Flickr’s fame is an unintended consequence. Creators and husband-and-wife team Stewart Butterfield and Caterina Fake were toying with the idea of an online photo-sharing application as a side project while developing a multiplayer game two years ago. Conventional wisdom held that Web-based photo sharing was a loss leader for photo companies that had other services or equipment to offer.

Flickr as fundamentally different from competitors like Shutterfly or Snapfish. Those sites are primarily places to store photographs. Sharing those photos requires sending a Web address and inviting recipients to peruse an online album. Flickr was conceived primarily as social software — a community with photographs as the town square. That philosophy continues under new owner Yahoo!, which bought Flickr in May. “The default setting for your photos is for them to be public, viewable by the rest of the world,” says Fake. More than 80% of the 29 million pictures on Flickr are public. “It has to be completely open, have user-generated content and let people control their own data,” she says. Butterfield, 32, who has degrees in philosophy from Cambridge and the University of Victoria, had already been working in Web design. Fake, 35, had a more visual background: she was the art director for the online magazineSalon.

Flickr users can tag each picture with their own labels. Click the tag on a picture you like, and you are presented with all the other pictures tagged with that word. Tags help create photo sets peculiar to Flickr, like “squaredcircle” and “whatsinyourbag.”

Fake describes Flickr as serving a continuum that starts with one person’s family, moving outward in concentric circles through neighborhoods, cities, nations and the world. Flickr was a window on the London bombing, Ukraine’s “orange revolution” and the 2004 tsunami. “All of these news stories were captured by people that were there at the time, on the street, with an impetus to share,” she says.

All that in an application that’s still in beta phase. There’s no set date for Flickr 1.0, but the company keeps adding features. August brings clustering groups if similar tags, allowing users to determine whether “turkey” should yield pictures of Istanbul or a holiday dinner. “The real magic in technology is when you can anticipate users’ needs,” Fake says. “And we’re just at the beginning.”