A chart mapping the traffic patterns from both sites (courtesy of Alexa.com) is quite instructive, in that Webshots has been going steadily downward in terms of “daily reach” while Flickr has been going steadily upwards. Flickr is about to pass Webshots, and the site hasn’t even been in existence for two years.
As both Thomas and Eirik note, this is likely because Flickr is a much better example of a “Web 2.0” service. In other words, it does a better job of taking advantage of the interactive Web. It is easy to use, it has a simple interface with not a lot of cluttered advertising, and it emphasizes community through the use of tags, groups, comments, contacts and so on — not to mention RSS feeds for everything and an open API. A lesson to be learned, and not just for photo sites.
Narendra Rocherolle, one of the founders of Webshots, has taken issue with the Web 2.0-style comparison between that company and Flickr for a number of reasons, including the fact that he says Photobucket is also growing just as quickly as Flickr and is not a Web 2.0 company. Leaving aside the “what is Web 2.0” question, I would argue that Photobucket is growing because it also encourages sharing (or distributing), just in a different way than Flickr — and both do so in ways that Webshots doesn’t. That is the important point, I think.
A story from Associated Press makes a similar point about Mapquest, although you have to read between the lines. Mapquest is the most popular map site, but is facing increasing competition from Google — in part because of features such as satellite images (which Mapquest used to have, but got rid of because it didn’t think they were useful) but also because it doesn’t have an open API. That means if you want to do “mash-ups” like beerhunter.ca you have to use Google, and I would argue that is a crucial difference — not just in useability, but in the way the two companies are structured — and that in turn ultimately affects how attractive the service is.