Zing.com Turning Off

SAN FRANCISCO — Zing Network Inc.’s photo-storage and display Web site has became the latest casualty in a continuing shakeout among online photofinishers.

Zing said Wednesday it is shutting down Zing.com because the site costs too much to maintain. The company now will focus on providing software for other Web sites, said Zing Chief Executive David Ezequelle, who joined the company just seven months ago from Palo Alto, Calif., venture-capital firm Alloy Ventures.

Alloy and Kleiner Perkins Caufield & Byers, Menlo Park, Calif., have been Zing’s lead funders, helping the company raise $53 million, Mr. Ezequelle said.

But this hasn’t been enough to keep the site alive. Between 300,000 to 350,000 of Zing.com’s four million members have created photo albums on the site, which was absorbing “probably 85% to 90%” of the company’s resources and bringing in “most of the revenue,” Mr. Ezequelle said.

But ultimately the site wasn’t “a self-sustaining piece of business,” he added. The company will start its third round of layoffs in about two weeks, leaving Zing with 21 employees, compared with 135 at its peak, he said.

Zing has also been hosting U.S. photo sites for two Japanese companies: NikonNet for Nikon Inc., and ImageStation for a U.S. unit of Sony Corp. (SNE).

Nikon announced earlier this month that NikonNet had switched to technology from closely held ArcSoft Inc., Fremont, Calif. The Sony site “will take on our own hosting responsibilities,” said Jay Sato, vice president of Sony ImageStation, adding that a transition plan would be worked out so that the change would be “seamless” for consumers.

Zing’s announcement comes at a time of turmoil among online photo operations. In March of last year, InfoTrends Research Group, Boston, Mass., forecast that worldwide online photo finishing revenue would grow at a compound annual rate of 92% and would reach $4.4 billion in 2005.

But this past February, InfoTrends reported that even though 15% of respondents to a survey had posted a photo to an online service and 35% had visited someone else’s digital album, many users were “still just experimenting with the technology.” Consumers weren’t paying for the majority of the prints they were ordering online, thanks to special promotions, and total print revenue per user was low.

In May, InfoTrends “drastically” cut its projections: “Online photo finishing revenue is forecast to grow at an average annual rate of 57% through 2006,” said research analyst Lia Schubert in a report,” but in the short term, it is not enough to support so many players dependent on self-funded growth.”

Many sites have shifted strategies from consumer to business operations or have shut down completely. Others have been acquired: Just last month, Eastman Kodak Co. (EK) agreed to buy closely held Ofoto Inc., of Emeryville, Calif., one of the strongest in the field.

Zing, which is also closely held, posted a letter on its Web site Wednesday afternoon saying Zing.com “will no longer be available” as of July 2, 2001.

The letter, signed by Mr. Ezequelle, gave Zing.com’s members several options for retrieving photos on the site, including downloading an application that allows them to move the images to their own computers — a task that may prove challenging for some members.

“We at Zing regret the inconvenience [closing the site] will create for you,” the letter said. “Unfortunately we cannot keep it going under the current circumstances.”

Copyright (c) 2001 Dow Jones & Company, Inc.