New Web site lets users scrapbook online

By BOB TEDESCHI The New York Times

For years, Internet users have treated online photo services like a batch of holiday snapshots — checking them out for a while, then letting them collect dust on the shelf as soon as something new comes along.

Now Smilebox.com, a start-up based in Redmond, Wash., is offering customers the opportunity to build online scrapbooks with animation, music and artwork. The kicker is that, in a market cluttered with free services that have struggled to produce profits, Smilebox is actually attracting paying customers.

Smilebox.com users pay $1 or $2 to choose from among 350 graphic templates for their digital photos, or pay for a $5 monthly subscription for unlimited access to the templates.

Those with dozens of holiday photos might choose to collect them in a virtual photo album with holiday themed artwork on the borders, for instance. Next, users can choose from 700 musical selections to accompany the photo book, and decide on other visual flourishes, like animated transitions between pages. (Smilebox also offers a free version that includes advertisements and fewer music and template choices.)

Unlike many other photo-sharing services, Smilebox does not require users to upload photos to the Web site and edit them there. Rather, since users download the template, they need only drag images to the desired locations on the template, then upload the entire file to the Web site. Smilebox then delivers e-mail messages to the user’s friends and family, inviting them to view the book.

Should Smilebox gain enough acceptance with consumers before the free photo services offer up competing features, analysts said, it may well build a successful business. Building a successful business of any significant size, though, may be asking too much.

“This looks to me like a niche business,” said Christopher Chute, an analyst with IDC, a technology consultancy. “Getting people to pay has always been a problem, so they’ve got to find a hook.”

Andrew Wright, the chief executive of Smilebox, believes he has found at least one hook into a bigger market, thanks to an alliance with Hallmark. In that partnership, the greeting card company in December started offering a modified version of Smilebox on Hallmark.com.

According to Steven Ruschill, who oversees online initiatives for Hallmark’s new business development group, the Smilebox partnership has yielded “pleasantly surprising” results, despite his company’s having done nothing to promote the service. “It’s a little too early to judge it fully, but so far so good,” he said.

Hallmark.com visitors who clicked on the Smilebox feature turned into paying customers more often than Ruschill anticipated, he said. If the number of paying customers reaches an undisclosed threshold over the next several months, he said, Hallmark will most likely retain the service on its site and continue to share the revenues with Smilebox.

“When the novelty starts to wear off, the question is whether users will just think of this as another thing they have to do,” he said.

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