photo-sharing.jpg
photo-sharing

Is there a photo-sharing bubble? Here’s our VC column for the Mercury News today about all the photo-sharing sites out there.

Our answer: Well yes, and no. We’re flaky on this one.

Analysts told us there’s plenty of room for new photo-related start-ups — despite our initial hunch, when setting out to report the story, that the sector is too crowded (remember our surprise last week at the news that Funtigo raised venture capital for what seemed like basic photo-sharing?).

Well, the space is definitely crowded. Shutterfly’s chief executive, Jeffrey Housenbold, told us that thousands of photo-sharing and…

…photo service sites had come and gone over the past six years. Thousands? Was he certain? Yep, “several thousand fly-by-nights,” he insisted.

Even if you settle on the more modest “hundreds,” there are still a ton of them. So why would companies like Funtigo still be getting funding? Well, turns out that the Funtigo story (we reported last week it had raised $2.76M in a first round from Sierra and Catamount) is too good to be true. We’d reported that it was a photo-sharing site, after seeing a large-font logo on its home page declaring “Share your photos” (it’s still there as of this writing). However, we contacted the Funtigo folks yesterday, and they were stealthy. Chief Executive Paul Remer said the company is still sorting out its plans, and couldn’t comment. Separately, venture backer Jed Smith, of Catamount, suggested the company might exit the photo sector altogether. “It is not a photo-sharing company,” he said, telling us to check back in January. When we asked him about the home page headline, he went silent.

So it is crowded, on the one hand. But on the other, there are niches that new companies can target. Things like facial recognition, for auto-tagging, which explains the fluster over Riya. Another is customized photos, for printing on things like t-shirts, mugs or ornaments — explaining the new funding going to folks like PhotoTLC.

[By the way, there are a slew of related start-ups like GoodStorm, featured at CNET and by Michael Arrington at TechCrunch. It’s a competitor to Kleiner-backed Zazzle, CafePress and Spreadshirt — not photo-sharing, but related in that they let you customize your logo on things like t-shirts, with GoodStorm setting up an online store for you to do this. GoodStorm was founded by Yobie Benjamin and August Capital’s Andy Rappaport in October and launched on Dec. 14.

Arrington: “Their business model is designed to cater specifically to nonprofits. They keep only 30% of the profits on a sale (giving the rest to the seller), and also donate a portion of profits to charity. Like I said, it’s hard not to like this company.”]

Finally, returning to the photo-sharing plays, there’s room too for sheer simplicity, such as Bubbleshare, also praised by Arrington. Meanwhile, Fotki, run by some boot-strapping guys in New York and Estonia, is also pushing the simplicity envelope, pledging next week to roll out a two-click way to get your photos online (Fotki’s Igor Shoifot dropped the fact they’ll be out in the valley chatting with VCs shortly; says they’ve had good discussions with Trident).

And if you’re broke, and wondering what to do with only two days before Christmas, you might consider Fotki’s 9-cent photo print offer. And like others, they ship overnight!