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The big lesson from Photobucket’s ‘ransom images’ debacle

·Contributing Editor
Phtobucket’s “ransom image.” Source: Digital trends
Phtobucket’s “ransom image.” Source: Digital trends

A major photo-sharing site is altering the deal. Pray it doesn’t alter it any further.

Unfortunately for Photobucket, it didn’t have a Darth Vader level of leverage when it recently started asking users to switch to a $400-a-year plan if they wanted to keep embedding their images on other sites.

This Denver-based firm’s more likely fate: serving as a lesson to others about the risks of an ad-based business model—and about how not to pivot to a different financial footing.

Getting thumbnailed

Photobucket broke the news of this change to its users in about the worst way possible: by breaking links and erasing images embedded on third-party pages, both popular options when the site launched in 2003.

As irked British stamp-collecting blogger Ian Billings wrote June 30, Photobucket images embedded in a philatelic forum had all been replaced with the same thumbnail graphic of a maxed-out gauge and the caption “Please Update Your Account To Enable 3rd Party Hosting.” He labeled it “a new sort of ransom.”

The only heads-up provided to users seems to have been a cryptic June 26 post on Photobucket’s blog that said “We have updated our Terms of Service, effective June 20, 2017” and advised reviewing those new policies “as they may affect your account.”

I didn’t get an email about the new terms at either of two long-dormant Photobucket accounts. Most users seem to have been just as surprised, to judge from their outraged tweets.

The actual change was far more severe than that post’s vague phrasing would suggest. Simply linking to a Photobucket image from elsewhere would now require paying $100 a year, while embedding images on other sites would entail the $400 annual fee.

Photobucket’s enforcement may be inconsistent, as some images I’d embedded elsewhere years ago remain viewable.

Failure to communicate

The company has since compounded its mistakes with some epically awful communication. After a few days of silence, its Twitter account surfaced to invite followers to “Learn more about the latest changes at Photobucket.”

Users were not amused, to judge from replies like “Do you guys HONESTLY think this is going to work out in the end for you?”

The company answered a query I sent to its tech-support email address (after finding no press-contact info on its site and having calls to its main phone number met with a recording advising I email support) by pointing me to a July 6 press release.

That document quotes CEO John Corpus blaming this shift on “the rise of ad blockers and the Company’s explosion of 3rd party hosting that generates zero revenue.”

Photobucket didn’t say how many people had signed up for its $400 plan since this revision. It doesn’t seem to have been any more open with other news outlets; the Denver Post’s story quotes the same statement I got.

Boom to bust

A decade ago, things looked much brighter for Photobucket. In early 2007 the traffic-measurement firm Hitwise acclaimed it as the web’s top photo-sharing site, with 41% of the market, not long before the News Corp. (NWS) subsidiary Fox Interactive Media paid $250 million for the company.

Photobucket missed the rise of mobile apps, but its easy embedding still made it an easy choice for adding images to sites like eBay (EBAY) that limited their own picture storage at the time.

Two years later, News unloaded Photobucket for $60 million. In 2011, Twitter (TWTR) picked Photobucket to run its new photo-sharing feature—then switched to an in-house system the next year.

Photobucket kept on touting its easy linking and embedding, suggesting in a 2013 e-mail that I let my photos “out to mingle with your friends wherever they are on the web.”

It still claimed 60 million unique visitors a month in 2015, although by then my occasional Photobucket use had long since stopped.

Ailing ads

Revisiting the site for the first time in years week made it painfully obvious how far management had gone to soak up ad revenue.

Not only are its photo galleries overrun with ads that obscure images and sometimes block the whole page, I even saw its terms-of-service page temporarily hidden by a tacky ad gallery.

If trying to monetize that unloveable legalese isn’t a cry for help, I don’t know what is.

It can be tempting to write off this sad saga as one company’s mismanagement. But Photobucket isn’t the only smaller site to find that online ads don’t yield enough revenue while, as the music-sharing site SoundCloud just reported, subscriptions don’t cover their bills either. Not all of these sites will be so easy to blame for their fates.

Giant companies like Facebook (FB) and Google (GOOG, GOOGL) may continue to prosper from online ads. But you have to wonder how much room the web will leave for sites without big-name brands behind them.

More from Rob:

Email Rob at rob@robpegoraro.com; follow him on Twitter at @robpegoraro.