Kodak to sell online-photo service to Shutterfly

(AP) NEW YORK — Eastman Kodak Co. (EK) will close its online photo service on July 2 after a federal bankruptcy judge approved selling the business to Shutterfly Inc. (SFLY) for $23.8 million.

Shutterfly Inc. emerged last month as the sole bidder for Eastman Kodak Co.'s Kodak Gallery. The judge issued an order approving the sale last week.

Kodak, which filed for bankruptcy protection in January, is selling the photo printing, storage and sharing business to generate cash and to narrow its focus.

The two companies offer similar services, where basic sharing of photos is free and users pay for prints, photo books, digital copies on DVDs and other products. The services still make money, but demand has declined in recent years as people increasingly share photos online through Facebook and other social networks.

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In an email to Kodak Gallery users on Monday, Kodak said people who do not want their photos transferred will have to inform Kodak by May 28 by visiting its website and choosing to "opt out" of the migration. After July 2, customers won't have access to any photos on Kodak Gallery.

Shutterfly will contact users in June with details on the transfer. Users can link a Kodak Gallery account with an existing one on Shutterfly, or have a new one on Shutterfly created automatically.

Kodak warned that because the migration "will be a massive undertaking, involving the movement of billions of photos," customers' images may not appear on Shutterfly for months. Photos will appear under a "Kodak" folder in Shutterfly.

Kodak said customers must complete orders for prints and other products by July 2, or order from Shutterfly after that. Kodak allows full-resolution downloads of photos for free, but Shutterfly does not. That means users wanting the originals for free must retrieve them before July 2. Users can also buy DVDs with the full-resolution files through either service.