For consumers this isn't too big of a deal. There are plenty of good-hearted people out there and "host my images" isn't something that requires a lot of personal trust (at least, for the kind of images I host). Some hosts don't scale much and can survive off donations. Others become too large and fall under their own weight.
When one service becomes poisoned (as you described it) - I move to another service. Once upon a time that was Imgur, followed by puush, followed by minus, followed by pomfse, and now I use vgy.me and mixtape.moe (when vgy.me's servers go down, which is rare but happens). There are no shortage of image hosts around to choose from.
Your writeup is right on the money. It isn't a service that scales well and any monetization tends to lead to users dipping to greener pastures. Imgur being a strange exception.
Itsosticky was designed from the outset to be an image sharing service with community potential, contrasted with image hosting, it's a service that facilitates quick sharing of an image or screenshot with a friend or group.
When used for its intended purpose, direct sharing, as opposed to free hosting for hotlinking, there are features that make it worthwhile sharing an Itsosticky resource URI rather than a direct link to an image file. For example, zoom capabilities, that some people may find superior to those available natively in a web browser, albums and easy social sharing links, and not least, fast uploads from phones without the need for a dedicated app.
All users are invited to publish their images to the gallery for greater social participation or exhibition.
None of what you've said here makes you stand out from your biggest problem: Imgur. None of those features are groundbreaking or even original. And how are you going to monetize? Running this service won't be free.
Imgur isn't a problem, and this shouldn't be a problem for Imgur. There are similarities, but that's mostly due to necessity in good UI. If people prefer Imgur, they should certainly use Imgur.
I can't comment on what might be right or wrong with other sites, not in the capacity of someone promoting a competing product.
Itsosticky is fast (server hardware permitting), modern, has no advertising at all at the moment, and no third-party sharing widgets.
I can't discuss plans for monetisation - there are none as yet.
I think we need to think about why people might donate. Picture you use a service, it shows you an image... do you think to pull out your credit card and send them money? Why would you with all the other image services out there?
I mean, a few will, but I think you need to create something that actually solves someones problem in a meaningful way (that is unique compared to free services).
When I started building Theneeds, we wanted users to be able to post, like in Twitter. And soon, we wanted users to be able to attach photos or other media.
For media in the sense of an url that we then embed/display it's relatively easy. And even easier if you pay for an external service like embed.ly to do the job.
For images it's a mess. We had to take care about uploading, resizing, posting async to s3, invalidating caches, and of course displaying. If I had to do that again, I'd surely look for an external service (that I didn't find at that time).
Maybe this is a viable way to monetize? I guess that there are quite a good number of companies that need upload+display of UG images, or at least that they could do it if it was easier to plug in.
Just for reference, embed.ly costs 20$/mo for just display, so I guess you could at least ask for that + storage costs.
Next, you could add additional services such as cdn support, or anti spam/copyright infringement/adult content/etc.
Well, this is an incredibly difficult market to compete in. You need something really special to stand out and attract users, or devs won't bother with your service. Other sites like Imgur already have the mindshare and you need to somehow get huge and find an effective monetization strategy to pull it off. Big image hosting sites are expensive and you won't be able to turn a profit for a long time, and if you're paying for it out of pocket it's going to go south pretty quick. Especially if you don't pay for the high end infrastructure, your site will get slow as the load piles on (and it will pile on and you will see service-disrupting abuse) and most users will leave without a second thought if they have to wait more than a second or two to see their images.
https://drewdevault.com/2014/10/10/The-profitability-of-onli...
Disclaimer: I wrote it