AT&T and Yahoo on Thursday rolled out a digital photo-sharing service, the latest in a string of offerings between the two tech giants.

on Thursday rolled out a digital photo-sharing service, the latest in a string of offerings between the two tech giants.

The new service, AT&T Yahoo Photos, gives AT&T another free perk it can offer its 7.8 million DSL subscribers, and it potentially gets more consumers to use the newly upgraded Yahoo Photos service. The service includes features such as photo-tagging and online “playlists” of photos that automatically recognize and add tagged photos to online albums.

“The MO here is to get people to use the services and get them engaged,” said Standard & Poor’s analyst Scott Kessler. “This is the continuation of a long-standing relationship” in which AT&T and Yahoo share broadband subscriber revenues.

The companies wouldn’t disclose terms of the deal, but Mr. Kessler said the entire partnership likely benefits Yahoo more. “These deals are super for Yahoo. It’s repackaging its existing offerings,” he said. “For every customer that signs on, Yahoo gets a payment [from AT&T] related to subscriber numbers.”

According to recent comScore and Hitwise reports, Yahoo Photos, which debuted in 2000, ranks first and second, respectively, among the top-used photo-sharing services that include Flickr, which Yahoo acquired last year. But Yahoo spokesperson Kim McIntyre said Yahoo Photos doesn’t compete with Flickr.

“People who use Yahoo Photos are using it to share and make photo gifts with a set group of family and friends,” she said. “People who use Flickr use it as the eyes of the world, and to express themselves artistically. There’s a very, very small segment of people who use both services.”

According to Hitwise, the top 10 photo-sharing services in descending order are Photobucket.com, Yahoo Photos, Webshots Community, Kodakgallery.com, ImageShack, Flickr, Snapfish, Picturetrail, Slide.com, and Shutterfly.

This week Google said it acquired a biometric software company to help it upgrade its Picasa photo-sharing service (see Google Grabs Photo Specialist).

Google Grabs Photo Specialist

Contact the writer:WTanaka@RedHerring.com