The announcement appears to be the final nail in the coffin for Digital Railroad, which officially shut its doors on October 28. Sites that were hosted by Digital Railroad were still loading on November 11, but the service was slow and buggy.
Two potential deals to sell Digital Railroad’s assets to other companies collapsed in recent days, according to liquidation firm Diablo Management Group. The only option left is let a DRR creditor take the servers and sell them at auction.
“Digital Railroad had hoped that it could preserve the images on the storage devices so that the owners of these images could recover them,” reads a November 11 letter from Diablo.
“Unfortunately, this was not achievable. We apologize for the difficulties that this has created but without additional resources we have no other recourse.”
In the four weeks since Digital Railroad signaled that it was in serious trouble, many customers have managed to back up their work and find alternatives to the service. Still, the sudden collapse of a company trusted by so many photographers has left some feeling uneasy.
“It affected me in terms of having an archive that’s going away,” says Digital Railroad customer Brenda Tharp, a travel, nature and editorial photographer in Novato, California, “The main thing for me was just a disruption of any opportunity to send people there” to browse her archive online, she says. Tharp had bought a year of the Digital Railroad service in advance, and was paid up through February. Now she is considering offers from other companies that offer similar services. But Tharp says she’s paying attention to the health of those companies before she signs up for a long-term deal with any of them.
DRR members paid fees of $50 a month or $540 a year for secure storage of their images, Web site hosting, and other digital services. DRR also offered a stock licensing service and processed e-commerce transactions for photographers. Many photographers have not been paid for outstanding sales.
At the moment, there appears to be little recourse for customers burned by the shutdown of Digital Railroad. The Stock Artists Alliance says it is working to get information about outstanding license payments. It also recommends that DRR members who paid for the service in advance dispute the charges with their credit card companies.
Several photo agencies that were with Digital Railroad have signed up with picturemaxx, a German company that provides hosting for stock libraries. Agencies making the switch to picturemaxx include Redux, eyevine, VII Photo, Noor and others, according to Tom Tinervin, a former Digital Railroad employee who is now managing director of picturemaxx USA. One agency that specializes in photos of presidential candidates, CandidatePhotos.com, quickly switched to picturemaxx over a recent weekend to avoid a disruption in service during the U.S. election.
Virtual Picture Desk said it is helping migrate several Digital Railroad-powered stock agencies to IPN Stock (which is owned by Nielsen Business Media, the parent company of PDN) or Photolibrary. VPD was working with Design Pics, JTB Photos, De Agostini Picture Library, The Hoberman Collection, Learning Pictures, Woodfall Wild Images and Bruce Coleman USA.
Online services for individual photographers – including PhotoShelter, Livebooks and Lightbox Photo – were also courting Digital Railroad refugees with discounts and e-mail promotions.
PhotoShelter had been mentioned as a potential buyer of Digital Railroad’s assets, but the deal never materialized. In its letters to Digital Railroad members, Diablo says two other potential buyers took a look at Digital Railroad and walked away last week.
One of them was Newscom, a distributor of news photos and other news content. “We reviewed the site, we reviewed the technology, we looked at the financials, decided we couldn’t make it work and rescinded our offer,” Newscom managing director William Creighton told PDN.
A second company – unnamed in the Diablo letter – expressed interest in the company November 6 but backed off a day later.
The other company may have been Kodak, according to a source with close knowledge of the Digital Railroad negotiations.
The source said Digital Railroad ran out of cash this fall and was unable to secure more loans. Digital Railroad owed $1 million to a bank and more in unpaid bills.
A second source with knowledge of Digital Railroad’s finances said the company had burned through at least $20 million in investments and loans. Both sources spoke off the record because of the sensitivity of the information.
Creighton, the Newscom executive who reviewed Digital Railroad's finances, said the company's pricing structure "just isn't sustainable." He estimated that a more sustainable price for hosting would be about $2,500 per year. "And that may be too much for an individual photographer the way the marketplace is going now."
David Walker contributed to this report.
