Business Model for Bezos-Backed Aviary Becomes Clear After Refocus

For Aviary, a photo editing software startup based in New York, the picture is brightening.

A year ago, a good day was when its free web-based editing tool was tapped 50,000 times. Today, Aviary is serving up more than 10 million image edits daily, and the number of users is approaching 20 million, said Avi Muchnick, co-founder of the company. In the past year, its software has been used to edit more than a billion images.

It’s a dramatic turnaround for Aviary, which started in 2007. The company, backed by Amazon’s Jeff Bezos and LinkedIn’s Reid Hoffman, is now bringing in enough revenue to help free it from having to raise additional funding for several years, according to Paul Murphy, an adviser and Aviary’s former chief operating officer.

The pivotal point came when it decided to shift its strategy in a crowded photo editing applications market, which would later attract even more attention when Facebook announced its $1 billion deal for Instagram. Rather than compete in that arena, Aviary decided to let other companies use a mobile-based version of its software to power their existing photo applications, Muchnick said.

“We took this approach of powering the apps that existed, where there wasn’t as much competition,” he said in an interview. “It has taken off in the year since we launched it and the next few months are going to be insane.”

The startup now counts Nokia Oyj, Microsoft and Yahoo among its roughly 2,000 partners. Soon, it will add Japan’s social network Mixi and Russian’s e-mail network Mail.ru, said Muchnick, who previously founded Worth1000.com, a contest site for artists that evolved into Aviary.

Aviary has raised $17 milllion so far from investors including Spark Capital, Bezos Expeditions, the personal investment firm of Amazon’s chief executive officer, LinkedIn co-founder Hoffman and strategic investors, the company said.

While Aviary makes some money from licensing its software, the company expects most of its revenue to come from end-users, who pay extra for virtual stickers, filters and borders to place on their photos. This revenue-sharing option, which was tested with a handful of partners, is going to be more widely expanded, Aviary said.

 

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