Behind Flickr’s New Pricing: Yahoo Really Wants To Show More Ads

It looks like there’s something more to today’s series of Flickr announcements than just bigger images, more storage and a shiny, new design: Yahoo really wants to show more ads.

As you probably heard, Flickr has upped its base storage for all users to an astonishing one terabyte of data. And that’s free. No charge. Zip. Gratis.

It’s a dramatic change to Flickr’s previous account tiers.

Before today, Flickr Pro accounts ran about $25 per year and included several benefits that Free accounts didn’t have:

• unlimited photo and video uploads
• unlimited storage
• unlimited bandwidth
• archiving of hi-res images
• no ads (on Flickr.com and its mobile apps)
• and more

Starting today, Flickr is offering Free and Ad-Free accounts. The ad-free account is now $50 per year (double the old Pro price), and the only benefit it offers is the ad-free experience. All other benefits of paying to use Flickr are gone. (There’s also a “Doublr” account level that offers two terabytes of storage, not one.)

By doubling the price of the paid account and killing all the benefits except not seeing ads, Yahoo is practically begging Flickr users not to have paid accounts.

The only logic behind that seems to be that Yahoo really wants to be able to show more ads to Flickr users.

In Yahoo’s latest earnings report, the company announced that revenue from displays ads was down 11 percent year-over-year. (See the top line of the chart below.)

Today’s Flickr changes, along with the promise that Yahoo will monetize Tumblr, appear to be a couple steps toward changing that downward display trend.

Existing Pro users can switch to a free account by August 20th and still enjoy all of the new things announced today … while also seeing ads. But they don’t have to switch; Flickr’s help page says that existing Pro users will still be able to renew their Pro account in the future. There’s no price point for that. If it’s at the same price that Pro accounts have been (about $25), it means Pro users will be able to enjoy an ad-free Flickr for about half the price of new “Ad Free” account holders.

My guess is that Flickr isn’t counting on having many Pro or Ad Free users in the future, and is looking forward to increasing its display ad inventory.