Maybe it's the picturesque scenery here. Or maybe it's because overcast skies are ideal for taking photographs.

Whatever the reason, the Seattle area has long been an unofficial headquarters for the photography and imaging industry. The region is home to two of the biggest photo powerhouses in the world, Getty Images and Corbis, and several smaller companies have opened recently as the use of personal digital cameras has skyrocketed. These aren't the next Canons or Nikons; rather, they're creating programs that work with photos already in your camera or computer.

One of those companies, Smilebox, is getting some attention this week as a presenter at the Demo conference in Phoenix, a twice-a-year event considered a launching ground for new technologies.

The Redmond-based Smilebox, formerly called Muskoka Media, plans to launch in test form next month. Its service lets people insert photos into digital postcards, slide shows and photo albums and send them to others. The concept was partly inspired by the scrapbooking craze, partly by online greeting cards, and partly by RealNetworks and Microsoft, where founder Andrew Wright learned about consumer businesses.

The company also is announcing that it has received $5 million in funding in a first round of financing, including $4 million from Frazier Technology Ventures in Seattle and $1 million from individual investors. Last spring, Smilebox raised $1 million from angel investors, including RealNetworks Chief Executive Rob Glaser and former executives at Macromedia.

"We all have digital cameras, but we're not using them to communicate with each other," said Wright, 43.

A Smilebox user can create a three-page birthday card, for example, select digital photos for each page and choose music to play in the background. The recipient would get the card by e-mail and view it without having to register or download software. (The card runs on Adobe Systems' Flash player, which already is installed on most computers.)

Another card shows an animation of a soccer player kicking a ball toward the viewer. The ball shatters and turns into a collage of digital photographs. Wright is aiming to have 200 designs ready for customizing in March and 1,000 by the end of the year.

Smilebox is expecting to make money by charging users for high-resolution, premium designs that can be printed out on paper. It will cost 99 cents to $1.99 to own a design, and an unlimited-usage subscription costs $5 a month.

But with a number of free photo-related services already online, including Yahoo!'s Flickr and Google's Picasa, Smilebox might have a hard time persuading users to pay for premium content. So the company is also offering free designs with lower resolution images that can't be printed, and the recipient must view an ad before accessing them.

Wright is using Google's advertising network, which is expanding to include image-based ads, and expects to get about a quarter of Smilebox's revenue that way.

Many companies are debuting services to cash in on the popularity of digital images, and for good reason. Photo sharing over e-mail is the fourth most popular online activity — after e-mailing messages, researching items to buy and then purchasing — according to Ted Schadler, an analyst with Forrester Research.

About 56 percent of U.S. Internet users have sent a photo over e-mail as an attachment, Schadler said. Only 13 percent have used the popular Flickr or other photo-sharing services.

Smilebox is targeting female Internet users ages 30 to 65, and said mothers with children at home will be the most enthusiastic base. Women are the ones that generally manage a family's digital-photo collection, Wright said.

"That's a market that is amassing a large library of digital photos but isn't quite sure what to do with it," said Richard Wolpert, the chief strategy officer at RealNetworks and one of three on Smilebox's board. "There's no doubt in my mind that the market is huge."

That's the same group that Wright targeted at RealNetworks, where he built the company's Web games business. Studies show that women were most likely to play the casual, downloadable games available for the PC.

RealNetworks' game service became a central location for casual PC games, selling them on behalf of game developers and taking a cut of revenue.

Wright said he wants Smilebox to have the same model, where Flash developers design their own templates and sell them through Smilebox. No other company has this kind of platform or service, said Paul Bialek, a Smilebox board member and a general partner at Frazier Technology Ventures.

"Their product is the intersection of a variety of other categories that already exist to create a new experience that up to now hasn't been available," he said.

Kim Peterson: 206-464-2360 or kpeterson@seattletimes.com