When an internal announcement leaked out of Yahoo last month that it was “sunsetting” popular social bookmarking service Delicious, that service’s users flew into a panic. Yahoo quickly backtracked on the plans and the service remains up and running, if minimally supported.
Would Flickr survive the hemorrhaging at its parent company Yahoo? That was the next logical question. Today Flickr power user Thomas Hawk did a little investigation of how many $25/year paid Pro accounts and thus how much annual revenue he estimates Flickr contributes to Yahoo. Hawk’s methodology seems reasonable, if generous, and led to the conclusion that Flickr probably brings in around $50 million in annual revenue. Minus expenses, the profit it brings Yahoo is probably negligible. In other words, Yahoo has little economic incentive to support, maintain or grow one of the biggest photo sharing sites on the web and the place many of us pay to store our photos online. That’s cause for concern. Note:Former Flickr chief software architect Cal Henderson responds in comments below, saying that Hawk’s methodology is “deeply flawed” and that advertising makes up a large amount of Flickr’s revenue. So take the following with a grain of salt now that we’ve heard that from a former insider.
Hawk’s methodology involved looking at Flickr’s last stated number of users from a year ago (40m) and decreasing that number by the 18% that the site’s publicly visible web traffic has since declined by. Then he did a search for two common names, John and Jane, and counted what percentage of the first 100 users with each name were listed as paying Pro members. This admittedly crude method led Hawk to conclude that an estimated 7% of Flickr users have paid accounts. That’s reasonable, if not high. (I’d perform a more extensive analysis right now, using the same method, if Flickr allowed for automated extraction of information from its site. It doesn’t though.)
Put all the numbers together and you get about $50 million in annual revenue. “How profitable is Flickr?” Hawk asks after discussing hosting, office and staff costs, “Your guess is as good as mine. I suspect that after you back out all the costs on their revenue though that it’s not a meaningful or significant number for Yahoo.”
As we wrote last April, when Flickr’s epic community manager Heather Champ left the company, Facebook has long been larger and now sees almost an entire Flickr’s-worth of photos (3 billion) uploaded to that social network every month.
As we wrote yesterday when discussing Facebook’s crushing Google Reader in future of news reading, it’s clear though that Facebook has come up with a winning formula: emphasis on effective user experience, easy and meaningful social interaction, casual gaming and multi-media reading and writing, not just subscription like Google Reader offers.
Facebook isn’t just photos like Flickr, it isn’t just newsfeeds like Google Reader. It isn’t just video like YouTube. It’s a whole lot of everything, with really easy publishing of updates and leveraging a big social graph holding it all together as glue.
Should Flickr users be worried about their photos? In the short term, maybe not – but in the long term, something’s going to need to change. Either we all start storing our media in easy-to-use cloud systems, or we bend our knee to the mighty Facebook, or we come up with systems that make transfer of our digital assets between institutions as easy in the future as it is to move our financial assets between financial institutions today. (Look what Dave Winer made today, along these lines.)
What’s wrong with the internet, though, if millions of people can pay $25 per year to store a visual catalog of the world and that’s not good enough, financially?
Button photo posted on Flickr, under Creative Commons (one of the coolest things about Flickr), by user Poolie.
