On November 13 last year, an Australian girl called Yukiko Kawabata took a photo of a gnarled gumtree in Sydney's Chinatown and uploaded it to Flickr.

It wasn't an exceptional image, but Kawabata was soon inundated with messages from Flickr staff - and then from people around the world - congratulating her on having uploaded the two billionth photo to the site.

In a little over three years, Flickr has gone from being a small Canadian start-up to the world's second most popular site for uploading, sharing and searching for photos, with just under 21 million visitors a month worldwide. In the last year, its user base has grown by 91 per cent - thanks largely to new features which make it easier for people to search for pictures by location - and is now, according to Nielsen Netratings, just half a million visitors shy of the leading site, Photobucket.com.

As with any internet company, however, there is no scope for complacency, and just as Microsoft was caught napping by the rise of the internet, so Flickr is threatened by the increasing use of social networking sites, rather than photo-specific sites, to share photos.

"The specific kind of photo-sharing that has been successful on Flickr - using photography as a way of connecting and keeping in touch - is almost exactly what is happening on Facebook," says Stewart Butterfield, co-founded of Flickr, which was bought by Yahoo! for an undisclosed sum two years ago.

The threat to Flickr is that users go elsewhere, bringing down the number of people who might be exposed to ads on the site, something the internet industry refers to as a website's 'eyeball value'.

Yahoo! doesn't break out revenues for Flickr - all Mr Butterfield will say is that overall revenues as well as 'average revenue per user' are 'growing' - but alongside a $25 a year 'premium' subscription service, the site's main source of income is advertising. (Flickr also has a printing service - along the lines offered by competitors like Kodak Gallery, but it's "not a big focus," Mr Butterfield says.)

"Ultimately the fact that Facebook has a photo-hosting service won't be the thing that causes them to win or lose. It will be them being the nexus of all that activity that (will make the difference)," Mr Butterfield, who founded the site with his wife, Caterina Fake, in 2004, says.

"Ideally it would be great if someone's photos on Facebook came from Flickr, their status came from Twitter (the micro-blogging site), and the stories in their newsfeed came from their blog. I don't think Facebook wants to 'build out' every feature that Flickr has currently, but ... it will be interesting to see how it plays out."

'Photo-sharing websites' have diversified greatly in the short time they have been around, and now support a range of business models. On one side are sites more akin to traditional photography services - like Snapfish and Kodak Galley - which in addition to letting users share photos on the web, offer printing. (Kodak Gallery charges 15 cents for 4"x6" prints; on Snapfish they're 12 cents.)

Then there are the sites, like Flickr, which focus more on the social aspect of photo-sharing - letting users upload, edit and share their pictures - and which derive money principally from advertising. (Alongside Flickr sit Picasa, Google's offering, which has grown its subscriber base by nearly 300 per cent to 14.5 million in the last year, and Photobucket, owned by MySpace, which has grown by 54 per cent to 21.3 million.)

Finally there are those which effectively enter the market by stealth, supplying a photo-sharing application on a social networking site. The most popular photo-sharing site in the UK, for instance, with 3.2 million users - more than twice the number that use Flickr - is Slide.com. Hardly anyone has heard of it, but plenty, will unknowingly be using its popular photo-sharing 'app' on Facebook.

Explore Tech & Web

• Personal Tech

• The Web

• Gadgets & Gaming

Times recommends

• Sony Reader could kill off the book
• Make 3D images with your own camera
• Lifelike animation heralds new era for computer games