"March 9, 2001

Dear Photoloft Members,

Today I have an extremely important announcement to make. In the future, there will be a fee associated with uploading photographs to Photoloft.com. Viewing photos, sending e-cards, and using the guest book will still be totally free. As distasteful as this may seem to some, please take a minute to read the following message and at least understand what the thought process is behind such a move.

First and foremost, the charge for having an account in which photos may be uploaded into will be extremely affordable, $2.99//month. However, in aggregate it will greatly enhance our ability to maintain and improve the site. Perhaps a little history is important at this point

When initially launched, Photoloft.com was the first photo-sharing site on the Internet. Since that time, well over $1 Billion of Venture Capital money has been spent, most of it wasted, to create competitive offerings. However, there are no free lunches, the money must come from somewhere and two models for generating revenue have emerged:

1. Revenue from advertising and email solicitation
2. Revenue from the creation of prints and gifts

The first one is getting less and less attractive as a revenue source. First of all, consumers flat out are not interested in the advertisements, thus diminishing the desire for advertisers to pay, but more importantly consumers realize that there is a bit of a bait and switch going on here. "I signed up to share photos, but I'm suddenly on a get rich quick email list." And from an internal resource perspective, the employees of BrightCube would rather concentrate on how to make the service better and not concentrate on how to sneak dollars out of unsuspecting customers wallets.

The second one is a little more interesting. Getting prints made online is a real and tangible benefit that many are already taking advantage of. However, printing photos is a commodity business and has been for some time. Most photos are printed with ink and paper that is made by just a handful of companies.

So the obvious question begs: Can a dot.com company mark up the price of the photos enough to become a profitable middleman? And if that is not enough, can the difference be supplemented by extracting dollars from the personal profile information users invariably leave behind when purchasing online? The rash of closures lately, such as Kodak backed E-Memories would say no. However, a third variable is also involved. What about the people who wish to print at home?

Most people print at least some photos at home. Despite quality problems and price issues, convenience usually prevails. Especially in the case of an amateur digital photograph. That is because the life of the photo is somewhat simplistic, a month on the refrigerator and then on to the recycle bin (or shoebox as the case maybe).

Now, back to why Photoloft.com has made the decision it has made. First and foremost, it allows the company to develop technology without any hidden agendas. It allows us to develop a full array of services and let the consumer choose what they want to do and when they want to do it. For example, we will be able to offer "photo quality" prints from a variety of different sources (and quality/price points) while improving our ability to enhance home printing. Our focus, as it was in the beginning, will be on the experience. No advertising, which we never did well, and no Spam, which we never did anyway. This decision frees the Photoloft development team to do what they do best, create on-line photo sharing technology.

I hope this explains our position and I hope that you will stay with Photoloft as we move forward. It is our firm belief that our customers need photos on-line for a variety of different reasons, and our charter is to enable those services based on customer need. We do not want our time to be spent supporting quasi or hidden revenue channels or supporting only the features that enable particular types of e-commerce. And if history is the best predictor of future behavior, then I would expect many others in our space to follow our lead.

For those who do not wish to remain with Photoloft, your pictures will remain on-line for thirty days. They will remain viewable during the entire time, as they are now. For more information on the specifics of the service, please go to the following link:
http://www.photoloft.com/home/s_viewmembership.asp?s=plft&popup=No

Sincerely,
Jack Marshall
Co-Founder of Photoloft.com,
Vice-Chairman of BrightCube."