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.