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This article by Doug Dixon was prepared for the March 26, 2003 edition of U.S. 1 Newspaper. All rights reserved.
Is DotPhoto’s Success Just a Phone Call Away?
Have you done the cell phone ring dance? That’s the
spontaneous reaction that happens when you’re standing in a group
and someone’s cell phone starts ringing. Suddenly everyone is bending
over to fumble in their pockets or frantically dig in their bags to
check whether it’s their phone that is ringing.
Of course, if your phone has a distinctive ring sound then you can
just look on calmly while everyone else is doing the dance. Recent
cell phones do provide a small selection of built-in rings to customize
the tone, but you will find that common selections like the William
Tell Overture soon become more annoying than individualistic. And
people really want to customize their gizmos anyway, not only with
colorful faceplates for their phones, but also with a very distinctive
Ring tones are big business. "We think this has the potential
to earn a lot of money for dotPhoto," says Glenn Paul, Princeton
entrepreneur and co-founder of the Clancy-Paul computer stores that
flourished in Princeton in the 1980s and early ’90s. Paul, a 1979
alumnus of Princeton University, is CEO of dotPhoto, a Ewing-based
company that provides photo archiving, sharing, and printing services
for users of digital cameras (www.dotphoto.com). DotPhoto introduced
its new Blabtones ring tone service through Verizon Wireless at the
Cellular Telecommunications & Internet Association (CTIA) Wireless
2003 conference in New Orleans on Monday, March 17. "For the first
time ever, cell phone users can create their own ringtones," says
Launched in May, 2000, dotPhoto survived the dot-com crash and has
expanded from Internet to cell phone services, and from images to
audio. It provides free hosting of digital images uploaded by members,
and then sells printing and other services. DotPhoto then expanded
into cellular phone services last year by developing the Pictavision
application for downloading and viewing photos on new cell phones
with color displays.
So how can there be profit in ring tones? Especially
in these days of Napster and file sharing of songs and even videos
across the Internet, how can very short audio clips be a serious business
The answer comes from the different network architecture and billing
practices in the cellular business. If you have Verizon cellular services,
delivered through a Verizon-authorized phone, then Verizon controls
and manages your connection to the Internet and other services. The
phone is a controlled and relatively protected environment; you cannot
download arbitrary files and programs, which is probably a good idea
in this sometimes unpleasant world of electronic spam and hackers
In the Internet world, you typically pay a flat rate for monthly service
to one service provider, and then access and download information
from the vast array of independent sites across the globe. As a result,
nobody has yet figured out how to impose small transaction fees that
can be efficiently collected across a wide range of Internet sites.
Conveniently for cellular service providers, you already are used
to paying connection and service-based fees for your cellular service.
Your carrier then can provide new services, accessed only through
their network, and add the additional charges on to your existing
bill. A package of 10 custom ring tones, for example, costs around
$11 to download.
And of all the possible new services — E-mail and the Web, news
and stock quotes — the "killer application" right now
is in fact ring tones. "People of our generation will say `I don’t
know anybody who uses phones like that,’" says Paul, "and
it reminds me of people who were our generation when I was 20, and
they would say `I don’t know anybody who uses computers, seems like
a fad to me.’"
Red Herring magazine, in the June, 2002 issue (the last issue before
it too died a dot-com death), reports that over 80 million ring tones
are downloaded each month in Japan, 60 million in Europe. In the U.S.,
as the market is beginning to develop, 1.5 million ring tones were
downloaded last December. That’s an estimated more than 1 billion
ring tones downloaded globally in 2002. At a monthly fee of around
$3 for ring tone access, ring tones are indeed an interesting market.
"The guys at Verizon Wireless tell me that there is nothing bigger
on cell phones right now," says Paul. "It’s enormous. When
I asked them to quantify they said it’s just `many many, many’ times
bigger than anything else."
"Ringtones, especially for our new customers, has been one of
our most popular services. In fact, customers typically purchase ringtones
by the bundle," says Sheldon Jones, Philadelphia-based public
relations manager for Verizon Wireless.
Merrill Lynch predicts that the global mobile phone content marketplace
— including ring tones, wallpaper images, and games — will
reach $25 billion by 2005.
Even to enter the cellular market, dotPhoto had to survive
the dot-com crash. Other online photo services that arrived with big
splashes have since folded, including Zing, PhotoPoint, and Intel’s
GatherRound.com, which was launched in September, 1999, and discontinued
service two years later in October, 2001.
"We have come through the nuclear winter of the Internet and of
venture capital at the same time," says Paul. "What it has
taken is a small group of shareholders at dotPhoto who believed in
it, and kept putting money in the company and loaning it to the company."
"And still we did not have a lot of money," says Paul. "Shutterfly
raised $64 million and built a $16 million business. We had $3.4 million
and are at a $4 million run rate right now. You could say we have
a little better use of capital."
DotPhoto is significantly smaller than other competitors. While dotPhoto
has grown to more than 200,000 customers and 20 million photos online,
Ofoto has 5 million registered users, and Snapfish has over 4 million
members and 85 million photos online. Many other competitors remain,
including services from other new photo sites such as Shutterfly,
Picturetrail, PhotoAccess, and PhotoWorks; Internet portals such as
Yahoo, MSN, and AOL; traditional photo companies such as Kodak and
Fuji; electronics companies like Sony ImageStation; and even discounters
"It’s taken a group of determined people at dotPhoto," says
Paul. "This little group of people has always done what is necessary
to stay in business. There have been some break points where we might
not have been there."
One such problem for dotPhoto is managing capacity for the boom in
business around the Christmas season. This past season, for example,
dotPhoto’s business jumped from $300,000 to $450,000 in December.
But last February, "we were really choking on orders from December,"
says Paul. "We were running 3 shifts around the clock and we couldn’t
keep up with it."
"It was very difficult to raise money to buy equipment. The machines
we were using were $100,000 each. It became clear to me that we were
not going to get money for equipment. We were very fortunate to find
some folks who would do the printing for us." By off-loading some
of the peak work, dotPhoto was able to print almost a million pictures
the past December, and did not have to invest in additional new capital
equipment. "We never could have handled that the year before,"
says Paul. "That also allowed us to make the company a more variable
"We have just a handful of technical people," says Paul, "who
have done things that normally would be done by much larger teams
To form dotPhoto, Paul teamed with co-founder Joe Godcharles, owner
of a MotoPhoto franchise in Plainsboro, to develop a new photo-processing
factory in Ewing. He also hired Walter Krieg, of Research Park-based
InfoFirst Inc., to implement the Web hosting service and databases
behind the site.
"To have a chance at any business you need to be really fierce
about it," says Paul. "It’s hard enough. You need to get lucky
in a lot of ways and run across the right people, and just be incredibly
fiercely devoted to it too."
While focused on dotPhoto, Paul did maintain an interest in his sales
quoting software company, Qwik Quote Development in Pennington. "Qwik
Quote has a better product than ever," says Paul. "Their development
moved to China a year ago. They’ve been able to put together much
better code in China than we could afford to do here."
Meanwhile, Godcharles gave up his MotoPhoto store. "Joe spent
almost all of his time at dotPhoto," says Paul, "and when
you take time away from a business it usually falters. That was becoming
a harder business anyway because one-hour labs were competing with
Wal-Marts and drugstores. Last year Joe decided to close it down,
which was a great sacrifice to him."
InfoFirst, which supports the dotPhoto website and developed the mobile
applications, was founded in 1996. It too struggled with the crash.
"Last year was abysmal," says Walter Krieg, "we had to
let two people go last summer." With Krieg, president, and his
partner, Bob Johnson, InfoFirst has three full-time staffers and three
to four part-timers. InfoFirst has focused on building the back-end
infrastructure to support websites and services. "What we do is
behind the scenes," says Krieg, "the database and the workflow.
It was a goldrush before; now it’s business."
InfoFirst got involved in developing wireless applications
for dotPhoto in the middle of 2001. It worked with Verizon to develop
the Pictavision photo-viewing application for the QualComm phone platform.
QualComm is the developer of the CDMA (Code Division Multiple Access)
wireless network technology adopted by Verizon. More recently, QualComm
developed the BREW (Binary Runtime Environment for Wireless) programming
platform for downloading and running applications on wireless devices.
BREW carriers in the U.S., including Verizon Wireless, ALLTEL and
U.S. Cellular, represent about 48 million customers.
With the availability of more powerful and downloadable phones, Verizon
assembled and packaged a variety of applications and services as its
Get It Now service (www.verizonwireless.com/ics/plsql/getitnow.intro).
You can review the list of available applications on the Verizon web
site, and then purchase and download them to your phone. Many offer
a free trial demo, and then can be purchased for a limited period,
or on a subscription basis.
Verizon has organized the Get It Now services in several categories:
Get Games offers dozens of games, from sports to cards. Get Going
offers a variety of travel services, including airline flight information,
restaurant guides, and expense reporting. Get Fun offers entertainment
goodies, including jokes, horoscopes, and drink recipes. Get Mail
provides an E-mail application.
The Get Pix service provides tools to view and share digital images,
including dotPhoto’s Pictavision, and a mobile video viewer to access
public or private webcams and watch live video on your phone, albeit
at very small resolution and updated every few seconds.
Finally, the Get Tones service offers four collections of pre-created
ring tones. These are libraries of pre-defined tones that are offered
as a bundled package. DotPhoto’s new Blabtones service would then
add the ability to create your own recordings as ring tones.
"Where you used to need a "toolbelt" of devices to get
certain capabilities, you now need just one," says Jones of Verizon
Wireless. "Convergence has been a key factor in driving adoption
and will continue to be. It took only 17 years for the wireless phone
to reach the 100 million customer mark; by comparison, it took television
54 years, the automobile 68 years and the landline phone 91 years."
In contrast to cell phones, digital photography has
just kept plodding along. One big growth constraint is that it requires
using a computer to take advantage of all these wonderful new possibilities.
"It became clear, almost as soon as we got into the business,
the problem with the model was that it was too complicated," says
Paul. "You have to take your pictures from your digital camera,
you have to get them onto your computer, and you have to upload them
from your computer to the Internet. It was just too long a process,
and too hard for an awful lot of consumers."
One solution that camera companies and services have been pursuing
is simplifying the process of getting photos from the camera to the
computer and then to the Web. For example, some manufacturers provided
camera "docks" and associated software so you could insert
your camera and automatically upload images into your digital photo
DotPhoto also experimented with these kinds of devices. "We demonstrated
at our shareholders’ meeting at least two years ago a little computer
with a wireless card and a camera attached," says Paul, "and
showed how we could take a picture and it go directly to dotPhoto.
We even tried to raise money to make such a device, of course nobody
was buying that either.
"Then we realized that those devices were going to come to us,
in the form of cell phones. Everybody carries a cell phone, nobody
carries a camera."
DotPhoto then developed the Pictavision application to download and
view photos from your online dotPhoto albums. In fact, you can access
any of the albums hosted at dotPhoto that the owners have made publicly
available. "It’s a limitless photo wallet," says Paul. "There
are over 20 million pictures on dotPhoto, and you can get them all
for your phone now."
"The new vision of our company has metamorphosed from printing,
which we set out to do to begin with. The more you use digital pictures
the less you want to print them. You’ll always print a few. The way
to share these things is going to be electronically."
DotPhoto calls this vision "Digital imaging in every palm."
"In about 1983 you may remember Bill Gates going around saying
`a computer on every desk,’" says Paul, "and even those of
us in the business though that’s a little ambitions. But certainly
it happened. Here 20 years later it’s looking to us like digital imaging
in every palm, which again seems a little ambitious to begin with.
But if you think about it there are 120 million people in this country
with cell phones already, and cell phones are turning over at 35 percent
"It’s just like the early PCs, people want the new features, they
want the latest and greatest. By 2005 there will be 200 million cell
phones, all with color screens, probably half at least will have cameras.
That will bring digital imaging to every palm. We would certainly
like to have a piece of that."
With the current Pictavision service, you first choose a photo album,
and then select a photo name, and then download the individual photo.
The albums and photos are listed by name to speed up the interaction
by using text. The download of the final photo takes about 18 seconds.
dotPhoto keeps the full-size photo on its servers for printing, and
automatically generates the smaller screen-sized images to download
to your phone.
Pictavision consistently has been one of the top 10 downloads of all
BREW applications on the Verizon Wireless network. Pictavision’s service
is priced at 99 cents for a single interaction, up to 25 images in
a single session, or $3.99 a month for unlimited access. It is currently
available for the Motorola T720 and Sharp Z-800 phones, and soon the
new Audiovox LGVX4400 and Toshiba 9500.
The next version of the Pictavision service, currently in final testing,
adds the ability to save and share your photos. You can save pictures
locally on your phone, install an image as the background screensaver,
and share photos from your phone by E-mailing them to others. The
photo is still stored on the dotPhoto server, so actually you are
E-mailing an invitation to the recipient to download and view it from
Pictavision’s competitor at the Verizon website, Exego, already allows
users to send photos from their cell phone to another cell phone.
It costs $6 per month, and the photos must have been uploaded to the
website of Raleigh-based Summus Inc. (www.summus.com). The full realization
of portable photography, however, comes with cell phones that include
an integrated digital camera. DotPhoto hopes to introduce its "click
and deliver" service this summer to not only to show pictures,
but also to capture new pictures right where you are and immediately
share them. In this patent pending service, once you approve your
photos they will be uploaded to the dotPhoto service, and then automatically
processed and shared according to your previously-defined preferences.
"When the pictures come in we can send automatic E-mails, or automatically
print them," says Paul, "whatever it is you want us to do."
This service can be available even if you do not have an Internet
account. You can dial an 800 number, set up an account, and have your
photos automatically processed in groups. "When the 36th picture
comes in," says Paul, "we process them all and send them straight
to your mail box."
Blabtones grew out of another service that dotPhoto
offers for web photo albums. "We allow you to voice-annotate your
pictures," says Paul. "We’re still the only site that allows
you to do that." You can download a small application to your
computer to record a voice-over for your photos, and then upload it
to the dotPhoto site to play when visitors view your photos. For businesses,
this "talking pictures" technology can turn a static photo
album into a more dynamic marketing presentation.
Since dotPhoto already had the infrastructure to record and manage
audio clips, it was a small step to allow users to record their own
ring tones. The new phones not only have better sound chips to play
audio clips, they also provide the ability to assign individual ring
tones to specific callers. "You’ll have phones that actually talk
to you when they ring," says Paul, "`Come on honey, pick up!
It’s really me.’" Similarly, you can use distinctive ring tones
to identify high-priority and less urgent callers.
Blabtones are scheduled to be available on Verizon Wireless phones
that have the Get It Now service and polyphonic sound chips. Paul
expects to be able to sign a Verizon contract by the middle of April.
At launch, it will be available on the Motorola T720 phone. Blabtones
are priced like other ring tones, including the 10-tone package for
With this ability for anybody to create ring tones, "We hope you’ll
have the very creative few linking up to the acquisitive many,"
says Paul. "There may be a couple of thousand people who take
advantage of this, and make some outrageously interesting and funny,
clever ring tones. The rest of us can then buy them." dotPhoto
will make money from delivering the tones to subscriber’s phones,
Verizon will take its cut, and, for the moment, says Paul, "we’ll
offer prizes for the top-selling ring tones."
"It’s a mechanism that has worked on the Web," says Paul,
"to allow people to be creative and see what they come up with."
Paul has some concern about digital rights management. "We don’t
want to become a Napster-like tool, but still want to provide a tool
that enables creative ringtones. For that reason, we are withdrawing
the capability to import MP3 and MIDI files, but we may return to
that capability if we can put together a general agreement with the
recording industry. High-quality speech Blabtones are only 4 seconds,
and the average ringtone is about 3 seconds."
No good idea is without competition, and though no company matches
Blabtones’ creative capabilities, several competitors emerged at the
CTIA conference. According to an industry B-log (www.ringtonia.com),
AOL is selling Hollywood tunes for $1.99 each to Cingular, AT&T, and
T-Mobile subscribers, and college fight songs are available from www.Zingy.com
Zingy also translates a user’s song to a ringtone and sends it to
the mobile phone.
Having survived the dot-com debacle, dotPhoto is now
expanding its services. "We’ve had many profitable months, and
we hope to establish that as a permanent thing." However, access
to new capital is still difficult. "We would like to bring in
some money to solidify our electronic handling services," says
Paul, "which are more profitable and the long term for the industry
we think." Paul sees further consolidation coming in the on-line
photo industry. "I hope we can be one of the consolidators in
the industry," he says. "We can take these larger customer
bases that are married to print, which is not very profitable, and
overlay our services, and we’ll have a good model."
"We can sell pictures and license content," says Paul. "The
reselling side could become kind of an eBay of photography. Go to
dotPhoto and type in China or Paris and you get a good number of pictures
from any part of the world."
"This is our model," says Paul, "creating tools that link
people together. You can find any kind of picture you want, you can
find any ring tone that you want. We’ll allow people to create this
stuff and distribute it to everybody else.
800 Silvia Drive, West Trenton, NJ 08628. Glenn Paul, president and
co-founder. 609-434 0340; fax, 609-434-0344. Www.dotphoto.com
- InfoFirst Inc., 8 Wall Street, Princeton 08540.
Walter Krieg, president. 609-683-3800; fax, 609-683-3802. Www.infofirst.com
DotPhoto started as a photo sharing and printing service,
and has evolved to add more electronic services for sharing digital
images. "We’re trying to make dotPhoto the one place where you
can do everything with a picture," says Paul.
You can join dotPhoto for free, upload and share your photos, and
order prints for 29 cents for 3x5s, 95 cents for 5x7s, $2.95 for 8x10s,
and $9.99 for 12×18 inches. You also can upgrade to a variety of prepaid
plans for quantity purchases. For example, $4.99 a month includes
10 4×6 and 5 5×7 prints, and $14.99 a month includes 36 4x5s, 8 5x7s,
and 2 8×10 prints.
One important difference from other services is that dotPhoto allows
customers to sell their pictures, and provides the infrastructure
for displaying photo albums, ordering prints, and collecting revenue.
Professionals using the dotPhoto Pro service (www.dotphotopro.com)
can watermark their images, add keywords for searching, add their
own branding, and set custom pricing.
"We have a lot of people who sell pictures," says Paul, "newspapers,
professional photographers. We just signed a contract for 25 percent
of the radio stations in the country. Every radio station has a website,
and they have events and take pictures, and they have stars."
"That’s a neat business," says Paul, "because essentially
we get free content. We’re providing a service to the many people
who want to sell pictures."
This ability to create albums and sell photos then becomes a
form of viral marketing for dotPhoto. "You can take that dotPhoto
album system and bolt it on to any website," says Paul. "There
are U.S. Navy carrier groups communicating between the carriers and
the families at home. There’s a high school in Rockwell, Texas at
YellowJackets.org. It seems like every hour of the day they’re taking
pictures there. More than 200,000 people have come from there."
(The quantity of photos available from the Rockwell High site is amazing.
The album for just the Saturday of their Prom Week last April has
over 1,000 pictures posted online.)
"We’re giving that feature away," says Paul. "There are
31,000 web sites linked to dotPhoto. All these people are linking
to us, and then they discover dotPhoto, and then they sell their own
pictures, and then their friends come in and buy pictures."
Pricing for friends to buy individual prints starts at $1 for 3×5
prints, $1.50 for 4×6, and $7.50 for 8×10.
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