Photobucket, one of the web’s most visited sites and home to billions of photos, is introducing a new feature dubbed “Group Albums”. The feature will allow multiple friends to add their photos and videos to a shared album, which can be password protected and moderated by the Group’s owner. Group Albums aren’t currently active on the site - Photobucket expects to have them live by Wednesday morning.

Group Albums will support sharing via emailed invitations and RSS feeds, and will allow an album’s contents to be presented in a slideshow. Each album will have a maximum size of 1GB.

The feature will be handy for many Photobucket users, but it’s hardly novel. Similar features have been on social networking sites like Facebook for years.

Photobucket, acquired by Fox Interactive Media in May 2007 for $300 million, is releasing their API to the public today and will allow third party developers to build photo/video storage and visualization to their applications. Adobe, AOL, FotoFlexer, Intercasting, RockYou, Slide and Snapvine are being announced as launch partners. API documentation is available at developer.photobucket.com.

Previously the API was released only to signed business development partners, and had limited functionality. Functionality includes log in via OAuth, album creation and editing, content uploading, content sharing via email, search and metadata access (tags, titles, descriptions, etc.).

Photobucket is also promoting third party services on their API, at gallery.photobucket.com.

Flickr has had an API available since late 2005, with hundreds of third party applications built on the base service.

Starting tomorrow Photobucket will be able to edit images on the service in-browser courtesy of technology provided by FotoFlexer.

The deal, which is highly reminiscent of the one recently struck between Flickr and Picnik, allows for things like resizing, rotating, coloring, decorating, beautifying, and distorting.

Peter Pham, VP of Business Development over at Photobucket(acquired by FIM last May) has resigned to head up a new company, BillShrink, as CEO.

BillShrink, which has been in development for the past seven months and largely under the radar, will launch in a couple of weeks with the aim of helping users save money. Its strategy lies in suggesting better service packages for select verticals, starting with cellular phone plans.

Consumers will answer a set of cell phone service-related questions and optionally submit their wireless account username and password. The service will then extract your usage habits, assess your answers, and suggest an optimal set of wireless package configurations from the wide range of plans and add-ons that providers offer. This Orbitz-like result set can be tweaked by changing your preferences, for example, in favor of more coverage over lower prices.

Much of BillShrink’s power will come from its web scraping and normalization engine that will gather and make sense of the deals provided by the various cellular providers. The company aims to improve on suggestion services like LowerMyBills by moving beyond comparison grids and making clear suggestions that have been generated by the analysis of many factors.

BillShrink will eventually move into other verticals, such as credit cards and insurance plans, with the end goal of becoming a destination that consumers can trust and return to frequently for spending advice. The company will primarily generate revenue from lead generation, similarly to Mint.

Schwark Satyavolu and Samir Kothari co-founded BillShrink, which has taken funding from Bessemer Venture Partners.

Photobucket has announced inline support for inclusion of Photobucket photos within MySpace. To use, MySpace users click on “Add Image From Photobucket” when leaving a comment, which then provides them the ability to browse their Photobucket photos. Users can also search Photobucket for images other than their own for inclusion in a comment.

The only downside is that MySpace has yet to provide log in integration with Photobucket, and hence MySpace users will not only require a separate Photobucket account, they’ll also have to log in to Photobucket from within MySpace to use the feature.

The addition of Photobucket support in MySpace has certainly not been quick in coming (MySpace acquired Photobucket in May for $300 million) but it is a step in the right direction. Photobucket has continued to grow since being acquired by MySpace, and has recently passed the 56 million member mark, up from 36 million in March.

Picture and file hosting has established credentials as a business idea. As the cost of storage has rapidly decreased as social networking has boomed picture hosting has been a hot vertical. There’s no shortage of sites in this space, and easy money to be had. At the very top Photobucket was acquired by MySpace for $250 million. To date free file hosting sites have been just that: free file hosting where essentially you get a service for free and the operators keep the profits from the site. Shareapic wants to change that.

Shareapic’s model is simple. It offers the same basic service other free hosting sites offer; upload your pic, get an embed code then display the pic on your site of choice. But Shareapic believes that their success in hosting files and profiting from this should be rewarded. Every registered Shareapic user gets a cut of any advertising revenues Shareapic makes. Primarily this isn’t based on advertising revenue made against each image (although users can add their Adsense code for some revenue via Google), payments are calculated based on image views. Their example:

If in month one Shareapic calculates to distribute $1,000 to our members, we will first tally up the total number of image views for that month. Using these two numbers we can determine the respective payouts for each user. If there were a total of 500,000 image views for the month, image views will equate to $0.002 each (1,000 divided by 500,000), or $2 per 1000 image views. If you’re posting lots of pics in forums, MySpace or eBay, you can see how easy it is to earn quite a bit of money!

Perhaps the only draw back is that Shareapic doesn’t disclose the revenue share; it may lack transparency but it’s still more than other sites pay in this space, which is zero.

We’ve covered two other companies that paid members to participate today, AGLOCO which went to the deadpool, and Capazoo, both of which had dubious multi-level marketing schemes (some would suggest pyramid schemes) and usually come with a catch. By comparison Shareapic has an honest model, so honest in fact that it should be the way of the future. What Shareapic does is recognize that users of a free service provide a financial benefit to the provider, and that in return profits provided by user participation should be shared (at least in part) back. Imagine the hours and hours put in by Facebook users or users of other sites; they may be free services but the providers benefit from each participant, and in the case of Facebook’s valuation, greatly. Expect to see more sites like Shareapic who value their users to the point that they offer financial rewards in return; it’s not only a smart marketing pitch it’s also fair recognition of your time and your effort in a market where many have business models that expect a free ride from their users. Build it and they will come may well be replaced with reward them for their time by sharing profits, and we’ll all be the winners from that.

San Francisco based social network widget provider Slide has hit new highs, with reports that they are now serving over one million new widgets daily.

Slide provides widget based photo slideshows that users can embed in a range of social networking sites including MySpace, Facebook, Bebo and Friendster.

Slide has impeccable backing, being founded by PayPal co-founder Max Levchin and funded by Mayfield Fund, Khosla Ventures, BlueRun Ventures and Founders Fund with a rumored round of $20million in November 2006.

Slide’s Facebook apps alone have a combined usage number in excess of 10 million users. comScore reports that Slide was serving 117 million unique visitors a month as of April 2007.

Slide competes directly with services including RockYou, Flektor, and Photobucket.

We’ve gotten word that Fox has closed the acquisition of Photobucket, has wired the money to the Photobucket shareholders and will issue a press release tomorrow.

Photobucket has announced the launch of Photobucket Media Plug-in 2.0, an enhanced version of its free image and video hosting plug-in.

The new plug-in gives users of participating web sites the ability to search for billions of publicly stored photos, videos and images from Photobucket’s extensive library, along with access to their own content from existing Photobucket media accounts, all without leaving partner sites.

Photobucket Media Plug-in 2.0 partner sites include: Freewebs, Gaiaonline.com, LiveJournal, Piczo, Rockyou.com, Singshot, Slide.com and Tagged.com.

Photobucket CEO Alex Welch said that by adding search to Photobuckets Media Plug-ins will deliver a more compelling service option for Photobucket’s partners.

25 million searches are conducted daily across Photobucket’s public library of photos, images and videos. The Photobucket service is a top 50 site online according to Alexa; their acquisition by Fox Interactive May 7 seems to have done no harm to the wildly popular service and the launch of this new service would seem to indicate that the company continues to thrive under their new owner.

The Photobucket and Flektor acquisitions were confirmed by Fox Interactive today in a press release. No details on prices, so we are assuming earlier reports were correct: $300 million for Photobucket (including a $50 million earnout) and $15-20 million for Flektor.

We had earlier reported that MySpace made both of these acquisitions; in fact parent company Fox Interactive was the buyer.

See Photobucket and Flektor at the Techcrunch Database.

NewsCorp plans to pay half as much for Photobucket as they did for MySpace. Photobucket is going for $300 million with the earnout (a steal compared to Google/YouTube), and MySpace was acquired for $580 million, back in 2005.

Two separate analytics services, though, show that the Photobucket deal will bring very few new customers to MySpace because of the nearly 100% overlap in users.

Nielsen/Netratings says MySpace has 55.9 million monthly unique visitors, compared to Photobucket’s 14.7 million. Combined though, the sites will have just 57.7 million unique visitors. That means just just 1.8 million of Photobucket’s visitors don’t currently visit MySpace, too. That’s a 3% gain for MySpace. If you count just new users, MySpace is paying $167 for each one of them.

Comscore tells a similar story, showing that 77% of Photobucket’s users are also visiting MySpace regularly.

As a point of comparison, the overlap between Google and YouTube was even greater according to Comscore. At the time of the acquisition in October 2006, 80% of YouTube’s users also visited Google regularly.

MySpace already offers its users the same basic services as Photobucket (photo and video sharing). If they aren’t buying Photobucket for the product and they aren’t getting any new users…then why are they buying them? To limit the availability of Photobucket features and all that user content to other fast-growing social networks without these features? Because they can? Let’s see what MySpace has to say about this as the deal closes.

By almost any measure, MySpace got Photobucket for an absolute steal when compared to the Google YouTube deal. The companies are somewhat comparable - both have very large libraries of user-created videos, and both built their business on the back of MySpace. Photobucket also has a huge library of shared photos, a business YouTube never entered.

Google paid $1.65 billion in stock for YouTube. By the time the deal closed, the Google stock was worth nearly $1.8 billion. Photobucket is being acquired for just less than 1/5 of that - $250 million plus an earnout of up to $50 million

At the time of the announcement of their acquisition in October 2006 YouTube had very little revenue. Photobucket, however, is on track to blow through their projection of $25 million this year.

Also, the relative sizes of the two companies aren’t that far off. At the time of the acquisition, Comscore suggested that YouTube had approximately 25 million U.S. monthly visitors. Today, Photobucket has around 20 million U.S. monthly visitors, or 80% of what YouTube had when it was acquired.

Photobucket has 40 million registered users and is gaining another 85,000 or so per day. Their users are highly active, and upload a lot of content to the network. YouTube’s registered users were far below Photobucket’s 40 million at the time of their acquisition. YouTube had (and still has) a lot of traffic coming to the site to view videos, but far fewer users actually creating and posting content.

Leaving revenue aside, the traffic numbers indicate a comparable price of $1.3 billion for Photobucket, 4x the price they actually received from MySpace. To look at this another way, YouTube was paid about $67 per unique visitor. Photobucket got just $13.

Did Google overpay for YouTube? Did MySpace get Photobucket for a steal? Perhaps both. But in the end, being no. 1 in a category means you get a premium on acquisition. In the case of YouTube, that premium seems to be about 4x.

Another factor: Photobucket just didn’t generate the bidding hype that YouTube saw. It looks like the final bidders were IAC and MySpace, with a number of other bidders falling off in the last few weeks (perhaps spooked by the MySpace blockage of Photobucket videos).

In a year or so this deal is likely to look as brilliant for NewsCorp (which owns MySpace) as the MySpace acquisition was. Some would argue that they play dirty poker, but shutting Photobucket down at a crucial point in the acquisition negotiations was a brilliant move, and may have shaved hundreds of millions of dollars off of the purchase price.

Apparently an overzealous Photobucket employee is the source of this rumor, but we’ve confirmed it with more senior people: MySpace is acquiring Photobucket for $250 million in cash. We’re hearing that there is also an earn-out for up to an additional $50 million.

Photobucket has been looking for a buyer since March, when they hired Lehman Brothers to help sell the company. They were looking for $300 million or more, but may have had few bidders other than MySpace.

The companies have been in serious acquisition discussions for the last couple of weeks - A dispute that involved Photobucket videos being blocked on MySpace led to acquisition discussions, and the block was removed.

Photobucket generated $6.3 million in revenue last year and planned on hitting $25 million or more this year. They have 40 million registered users and add another 85,000 per day.

Our first coverage of Photobucket was a year ago. They’ve raised $15 million over two rounds of financing.

A simple blog post on Photobucket tells us that the war is over - PhotoBucket videos are now allowed on MySpace again after a two week ban.

But the interesting part of this story is what I don’t know yet - who blinked first and why. I’ve asked Photobucket if they made any concessions to MySpace and got back a long but essentially content-free reply that boiled down to “we get along very well with MySpace.”

I anxiously await Photobucket’s April Comscore numbers to see how traffic to the site was affected. Early indications from Alexa suggest traffic actually trended up over the last couple of weeks, although the massive press the story received could have had an impact. Comscore numbers will be much more reliable. Regardless of traffic, Photobucket was probably anxious to put this behind them and avoid spooking any potential acquirors looking at the company.

MySpace may have their reasons for ending this, too. They certainly showed that they were willing to execute a larger partner, and widget companies will think thrice before trying to slip any ads into their products down the road (and for the record, its far from clear that Photobucket was doing this). MySpace made their point quite clearly. However, the negative press surrounding the incident was perhaps more than they anticipated. With their point made, allowing Photobucket back in had little downside.

Been hanging around any tipsy MySpace or Photobucket execs lately and hear something good? Let me know.