+ Sandra Riano Flickr – A Primer for the Uninitiated

Web 2.0 and Flicker Since the dawn of world markets, Web 1.0 technologies have to invest heavily on the larger cost drivers (inventory, payroll, IT systems, Marketing & CRM) to keep up with their globalization needs. With the use of Web 2.0, Flickr was able to better integrate these technologies and focus their income where it was needed most (IT development, marketing and CRM) and reduce it in the following areas below:

1. Inventory: By not carrying any physical element of the photo hosting services, costs for these elements are highly reduced. By not ‘owning’ or creating any of the photos offered, the creative role (with all its associated costs) is always in the user’s hands.

2. Direct and Support Payroll: The need for employees is lessened because users upload their own photos, tag them, comment, and help increase the community, etc., allowing Flickr to focus their efforts on overall strategy.

3. IT systems and developers: By opening their API, Flickr allowed third-party developers and companies to work for them for them and help increase the usability and features of Flickr. This allows Flickr to focus their efforts into other areas of IT development.

Furthermore, Flickr is profitable with these four revenue models:

1. Subscription model: Flickr charges Pro account users a yearly fee to host and display an unlimited amount of pictures. A free account can host as many but only get to display 200 pictures at any given time.

1. Advertising-base model: Contextual advertising allows Flickr to increase ad spending based on actual ROI per campaign.

2. Transaction fee model: Target provides printing services for Flickr users while giving Flickr a small part of the proceeds. Also Flickr partners with Snapfish to allow to order mugs, T-shirts, stamps, photo books and other items with their photos printed on them, from which Flickr also keeps part of the proceedings.

3. Licensing and syndication model: Flickr has partnered with Getty Images to create the ‘Getty Images call for artists’ micro-site, which allows for amateur photographers to license their photos with Getty images while Flickr gets a small proceeds of the transaction.

Additionally, Flickr creates user value through interaction as follows:

1. Opening up Digital Content to Global User Interaction: By allowing users to post their own pictures to be shared across the net while allowing these users to hold control of the ownership and licensing of their own work.

2. Creating Better Search by User Generated Information: By permitting users to tag with identifiers their own and other users’ photos to create subjective and objective ‘tag clusters’; this user-generated meta-tagging method creates organic and multidimensional search capabilities that a regular spider search engine won’t be able to provide.

3. Discovering and Creating through Online Groups: By analyzing the user-generated tags and grouping them into clusters, Flickr allows users to identify and join common-interest clubs and events.

4. Catalyzing and Amplifying Group Social Network Effects: By using their own special ‘interestingness’ algorithm, which combines ‘favourited’ comments with number of views and number of comments, etc., to sort and rate images in their site. This allows for a more complex and throughout view of each photo to discover trends and influencers.

5. Supporting DIY Self-Service Syndication: By offering support for major blogging platforms and allowing RSS syndication to increase the reach and influence of the Flickr community.

6. Encouraging Others to Become Part of the Digital Ecosystem: By creating a large Digital Ecosystem using Flickr’s open API platform, users, third-party developers and other companies. This allows for Flickr to reduce software development cost, leverage others’ expertise and create long-term trust with their users.

Sandra Riano smriano@gmail.com 416.606.904