GumGum Seeks $1.2 Million in Financing

Posted on 7/21/2008 by Julia Dudnik Stern | Printable Version | Comments (0)

California start-up GumGum, which aims to monetize images using a traffic-based licensing models, is seeking financing to further expand its business. First Round Capital is leading venture capitalists with $500,000; its partner Howard Morgan is joining the GumGum board. The company seeks to raise $1.2 million.

The stock industry is carefully watching GumGum and close competitor PicApp, launched by PicScout. The two have a lot in common. Both North California-based platforms launched at roughly the same time and are based on the same principle. While GumGum offers pay-per-use and ad-supported licensing models, PicApp focuses on the latter. Both host images and handle the licensing, delivery, traffic monitoring, reporting and payment, keeping a portion of the revenue.

While the GumGum offering is more flexible in license type, in-beta PicApp has the advantage of long-term industry relationships forged by its parent, which got its start policing online copyright infringement. From the start, the PicApp image inventory was larger and offered recognized stock-image brands, including Corbis, Getty Images and Image Source. GumGum's big gun was the London-based celebrity agency Splash News; however, PicApp also made a deal with Splash earlier this month.

It is still uncertain whether the traffic-based licensing model, which is an online version of the ad-industry's cost-per-thousand, will bring in buyers used to paying flat fees. The budgets commanded by online advertising suggest that low-cost, high-volume is a lucrative proposition. Combined with growing numbers of bloggers and similarly rising demand for images, the potential is clear.

Copyright © 2008 Julia Dudnik Stern. The above article may not be copied, reproduced, excerpted or distributed in any manner without written permission from the author. All requests should be submitted to Selling Stock at 10319 Westlake Drive, Suite 162, Bethesda, MD 20817, phone 301-461-7627, e-mail: wvz@fpcubgbf.pbz


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