according to Hitwise for the week ending May 5, 2007.

Here’s the latest:

Thanks for patience — First, VB just changed servers. We understand there are a few formatting problems on our front page, feed hiccups and issues with our search engine. We’ll working to fix them.

Sabio Labs raises second round — Sabio is a secretive Palo Alto, Calif. start-up building a new design process for analog chips. It’s likely up to something significant, because Andy Bechtolsheim, the brilliant engineer and co-founder of Sun Microsystems has led a round of investment into the company. Investors in the earlier, first round include individuals like Art Reidel (CEO Scintera – on the board ), Bill Unger (of Mayfield), Barr Dolan (of Charter Ventures), Rajeev Madhawan (CEO Magma), Carl Showalter (of Lightspeed Ventures), Marc Friend (USVP and Summit Partners), Bobby Yazdani (CEO SABA), Amidzad (Palo Alto investors) and Harry Cheung. We plan to follow up with the company’s chief executive, Mar Hershenson.

The blog search engine Technorati has bought PersonalBee — PersonalBee (see our coverage) lets experts and others create their own news page for others to follow along. See Technorati’s statement here. Meanwhile, Technorati continues its search for a chief executive, something we’ve heard started several months ago. Technorati could have moved into providing blog and stat features, but the nimble MyBlogLog moved more quickly (our coverage). After more than $14 million in venture capital, Technorati appears still to be searching for a business model.

Is Photobucket in negotiations with Fox Interactive Media, owner of MySpace? — That’s what we’ve heard from a source, who says the two are working through Lehman Brothers in talks. Even if true, it’s another thing to speculate whether the recent scuffle between MySpace and Photobucket is related to deal jockeying. Apparently, Diller’s IAC is also interested in Photobucket. (See our update here)

Competitious has raised an angel round — Competitious is a start-up company that gives users tools to compare themselves against competing companies, using a number of variables, such as Web traffic, feature lists and news articles. Paul Colton, the founder and CEO of Aptana, which recently took over the RadRails project, is one investor. The company is still early, and has yet to release its main product. (See our earlier coverage).

Traits of successful entrepreneurs — Venture capitalist Ryan Floyd reports on the qualities of the best entrepreneurs he has funded.

Aggregate Knowledge raises cash, but ChoiceStream raises more — Following our report yesterday about Aggregate Knowledge, a behavioral search company raising $20 million, we learned competitor ChoiceStream, of Cambridge, Mass. has raised more, $25.79 million. The company hasn’t responded to requests for comment. Dan Primack has more details and speculates the company’s valuation exceeds $250 million. Rumor we’ve heard is ChoiceStream rejected a $150 million or so buyout offer, so Dan’s reasoning is sound, though SEC filings can also be misleading. Investors are General Catalyst, Sutter Hill Ventures and a family trust affiliated with ChoiceStream CEO Stephen Johnson. The company has more than 100 employees, and so is burning $1 million a month.

Updated with second response from Photobucket

Photobucket, the popular photo storing service, recently unveiled new advertising features — as it reportedly seeks to sell itself for hundreds of millions of dollars.

However, MySpace, pissed off by the new features, and perhaps a bit perturbed by the Palo Alto, Ca./Denver-based Photobucket’s momentum (see our post here), has shut down links by MySpace users to their videos and slideshows hosted at Photobucket.

This isn’t the first time MySpace has shut down links from other services, but the latest move poses a major problem for Photobucket — which is still dependent on MySpace for much of its traffic. Fewer links mean less advertising, and frustrated users — who may decide to use photos and videos from elsewhere. Last night, Photobucket launched a PR offensive, posting about the flap on its blog. Hundreds, if not thousands, of users have responded in comments, with their ire directed mainly at MySpace.

Photobucket is the loser in this battle, because it is more dependent on MySpace than vice versa. We’ve requested comment from Photobucket, but haven’t heard back. Before this latest action, we spoke with Tom Cole, a partner at Trinity Ventures, and a Photobucket investor and board member. He stressed the importance of the latest advertising offerings at Photobucket. These include contests — where high school Photobucket users compete to create the best mashups using photos and vidoes of Mandy Moore and her “Extraordinary” track — and sponsorships by Spiderman and Disney of things like Peter Pan slideshows surrounded in frames filled with Peter Pan people. All of these have been popular and potentially could generate good revenue for Photobucket.

MySpace has responded with a statement saying that the new slideshow features violate its terms of service (see vague references in section eight). The statement:

…Photobucket recently began running an ad-sponsored slideshow and encouraged users to post these ads in bulletins and profiles throughout the community. We spoke to the company about their actions, but they refused to respect our community’s terms and we had no choice but to disable their service.

Update: To be clear, the problem is not actual advertising within video, so much as the branding efforts discussed above, such as the Spiderman sponsorship. See more here in Adweek. By the way, we’re hearing rumors that Photobucket and MySpace’s parent, FIM, have been in talks about FIM possibly acquiring Photobucket. We haven’t confirmed those rumors. It is only a step further, then, to speculate that this tango is related: By showing Photobucket is so dependent on MySpace, FIM scares off other potential suitors, and thus reduces the purchase price of Photobucket — nice for MySpace.

Also, here is Photobucket’s latest response:

Photobucket was not contacted by MySpace about this issue. Photobucket is continually identifying new ways for brands to reach, and engage with their audiences. One of the ways we can do this is by allowing our users to combine their own content with that of brands to create personalized slideshows and videos. Some of our users choose to share their slideshows with friends on blogs and social networks, of which MySpace is obviously one. This content is not clickable and does not generate revenue for Photobucket – only the branded content and environments on Photobucket do that. In addition, MySpace is claiming that some of these slideshows contravene its terms of service. However, it has decided to block the posting of user-generated videos from Photobucket, not slideshows.

Brands have a lot of great content available that users want to share with their friends and networks. It’s a trend which is only going to increase, and we think it’s good for the brands, for the users and for social networks to provide ways to create and share that compelling content. Limiting users’ ability to do so would seem to be contrary to MySpace’s mission and certainly to ours.

The latest action

Apple to release EMI music without anti-piracy technology — In agreement with music label EMI, Apple is making EMI songs available without digital rights management (DRM) through its iTunes music store. The music will be higher quality, and tracks will cost $1.29, or 30 cents more than the standard 99 cents. This means you can take those songs and put it on any device you want to, a significant development.

Google allegedly joins Microsoft in bid for the major online ad company, DoubleClick — DoubleClick is an online site that lets advertisers deliver ads to Web sites, and is considered a sort of middleman between advertisers and publishers. Without owning such a property, Google remains perceived as more heavily dependent on advertisers, who make up most of its business, and thus more likely to favor their interests. At this stage, the talks are rumors. Bankers generally try to drum up support for a deal, and have an interest in generating speculation. The latest, reported by the WSJ, is that the sale price is $2 billion.

InfoWorld closes print edition, and recriminations begin — IDG has shut the print edition of InfoWorld, and there’s a good interview here with IDG’s leader Pat McGovern about the future of news. He gets into a scuffle with former Industry Standard chief exec John Battelle about the failure of that magazine. McGovern blames Battelle for not selling during the bubble, and gunning for a billion dollar IPO. Battelle responds, saying McGovern’s got it wrong. Others support him. In comments to the interview, McGovern fires back, saying he doesn’t have it wrong, etc. Who cares? The Standard’s advertising base would have disappeared anyway, whether or not it was sold.

Photobucket worth $300 to $400 million? — At least, that’s according to rumors reported by Techcrunch, which says investment banker Lehman Brothers is trying to sell the private Palo Alto, Calif./Denver, Colo. company. We’d caution against taking these numbers at face value, given that bankers always push for a high value (they generally get a 7 percent or so cut of the transaction). The site’s success stems from its convenient storage of photos, and the ability to easily link to those stored photos from other sites, such as MySpace (see story in Fortune). Photobucket has a whopping 36 million registered users and adds another 85,000 per day, according to leaked data. Note that only positive data was released, such as skyrocketing revenue predictions ($4.35M in 2005, $9.34 million in 2006, and more than $32 million predicted this year). Nothing about the company’s costs.

Iminlikewithyou, the latest dating site with buzz — This site lets you flirt with your prospective date, but also makes you compete in an auction-like system. You start with 500 points, and lavish points on the girl you like, in an attempt to outbid rivals. If you lose the bid, you lose your points. This is meant to discourage you trying for a girl who is out of your league. You can stock up on points by filling out questions, which lets the site find out more about your tastes. This site was originally nurtured by YCombinator, and subsequently has received more money from undisclosed angels. The site lets you see who is logging in. We saw Digg co-founder Kevin Rose logging in over the weekend, for example.

Yahoo opens its popular email program to outside developers — Shortly after announcing unlimited storage for its email service, the company has opened up its Yahoo Mail API, to let developers build applications on top of the service. Now it has stepped ahead of Google’s Gmail in most respects. Yahoo Mail has more users, has more storage, and more a friendly API policy.

Search Physics raises angel round — The San Francisco is building search engine technology that extracts information from Web sites, but hasn’t launched yet. (Thealarmclock)

Cisco buys Mountain View-based SpansLogic for around $6M — See story here, and why this is bad for another company, NetLogic. SpansLogic was backed by ATA Ventures.

Freedom-2 removes tattoos — Go ahead and get your tattoos. Freedom-2 offers technology that allows you to get tattoos that are permanent, yet removable if you change your mind and want to get rid of them. Apparently Freedom2Ink uses pigments and dyes that are encapsulated in a polymer bead. They are absorbed in the skin but can be removed easily with laser treatment — which breaks the beads and lets the dye spill out. The New York company has just raised $1.5 million in a first round of capital, led by Brightleaf Capital and other individuals.

Openfloodgate, another YouTube for docs — Like Scribd, this site makes it easier to post documents online than say, via your blog. Tina Seelig, an adjunct professor of entrepreneurship at Stanford, who owns the site, said it offers more control over content than Scribd, because it gives you the option to limit viewing to private groups. However, the content available for public viewing is easily copied. She has self-funded the site. The works, from art to poems, are stored as PDFs, but are turned into images on the page. Here’s a tour.

Finally, see the latest deals — A reminder to check here daily for the latest news about investments in start-ups. Today, we’ve got Vyatta, Mimosa, Sana and more, and also an overview of the lastest on IPO activity.

Photobucket, a Silicon Valley start-up, has quietly become the third largest video hosting site after YouTube and MySpace — reporting more than 35,000 videos uploaded every day.

Next Tuesday, it announces some extensive image and video editing tools it hopes will help keep bringing people to the site. These users can post the edited versions to any of several popular sites, such as MySpace, Faceboo or Bebo.

These Photobucket editing tools, to be announced in a partnership with Adobe (the company that makes the popular Flash technology used for video editing), could take the wind out of the sails of smaller competitors.

Photobucket will let you edit by adding captions, bubbles, frames, transitions, music, and other effects — and by dragging and dropping the resulting content to a “sceneline” (you can get a sense of the editing dashboard in screenshots below). The service goes live shortly for paying Photobucket users, and then to the other regular 35 million users in March.

Techcrunch reported on some of this earlier.

You may have heard of other video editing sites, such as Eyespot, Jumpcut (bought by Yahoo), MotionBox and MovieMasher. The average user wants to edit videos easily, and without being shut in the proverbial “walled garden.” Some of these sites let you upload a video and edit it, but can be limiting if you want to edit a video you see somewhere else.

Cuts.com, a new start-up, is trying to push things forward. It lets you grab video from any site — with help from a bookmarklet — and lets you edit it at Cuts.com. You can then post the edited version on your blog, or send it on to friends with some html code. Cuts.com plays the video from within a player (see examples here; lots of farting). Additionally, Cuts.com doesn’t change the video’s underlying code — so when you send it to a friend, they can erase your edits, accept some or all your edits, and then tweak it with their own edits, and pass it along again. You can sign up for a testing version now. This verson lets you ad captions, sound effects (farts have become popular), skipping of sections, and looping (which is where a portion of video is repeated).

Cuts.com wants eventually to let you edit full-length DVDs, and then offer the editing tools to cable companies, to add to their DVR boxes, for example to allow parental controls, says chief executive Evan Krauss.

Cuts.com is a team of five, hailing from Yahoo, Yodlee, eBay and Half.com. It has raised $800,000 from First Round Capital and other investors, most of it raised earlier this year.

It wants to make money with advertising on the site, and may try to license its software to video sites.