Newscom Walks Away from Digital Railroad Deal

The would-be white knight that might have resuscitated Digital Railroad has walked away, leaving DRR with a doubtful future.

Digital media content distributor Newscom and its parent company Mainstream Data have withdrawn a letter of intent to purchase the assets of DRR because they couldn't see how to operate it as a profitable business, says Newscom managing director William Creighton.

"We reviewed the site, we reviewed the technology, we looked at the financials, decided we couldn’t make it work and rescinded our offer," Creighton says.

Digital Railroad, a web hosting site for photographers launched four years ago, apparently ran short of money in mid-October. A potential merger between DRR and PhotoShelter, a competitor, fell through a short time later. Diablo Management Group, a California firm specializing in helping distressed companies, is now trying to liquidate the assets of DRR.

Diablo announced October 28 that DRR's web site could soon go dark, and photographers have since been fleeing in droves. At the same time, Diablo announced that it had a letter of intent from an unnamed company to purchase DRR. That company turned out to be Newscom.

"We started with the basic premise that we’ve got to run it as a profitable business. We looked at the cost of operating it, then we looked at the revenues that would be coming in," Creighton explains. "The costs outrun the revenues and that made it a  no-win proposition."

Creighton says Newscom found DRR to be a complicated system, requiring more people to operate than he had expected. "And a number of customers [photographers], from what we could gather, had fled to other places."

Creighton went on to say that the prices DRR was charging photographers for Web hosting--as little as $600 per year in some cases--"just isn't sustainable."

He estimated that a more sustainable price would be about $2,500 per year. "And that may be too much for an individual photographer the way the marketplace is going now."

What other options or plans Diablo has for DRR remain unclear. The company did not respond immediately to a request for comment.

But Diablo has told Stock Artists Alliance that it will try to get photographers their share of fees paid for images. Stock Artists Alliance has also advised photographers of steps they can take to protect their images and make claims for money owed.

Previous stories:
DRR Photogs: Your Check Is Not in the Mail
Newscom About to Acquire Digital Railroad's Assets

Comments

[Scott Dickerson]

Interesting that Creighton says that $600/year for hosting is unsustainably low. Photoshelter is substantially less cost for their 'standard' 35gb account. My other web host claims 'unlimited' storage and that's only $95/yr. Creighton must have been referring to more than just hosting, perhaps the work involved in supporting the application and customers.

As a DRR member I was sad to see them go for sure, however, I'm so far very pleased with my experience with photoshelter.

[Adrian Ellis]

In the light of the unfortunate demise of Digital Railroad, Canadian Based Lightbox Photo™ is stepping forward to offer it’s photo gallery software as the alternative solution. Photographers can create dynamic e-commerce enabled image websites empowering them to present their work how they want, where they want and when they want.

Lightbox Photo™ allows users to create their own stock photo libraries or online proofing systems, meaning no more commissions to third party providers.

For further information please visit www.lightboxphoto.com