Companies in recent months have launched a slew of photography applications for the iPhone and other smartphones, but many of these start-ups are still trying to figure out the best way to profit from their software programs.
The apps, many of which are free to download, let users apply special effects to photos they snap with their phones. The apps also make it easy to share photos on social media sites like Facebook and Twitter.
The apps have garnered millions of downloads in the past year, but building a business model has proved trickier. Some of the app makers are charging users for extra features; others plan to sell advertising or even prints of the snapshots. At least one start-up is exploring the idea of alerting a cellphone user to nearby advertisers once the person has snapped a photo.
"It's hard to monetize the apps right now because there are so many especially in the photography space," said Thomas McLeod, president of app maker Imaginary Feet LLC. "It's hard not to get lost in the oversaturation of the other apps."
Apps have to generate enough interest and not get lost in the pile. According to AppleInc., there are now more than 300,000 apps in its store alone, compared with 140,000 last January.
Currently, 28% of people in the U.S. have smartphones, according to ABI Research. Sales this holiday season indicate that an even larger percentage of Americans will have them in 2011, says Neil Strother, an analyst with ABI Research.
Since smartphones have built-in cameras but little in the way of photo-editing tools, a crop of companies have stepped into the void. The latest notable entrant: Foursquare introduced a photo-sharing capability in December to its location-based service. Now, as Foursquare's five million users "check in" at a location, they'll have the ability to share a picture of where they are, and their friends can comment on it.
Foursquare isn't planning to make money off the photo feature directly, but hopes it's an added lure for people to use the main app, says Alex Rainert, head of product of Foursquare.
Another offering, the free Instagr.am app, has been downloaded more than one million times since it was released in October. Users can snap photos, tweak them with filters and then share them with followers, much like users share text and links on Twitter.
Kevin Systrom, chief executive of Burbn Inc., the start-up behind Instagr.am, says he is considering adding local advertising. Under one scenario, users might take a picture and would then see a "nearby" tab listing local businesses such as bars and restaurants. Those businesses would pay for placement.
However, Mr. Systrom says such ideas will have to wait until the company has enough users to attract advertisers. "Our goal is to grow as big as possible. Any ad firms want to buy in the millions of users," he says.
PicPlz is a similar free app created by Mixed Media Labs Inc. It first became available in June, and has been downloaded 200,000 times and has 100,000 registered users on its website, says Dalton Caldwell, founder of Mixed Media Labs. But the company hasn't made money from the app yet.
Mr. Caldwell recently received $5 million of venture capital from Andreessen Horowitz as the seven-person company develops its business model. He says he will use the funds in part to hire an ad sales team.
Imaginary Feet makes SpyPic, a $1.99 iPhone app that allows users to surreptitiously take photos by suppressing flash and other tactics. It has been downloaded more than 120,000 times since its August launch, but only 10,000 of those downloads were paid, Mr. McLeod says. The others were downloaded free as part of regular promotions.
Mr. McLeod says the app is profitable, but that monetizing apps of any sort is difficult. The company doesn't do any advertising inside the app.
One firm that has gotten traction with its business model is Synthetic Corp., a San Francisco-based maker of photo apps including Hipstamatic.
Since Hipstamatic's launch in December 2009, the $1.99 app has been downloaded more than 1.7 million times. The app allows users to choose different lenses, films and flashes. The firm charges 99 cents for a package of add-ons such as infrared.
The company generates a third of its revenue from those extras, says CEO Lucas Buick, and is profitable. In September, it launched a service where users can send in photos and pay a fee for printed copies.
Some bigger players are getting into the photo app game, but often to drive sales of products rather than generate app revenue. Eastman Kodak Co.'s Pic Flick app allows users to print mobile photos to their Kodak wireless printers.
Since November 2009, the free app has been downloaded more than 40,000 times. "It drives revenue and more use of printing," so people need to buy more Kodak ink, says Tom Hoehn, director of interactive marketing for Kodak.