Webware

Yahoo's Flickr site has deepened its relationship with photo-licensing power Getty Images so photographers can nominate their own photos for inclusion in Getty's Flickr Collection.

Previously, Getty decided which images it believed were commercially viable, and since the program launched in July 2008, it has put together a collection of more than 60,000 commercial images. Now photographers, instead of just being able to indicate that they're willing to be contacted by Getty, can actively submit a portfolio of images.

"A submission should include exactly 10 images that represent what you consider to be the best of your work. The Getty Images creative team will evaluate submissions based on style, subject matter, and technical skill," Andy Saunders, Getty's vice president of creative imagery, said in a statement. "If some or all of the photos--or other images from your photostream--are selected for the Flickr Collection on Getty Images, you will receive an invitation via FlickrMail. This invitation will clearly show Getty Images' initial selection of images and introduce the enrollment process."

The partnership is an interesting confluence between the old-school world of stock photography and the nouveau era of digital photography and the Internet. With digital SLRs and the Internet, high-quality photos are easier to come by, leading to the arrival of several "microstock" companies that sell photos on a royalty-free and relatively inexpensive basis. It's hurt professional stock photographers, but it's provided extra income to any number of enthusiasts and amateurs.

Flickr never launched its own microstock site, despite an abundance of enthusiasts contributing photos, but the Getty partnership does mix a commercial ingredient into the Yahoo photo-sharing site's operations.

The easy availability of photos at Flickr and other sites can lead to copyright infringement troubles. On Tuesday, Toyota USA apologized for using Flickr photos without permission:

Toyota apologizes for pulling images from Flickr without photographer permission. Images from a handful of photographers appeared on a Toyota site for five days. We're working quickly to reach out to the individual photographers involved. Until then, the images have been removed, and corrections have been made to the process of pulling images from Flickr.

So it's clear that some Flickr photos have business value, whether for their professional quality or their everyman snapshot flavor.

Getty and Flickr won't disclose any details about their business relationship, but here's what Flickr has to say about how the finances work for photographers:

Flickr has a business relationship with Getty Images, though we've never publicly discussed the specifics of the deal. Regarding the photographers, Getty Images will be the exclusive distributor of select Flickr members' content, and in turn, Getty Images will facilitate the license of such photography and will pay the royalties directly to the members. This will be a direct relationship between Getty Images and each Flickr contributor.

Flickr photographers will be asked to sign a Getty Images contributor contract, if they agree to have their images licensed for commercial use, that will specify rates for rights-managed and royalty-free royalties, as applicable. Rates for royalty-free imagery are 20 percent; rates for rights-managed (images) are 30 percent. These are directly in line with royalty rates that (Getty's) existing contributors receive.

When I wrote about KaChing last December, the site was a fantasy stock market where you could track the pretend portfolios of other investors. But the game of make-believe is coming to an end at the company, and KaChing is now letting users attach real money to their accounts. In doing so, this company is taking on the $11.5 trillion U.S. mutual fund industry. It looks like a great opportunity, both for the investors in the company and consumer equity investors.

KaChing lets anyone create and manage a portfolio on the site, and any user can see these portfolios and track their returns. Unlike other fantasy stock-trading sites, though, with KaChing you can actually commit money to mirroring another user's portfolio. This feature should be live on the site Monday.

The site offers some protection for users choosing to track others. It awards "genius" badges to portfolio managers to only those players who have been on the site for a year, who have qualified for and signed trading regulatory documents, and whose consistent performance measures over a certain level. Only genius users can be mirrored.

KaChing's "geniuses" might be worth investing real money in.

(Credit: Screenshot by Rafe Needleman/CNET)

KaChing traders also have to specify their fund or portfolio philosophy, which is tracked and rated by the system. If you say you're a health care investor, for example, and then you make a killing on Apple, your return may go up but your "sticks to strategy" rating will decline, and people following you or investing alongside your portfolio will be sent "drift alerts" to tell them that you might have moved from the "good" category into either the "lucky" or "reckless" bins. As CEO Andy Rachleff says, with a typical mutual fund, there's no way to tell if the investors are lucky or good, and especially not in between quarterly statements.

To invest alongside KaChing geniuses, you have to use fund a brokerage account at Interactive Brokers, which KaChing will do for you, online. KaChing works with this particular brokerage since it has an API that lets KaChing make fast trades fairly cheaply, at 2 cents a share.

Geniuses on the site set their own management fee, of which KaChing takes 25 percent. KaChing also will collect margins on stock trade commissions. Investors who are mirroring KaChing geniuses can stop doing so whenever they wish and trade their stocks out thereafter. Unfortunately, you can't yet trade into another genius' fund without setting up a new trading account yourself, but that should be fixed shortly. Account minimums are low, though ($3,000) and there are no exit fees.

Rachleff told me that the real secret behind KaChing is the observation that the Ivy League endowments outperform the S&P due to "a superior strategy to choosing investment managers," which is what KaChing's algorithms check for. Oversimplified, KaChing rates adherence to strategy coupled with returns, not just returns themselves. That makes returns predictable, Rachleff says.

Top KaChing genius Min Thang believes in health-care.

(Credit: Screenshot by Rafe Needleman/CNET)

Of more than 8,000 KaChing users with public portfolios, only ten, so far, are geniuses whose accounts can be mirrored. Hopefully that number will rise. These ten people need competition, and users need options.

I'm one of millions of consumers dissatisfied with the returns in my mutual funds as well as the lack of transparency in these investments. I am a big fan of KaChing's model, enough so that I am strongly considering putting some of my own money into the service once there are more genius managers to track.

Umoo is a virtual stock-trading platform that is, admittedly, a little late to the market. There are several virtual stock-trading games, including a prominent app from Marketwatch called the Virtual Stock Exchange. Realizing that, I wasn't sure if there was any more room for a game like Umoo.

I'm still not entirely sure.

Umoo (pronounced You-Moo) was originally started in Israel, but it has quickly made its way to the United States. In fact, the game originally only allowed gamers to trade on U.S. markets. But after building a small following, the company realized that it wasn't maximizing its monetization potential, so it opened it up to global markets to attract English-speaking gamers around the world. And that's where it finds itself today.

The premise
Umoo is a virtual stock-trading game. But it does it a little differently than most of its competitors. Rather than ask you to invest in a handful of companies and see how you did after the market closes, Umoo tries to replicate a real stock-trading environment by providing real-time trades. So, if your portfolio includes Best Buy and its share price is tanking for some reason, you can dump the stock and buy something new. It makes Umoo more realistic.

Winning some cash
Although you're given 100,000 virtual points to trade with in free games, Umoo's real appeal is in its cash games. Those games, which are created by Umoo employees, require all players to pay an entry fee before they can join the game. After investing the cash, each player is given the same amount of money to invest with during the timed game. The players with the highest returns on investment win cash prizes. Paid games run "24/5", since global markets aren't open on weekends.

Pick your game in Umoo.

(Credit: Screenshot by Don Reisinger/CNET)

I was a little disappointed with Umoo's profit-sharing plan. Games can be played for as little as $1, but some go up to $100. In either case, Umoo is taking the lion's share of the cash. For example, one $5 game that's currently available in the app, awards the winner $11.96 for achieving the highest return on their investment. Umoo has, so far, collected $65. An Umoo representative told me that the percentages it takes from each game decline as the cash pool increases, but I noticed a sizable discrepancy in every game between the amount of cash available and what the person actually wins. If the company wants to attract more users, it needs to pay more cash.

During my meeting with Umoo, the company was also quick to remind me that it is legal to play. Even though cash does exchange hands, the company said Umoo is a game of skill, rather than chance, making it legal across the globe.

Facebook employees and investors can now sell some of their stock to Digital Sky Technologies, the Russian investment firm that infused $200 million into the social network this spring.

Part of the deal at the time of the investment would be that Digital Sky Technologies would buy back up to $100 million in common stock from shareholders whose shares have vested.

Now, Digital Sky Technologies is purchasing stock at $14.77 per share, which assumes a valuation of about $6.5 billion for Facebook, according to Brad Stone of The New York Times, who first reported the news. That's lower than the $10 billion valuation at which DST originally invested, as well as the $15 billion at which Microsoft invested $240 million in the fall of 2007. But those two figures are considered to be preferred-stock valuations, not paper valuations.

But $6.5 billion is still a higher valuation than a few months ago. Before DST's investment brought some order to Facebook's internal stock trading, an employee at a firm that brokers privately-traded stock told CNET News that some Facebook employees, frustrated that they had not yet had a chance to cash out stock through an acquisition or an initial public offering, were looking to unload stock at a valuation well under $3 billion.

That sort of trading was difficult for Facebook to control. With the DST investment, employee stock sales became more official and easily regulated.

"While individuals must make their own decisions about participating in this program, I'm pleased that the price DST is offering is much greater than the price originally considered last fall," Facebook founder and CEO Mark Zuckerberg said in a statement. "This is recognition of Facebook's growth and progress towards making the world more open and connected."

On the flip side, the relatively low valuation may mean that Facebook employees will be more reluctant to sell to DST. Some may prefer to hold out for the possibility of an acquisition at a higher valuation, or wait until Facebook goes public--something that always seems to be just off the horizon.

Facebook's valuation has been one of the most talked-about numbers in Silicon Valley, especially as the company (reportedly) toys with the idea of an IPO. There were rumors that Zuckerberg had rejected funding that would value the company at $4 billion, shortly after legal documents from the ConnectU vs. Facebook trial revealed that the company then valued itself at $3.7 billion.

And Facebook can look forward to be even more front-and-center in the gossip industry's crosshairs: the alleged tell-all about the social network's origins, Ben Mezrich's "The Accidental Billionaires," hits stores on Tuesday.

Getty Images' Flickr collection is now live.

(Credit: screenshot by Stephen Shankland/CNET)

Getty Images, one of the stock photography powerhouses, has switched on a program by which selected Flickr photographers can license their images to paying customers.

In earlier days of the microstock business, in which photographers license images over the Internet for relatively low prices through sites including Getty's iStockphoto, there was speculation Flickr might jump into the market. After all, there's plenty of good material, and it's often already tagged for easier categorization.

Instead, though, Flickr and Getty announced a partnership in which Getty taps Flickr photographers it believes have potential to sell their photos through Getty. Invitations started going out in January, and now the Getty's Flickr collection is live, Yahoo announced on its blog Tuesday.

One complication, though: many photographers at Flickr offer their images under Creative Commons licenses that permit copying and redistribution of the photos.

According to the Flickr help section on the Getty program, Yahoo switches Creative Commons-licensed photos to all rights reserved if they're submitted to Getty:

Can I sell my Creative Commons-licensed content?

There is a chance one of your Creative Commons-licensed photos may catch the eye of a perceptive Getty Images editor. You are welcome to upload these photos into the Flickr collection on Getty Images, but you are contractually obliged to reserve all rights to sale for your work sold via Getty Images. If you proceed with your submission, switching your license to All Rights Reserved (on Flickr) will happen automatically.

If you're not cool with that, that's totally cool. It just means that particular photo will need to stay out of the Flickr collection on Getty Images.

Ben Metcalfe launched a discussion of the Creative Commons issue, pointing out that Creative Commons licenses are perpetual.

In response, a Getty Images representative said, "We would never expect anyone to revoke a license. We know that your image is being used with your permission by those who licensed it through CC (Creative Commons), which is why we are placing CC images we choose in RF (royalty-free licensing) only. We couldn't place it in RM (rights-managed) because rights management would not be possible. We came to this so as not to exclude inviting CC images."

As expected, iStockphoto launched its audio clip licensing service, called iStockaudio, on Wednesday.

The move marks another expansion for a site that pioneered the "microstock" business of inexpensive, royalty-free image licensing over the Internet. The company, acquired by stock art power Getty Images in 2006, also offers video, Flash animations, and vector illustrations.

iStock Chief Executive Bruce Livingstone announced the availability of the audio licensing Wednesday in a blog posting. The company has been accumulating audio clips over the last year, and now 10,000 are available.

"You can use our iStock tracks as many times as you like, wherever you like," Livingstone said. "Our tracks include public performance, synchronization, and mechanical licenses."

That means there are constraints on audio contributors, though, who may not be members of various professional organizations.

"iStockphoto has used reasonable efforts to ensure that the suppliers of audio content are not members of any performing rights, mechanical rights or any other similar societies (such as SOCAN, ASCAP, BMI, SESAC, PRS, MCPS, SACEM, SDRM, JASLAC, GEMA, etc.) and that no performing rights or other royalties are required to be paid to any such organizations," according to the iStockaudio license agreement.

When a customer licenses an audio clip--the noise of smashing glass or a background melody, for example--the company shares a percentage of the revenue with the contributor of the clip. Licensing fees range from 2 credits for a basic, simple clip to 25 credits for a long, elaborate one; credit costs range from $18 for 12 to $1,900 for 2,000.

SAN JOSE, Calif.--iStockphoto, which helped pioneer the "microstock" market for inexpensive, royalty-free imagery, plans to launch an audio-licensing business Wednesday.

The Getty Images subsidiary already offers photography, illustrations, Flash animations, and video. iStockaudio was a natural extension--one the company's customers had sought, iStock Chief Executive Bruce Livingstone said in a speech here at the User-Generated Content Conference and Expo.

iStockphoto CEO and founder Bruce Livingstone

(Credit: Stephen Shankland/CNET Networks)

"We're introducing iStockaudio on Wednesday this week," Livingstone said. The company announced the iStockaudio plan last May, but the actual arrival was delayed by a suddenly necessary overhaul to the site's search system, he said.

Initially, the audio service--think background music or the sound of a shattering window--will be available through public beta testing. Interface changes are possible before the final launch, scheduled for the South by Southwest conference that begins March 13.

So far, there are about 10,000 audio clips at the site, Chief Operating Officer Kelly Thompson said in an interview. "There's a lot of pent-up demand," he added.

Disruptive
iStockphoto, and the microstock industry in general, is an example of what can be done to harness the power of large numbers of people. Many in the traditional stock art business have been displeased that a bunch of amateurs willing to see their work sold for less than $1 a pop are eroding their business. But the hard economic reality is that microstock companies have put images on the market from photographers who are good enough to sell a few images now and again, even if not good enough--or devoted enough--to quit their day jobs.

iStockphoto now has about 65,000 photographers contributing to the site. Because Getty Images went private last year, the company won't reveal its 2008 financial results. The results were better, though, than in 2007, when the company garnered $71 million in revenue and paid contributors more than $21 million for their work.

The company is, of course, a technological phenomenon. It uses the Internet not only to connect large numbers of buyers and sellers, but also to help them view and distribute digital photography. "When iStock really started to take off is when the Canon Rebel came out," making it "affordable to shoot really good digital," Livingstone said.

Getty Images, which has a more traditional rights-managed image-licensing business, has a program to try to recruit new photographers from Yahoo's Flickr photo-sharing site, a partnership Livingstone helped set up.

Ups and downs
Thompson and Livingstone shared some of the ups and downs of their business' history at the conference. The lesson for companies such as iStockphoto that rely on user-generated content: pay close attention to what users and customers are asking for. They were asking for video, for example, and that now accounts for 10 percent of the subsidiary's revenue.

iStockphoto plans to launch its new audio clip-licensing site Wednesday.

(Credit: iStockphoto)

The flip side is launching something people haven't asked for. Livingstone had the iStock Forumeter idea, for example. It let people label forum contributors as grouchy crabs, helpful superheroes, comedic clowns, and unconstructive trolls.

"The problem with this is, the community didn't ask for it, didn't want it, and it was too accurate," Livingstone said. "People didn't really want to know how they were seen in the forums. It was a flop. We got rid of it in about 30 days."

Another bad idea: the Buy Request program for setting up custom photography shoots. In the company's core business, "99.99 percent of our sales are done unassisted. This little brainchild was the exact opposite. We had to help customers 99.99 percent of the time. It just didn't work," Thompson said.

The company also has struggled to keep up with growth of its computing infrastructure.

"It's important to be wrong as often as you are right, as long as you learn from the mistakes," Livingstone said. And when things go wrong, it's important to tell your users you're sorry. "Sometimes, the community needs to hear you acknowledge that there was a problem and apologize for it."

Once, the site went down after a truck cut the fiber line to the company's headquarters in Calgary, Alberta. "We did manage to get a check out of the company that supplied the fiber optics. Instead of keeping it, we decided to disburse to the community--the people who would have sold photos. It wasn't a lot--maybe $45,000--but I think people really appreciated the gesture," Livingstone said.

Growth strains
"Mostly, we plan for a reasonable amount of growth. Too much bandwidth is costly, but not enough is a disaster, and we know," Thompson said. "Early in our life, we got a bit behind the curve, and it was tough to catch up."

The company pushes what the MySQL database software can do, but this year, it concluded that it just couldn't handle the site's search operation. So in what was something of an emergency, it rewrote it in the C programming language.

"Our search was failing. We had to put everything on hold, surgically extract search from our Web site, and put it back in," Livingstone said.

Now, though, instead of 30 overtaxed search servers, the company has a single machine handling the chore, with four backup machines to handle potential problems.

The company hopes that new software called Dexter, which lets customers license images directly without using the Web site, will offer further help. A Mac OS X version is in private testing with people who license many images now, and a version running on Adobe's AIR software foundation is under development.

Apparently, it wasn't as easy to launch a microstock site for lower-cost photography sales as Corbis thought it would be.

Corbis, one of the established powers in licensing stock photography, launched SnapVillage in 2007, arguing that the microstock market was still young. But on Thursday, Corbis announced that it will phase out SnapVillage by the end of the year.

Contributing photographers and illustrators, along with customers and existing imagery, will be moved to a new microstock part of Corbis' existing Veer property called Veer Marketplace. Veer, a stock art agency Corbis acquired in 2007, offers both royalty-free and rights-managed imagery.

"We recognize that as the market has rapidly evolved over the past two years, we need a bigger, better offering to achieve success in microstock," Corbis said in a blog post. "In the months ahead, we'll be inviting SnapVillage contributors and customers to Veer Marketplace. Once Veer Marketplace is launched and fully operational, it will become Corbis' only microstock brand."

SnapVillage competes with a host of microstock competitors that arrived on the market earlier. Those include iStockphoto, acquired by Getty Images; StockXpert, acquired by JupiterImages; Fotolia; Dreamstime; and ShutterStock.

The partnership between Flickr and Getty Images is finally moving forward. Early Wednesday the Yahoo-owned photo-sharing service announced that invitations from Getty have been going out in high numbers. Some members who have had one or more of their images chosen to be on Getty's sale site could have gotten notice as early as last week.

Originally announced in July, the special Flickr-branded Getty collection will be launching in early March. It's the first official move by Flickr where users can sell their images, although all the purchasing and organization will be done on Getty's end. In the interim Getty has set up a Flickr group where those selected can discuss licensing and rights issues if there are any.

Unlike microstock services such as iStockPhoto, Shutterstock, and Fotolia, the Getty/Flickr partnership will be royalty-free and rights-managed only. It's also going to continue to be invite-only, whereas the other sites allow user submissions.