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+# Epic 7: AI-Powered Image Generation
+
+## Epic Goal
+To automatically generate and insert high-quality images into generated articles, including hero images for all tiers and content images for T1 articles, using AI-powered image generation via fal.ai FLUX.1 schnell API.
+
+## Status
+- **Story 7.1**: 📋 PLANNING (TBD story points)
+
+## Stories
+
+### Story 7.1: Generate and Insert Images into Articles
+**Status:** 📋 PLANNING  
+**Document:** [story-7.1-image-generation.md](../stories/story-7.1-image-generation.md)
+
+**As a developer**, I want to automatically generate hero images for all article tiers and content images for T1 articles, so that articles are visually enhanced without manual image creation.
+
+**Acceptance Criteria**
+* Hero images generated for all tiers (configurable per tier in job JSON)
+* Content images generated for T1 articles (1-3 images by default, configurable)
+* Images generated using fal.ai FLUX.1 schnell API
+* Theme prompt generated once per project using AI, reused for all images
+* Images uploaded to storage zone `images/` subdirectory
+* Images inserted into HTML content (hero after H1, content images after H2s)
+* Alt text includes 3 entities and 2 related searches
+* Graceful failure handling (continue without images if generation fails)
+* Job JSON configuration for image sizes and counts per tier
+
+**Implementation Notes**
+* Hero images: 1280x720 default, title truncated to 3-4 words, uppercase
+* Content images: 512x512 default, named with entity + related_search
+* Max 5 concurrent fal.ai API calls (same pattern as OpenRouter)
+* Images are optional enhancements (failures don't block article generation)
+* Theme prompt cached in Project model for reuse
+
+## Notes
+- Images enhance SEO and user engagement
+- fal.ai API provides fast generation (<3 seconds per image)
+- Theme consistency across project ensures visual coherence
+- Job JSON allows fine-grained control per tier
+- Technical debt: Image optimization, CDN caching, format conversion deferred
+
diff --git a/docs/stories/story-7.1-image-generation.md b/docs/stories/story-7.1-image-generation.md
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+# Story 7.1: Generate and Insert Images into Articles
+
+## Status
+**PLANNING** - Ready for Implementation
+
+## Story
+**As a developer**, I want to automatically generate hero images for all article tiers and content images for T1 articles using AI-powered image generation, so that articles are visually enhanced without manual image creation.
+
+## Context
+- Epic 7 introduces AI-powered image generation to enhance article quality
+- fal.ai FLUX.1 schnell API provides fast text-to-image generation (<3 seconds)
+- Hero images needed for all tiers to improve visual appeal
+- Content images needed for T1 articles (1-3 images) to break up text
+- Images should be thematically consistent across a project
+- Images are optional enhancements (failures shouldn't block article generation)
+- Job JSON configuration allows per-tier customization
+
+## Acceptance Criteria
+
+### Core Image Generation Functionality
+- Hero images generated for all tiers (if enabled in job config)
+- Content images generated for T1 articles (1-3 by default, configurable)
+- Images generated using fal.ai FLUX.1 schnell API
+- Theme prompt generated once per project using AI, cached in database
+- Images uploaded to storage zone `images/` subdirectory
+- Images inserted into HTML content before saving to database
+- Alt text includes 3 random entities and 2 random related searches
+- Graceful failure handling (log errors, continue without images)
+
+### Hero Image Specifications
+- Default size: 1280x720 (configurable per tier in job JSON)
+- Title truncated to 3-4 words, converted to UPPERCASE
+- Prompt format: `{theme_prompt} Text: '{TITLE_UPPERCASE}' in clean simple uppercase letters, positioned in middle of image.`
+- Naming: `{main-keyword}.jpg` (slugified)
+- Placement: Inserted immediately after first `<h1>` tag
+- Format: Always JPG
+- Title truncation: Extract first 3-4 words from title, convert to UPPERCASE
+
+### Content Image Specifications
+- Default size: 512x512 (configurable per tier in job JSON)
+- Default count: T1 = 1-3 images (configurable min/max in job JSON)
+- Prompt format: `{theme_prompt} Focus on {entity} and {related_search}, professional illustration style.`
+- Naming: `{main-keyword}-{random-entity}-{random-related-search}.jpg` (all slugified)
+- Placement: Distributed after H2 sections (one image per H2, evenly distributed)
+- Format: Always JPG
+- Alt text: `alt="entity1 related_search1 entity2 related_search2 entity3"` (3 entities, 2 related searches)
+
+### Theme Prompt Generation
+- Generated once per project using AI (OpenRouter)
+- Cached in `Project.image_theme_prompt` field (TEXT, nullable)
+- Prompt template: `src/generation/prompts/image_theme_generation.json`
+- Reused for all images in the project for visual consistency
+- Example: "Professional industrial scene, modern manufacturing equipment, clean factory environment, high-quality industrial photography, dramatic lighting."
+
+### Job JSON Configuration
+- New `image_config` section per tier in job JSON
+- Structure:
+  ```json
+  {
+    "tiers": {
+      "tier1": {
+        "image_config": {
+          "hero": {
+            "width": 1280,
+            "height": 720
+          },
+          "content": {
+            "min_num_images": 1,
+            "max_num_images": 3,
+            "width": 512,
+            "height": 512
+          }
+        }
+      }
+    }
+  }
+  ```
+- Defaults if not specified:
+  - Hero: 1280x720 (all tiers)
+  - Content: T1 = 1-3, T2/T3 = 0-0 (disabled)
+- If `image_config` missing entirely: Use tier defaults
+- If `image_config` present but `hero`/`content` missing: Use defaults for missing keys
+
+### Database Schema Updates
+- Add `image_theme_prompt` (TEXT, nullable) to `Project` model
+- Add `hero_image_url` (TEXT, nullable) to `GeneratedContent` model
+- Add `content_images` (JSON, nullable) to `GeneratedContent` model
+  - Format: `["url1", "url2", "url3"]` (array of image URLs)
+- Migration script required
+
+### Image Storage
+- Images uploaded to `images/` subdirectory in storage zone
+- Check if file exists before upload (use existing if collision)
+- Return full public URL for database storage
+- Handle file collisions gracefully (use existing file)
+
+### Error Handling
+- Log errors with prompt used for debugging
+- Continue article generation if image generation fails
+- Images are "nice to have", not required
+- Max 5 concurrent fal.ai API calls (same pattern as OpenRouter)
+- Retry logic similar to OpenRouter (3 attempts with backoff)
+
+## Tasks / Subtasks
+
+### 1. Create Image Generation Module
+**Effort:** 3 story points
+
+- [ ] Create `src/generation/image_generator.py` module
+- [ ] Implement `ImageGenerator` class:
+  - `get_theme_prompt(project_id) -> str` (get or generate)
+  - `generate_hero_image(project_id, title, width, height) -> bytes`
+  - `generate_content_image(project_id, entity, related_search, width, height) -> bytes`
+- [ ] Integrate fal.ai API client (`fal-client` package)
+- [ ] Use `FAL_API_KEY` from `.env` for authentication (note: env var is `FAL_API_KEY`, not `FAL_KEY`)
+- [ ] Implement concurrency control (max 5 concurrent calls)
+- [ ] Implement retry logic (3 attempts with exponential backoff)
+- [ ] Log errors with prompts used
+
+### 2. Create Theme Prompt Generation
+**Effort:** 2 story points
+
+- [ ] Create `src/generation/prompts/image_theme_generation.json` prompt template
+- [ ] Implement theme prompt generation using AI (OpenRouter)
+- [ ] Cache theme prompt in `Project.image_theme_prompt` field
+- [ ] Generate only once per project (reuse for all articles)
+- [ ] Update `Project` model with `image_theme_prompt` field
+- [ ] Create migration script for database schema update
+
+### 3. Extend Job Configuration
+**Effort:** 2 story points
+
+- [ ] Update `TierConfig` in `src/generation/job_config.py`:
+  - Parse `image_config` from JSON
+  - Provide defaults if missing
+  - Validate min/max ranges
+- [ ] Support `hero` and `content` sub-configs
+- [ ] Handle missing `image_config` gracefully (use tier defaults)
+
+### 4. Implement Image Upload & Storage
+**Effort:** 2 story points
+
+- [ ] Extend `BunnyStorageClient` or create image upload method
+- [ ] Upload to `images/` subdirectory in storage zone
+- [ ] Check if file exists before upload (use existing if collision)
+- [ ] Generate full public URL for database storage
+- [ ] Handle file naming (slugify main_keyword, entities, related_searches)
+- [ ] Return URL for database storage
+
+### 5. Implement HTML Image Insertion
+**Effort:** 3 story points
+
+- [ ] Create `src/generation/image_injection.py` module
+- [ ] Implement `insert_hero_after_h1(html, hero_url, alt_text) -> str`
+- [ ] Implement `insert_content_images_after_h2s(html, image_urls, alt_texts) -> str`
+- [ ] Parse HTML to find H1/H2 tags
+- [ ] Distribute content images evenly across H2 sections
+- [ ] Generate alt text: 3 random entities + 2 random related searches
+- [ ] Preserve HTML structure and formatting
+
+### 6. Integrate into Article Generation Flow
+**Effort:** 3 story points
+
+- [ ] Update `BatchProcessor._generate_single_article()`:
+  - Generate hero image after title is available (all tiers)
+  - Generate content images after content generation (T1 only)
+  - Insert images into HTML before saving
+- [ ] Update `BatchProcessor._generate_single_article_thread_safe()` (same changes)
+- [ ] Handle tier-specific image config
+- [ ] Store image URLs in database (hero_image_url, content_images JSON)
+- [ ] Continue on image generation failure (log but don't block)
+
+### 7. Database Schema Updates
+**Effort:** 2 story points
+
+- [ ] Update `Project` model: Add `image_theme_prompt` field
+- [ ] Update `GeneratedContent` model:
+  - Add `hero_image_url` field
+  - Add `content_images` field (JSON)
+- [ ] Create migration script `scripts/migrate_add_image_fields.py`
+- [ ] Update repository interfaces if needed
+
+### 8. Title Truncation Logic
+**Effort:** 1 story point
+
+- [ ] Implement title truncation to 3-4 words (extract first 3-4 words)
+- [ ] Convert to UPPERCASE
+- [ ] Handle edge cases (short titles, special characters)
+- [ ] Use in hero image prompt generation
+
+### 9. Environment Variable Setup
+**Effort:** 1 story point
+
+- [ ] Add `FAL_API_KEY` to `env.example`
+- [ ] Document in README or setup guide
+- [ ] Validate key exists before image generation
+
+### 10. Unit Tests
+**Effort:** 3 story points
+
+- [ ] Test `ImageGenerator` class (mock fal.ai API)
+- [ ] Test theme prompt generation and caching
+- [ ] Test title truncation logic
+- [ ] Test HTML image insertion
+- [ ] Test job config parsing
+- [ ] Test error handling and retry logic
+- [ ] Achieve >80% code coverage
+
+### 11. Integration Tests
+**Effort:** 2 story points
+
+- [ ] Test end-to-end image generation for small batch
+- [ ] Test hero image generation (all tiers)
+- [ ] Test content image generation (T1 only)
+- [ ] Test image insertion into HTML
+- [ ] Test database storage of image URLs
+- [ ] Test file collision handling
+- [ ] Test graceful failure (API errors)
+
+## Technical Notes
+
+### fal.ai API Integration
+
+**Installation:**
+```bash
+pip install fal-client
+```
+
+**Environment Variable:**
+```bash
+FAL_API_KEY=your_fal_api_key_here
+```
+Note: The environment variable is `FAL_API_KEY` (not `FAL_KEY`).
+
+**API Usage:**
+```python
+import fal_client
+
+result = fal_client.subscribe(
+    "fal-ai/flux-1/schnell",
+    arguments={
+        "prompt": "Your prompt here",
+        "image_size": {"width": 1280, "height": 720},
+        "num_inference_steps": 4,
+        "guidance_scale": 3.5,
+        "output_format": "jpeg"
+    },
+    with_logs=True
+)
+
+# result["images"][0]["url"] contains the image URL
+# Download image from URL or use data URI if sync_mode=True
+```
+
+**Concurrency:**
+- Max 5 concurrent calls (same pattern as OpenRouter)
+- Use ThreadPoolExecutor or similar
+- Queue requests if limit exceeded
+
+### Theme Prompt Generation
+
+**Prompt Template:**
+```json
+{
+  "system_message": "You are an expert at creating visual style descriptions for professional images.",
+  "user_prompt": "Create a concise visual style description (2-3 sentences) for professional images related to: {main_keyword}\n\nEntities: {entities}\nRelated searches: {related_searches}\n\nReturn only the style description, focusing on visual elements like lighting, environment, color scheme, and overall aesthetic. This will be used as a base for all images in this project.\n\nExample format: 'Professional industrial scene, modern manufacturing equipment, clean factory environment, high-quality industrial photography, dramatic lighting.'"
+}
+```
+
+**Caching:**
+- Store in `Project.image_theme_prompt` field
+- Generate once per project
+- Reuse for all articles in project
+
+### Image Naming Convention
+
+**Hero Image:**
+- Format: `{main-keyword}.jpg`
+- Example: `shaft-machining.jpg`
+- Slugify main_keyword
+
+**Content Images:**
+- Format: `{main-keyword}-{entity}-{related-search}.jpg`
+- Example: `shaft-machining-cnc-lathe-precision-turning.jpg`
+- Pick random entity from `project.entities`
+- Pick random related_search from `project.related_searches`
+- Slugify all parts
+- Handle missing entities/related_searches gracefully
+
+### HTML Insertion Logic
+
+**Hero Image:**
+- Find first `<h1>` tag in HTML
+- Insert `<img>` tag immediately after closing `</h1>`
+- Format: `<img src="{hero_url}" alt="{alt_text}" />`
+
+**Content Images:**
+- Find all `<h2>` sections
+- Distribute images evenly across H2s
+- If 1 image: after first H2
+- If 2 images: after first and second H2
+- If 3 images: after first, second, third H2
+- Insert after closing `</h2>`, before next content
+
+**Alt Text Generation:**
+- Pick 3 random entities from `project.entities`
+- Pick 2 random related_searches from `project.related_searches`
+- Format: `alt="entity1 related_search1 entity2 related_search2 entity3"`
+- Handle missing entities/searches gracefully
+
+### Job JSON Example
+
+```json
+{
+  "project_id": 1,
+  "tiers": {
+    "tier1": {
+      "count": 5,
+      "image_config": {
+        "hero": {
+          "width": 1280,
+          "height": 720
+        },
+        "content": {
+          "min_num_images": 1,
+          "max_num_images": 3,
+          "width": 512,
+          "height": 512
+        }
+      }
+    },
+    "tier2": {
+      "count": 20,
+      "image_config": {
+        "hero": {
+          "width": 1280,
+          "height": 720
+        }
+      }
+    }
+  }
+}
+```
+
+### Database Schema Updates
+
+```sql
+-- Add theme prompt to projects
+ALTER TABLE projects ADD COLUMN image_theme_prompt TEXT NULL;
+
+-- Add image fields to generated_content
+ALTER TABLE generated_content ADD COLUMN hero_image_url TEXT NULL;
+ALTER TABLE generated_content ADD COLUMN content_images JSON NULL;
+```
+
+## Dependencies
+- fal.ai API account and `FAL_API_KEY`
+- `fal-client` Python package
+- OpenRouter API for theme prompt generation
+- Bunny.net storage for image hosting
+- Story 4.1: Deployment infrastructure (for image uploads)
+
+## Future Considerations
+- Image optimization (compression, WebP conversion)
+- CDN caching for images
+- Image format conversion (PNG, WebP options)
+- Custom image styles per project
+- Image regeneration on content updates
+- Image analytics (views, engagement)
+
+## Technical Debt Created
+- Image optimization deferred (current: full-size JPGs)
+- No CDN cache purging for images
+- No image format conversion (always JPG)
+- Theme prompt regeneration not implemented (manual update required)
+- Image deletion not implemented (orphaned images may accumulate)
+
+## Total Effort
+24 story points
+
+### Effort Breakdown
+1. Image Generation Module (3 points)
+2. Theme Prompt Generation (2 points)
+3. Job Configuration Extension (2 points)
+4. Image Upload & Storage (2 points)
+5. HTML Image Insertion (3 points)
+6. Article Generation Integration (3 points)
+7. Database Schema Updates (2 points)
+8. Title Truncation Logic (1 point)
+9. Environment Variable Setup (1 point)
+10. Unit Tests (3 points)
+11. Integration Tests (2 points)
+
+## Questions & Clarifications
+
+### Question 1: Image Format
+**Status:** ✓ RESOLVED
+
+Decision: Always JPG
+- Consistent format across all images
+- Good balance of quality and file size
+- Future: Could add format options in job config
+
+### Question 2: Hero Image Title Truncation
+**Status:** ✓ RESOLVED
+
+Decision: Truncate to 3-4 words, UPPERCASE
+- Prevents overly long text in images
+- Improves readability
+- Example: "Overview of Shaft Machining" → "OVERVIEW OF SHAFT MACHINING"
+
+### Question 3: Content Image Count
+**Status:** ✓ RESOLVED
+
+Decision: T1 default 1-3 images, configurable per tier
+- Job JSON allows fine-grained control
+- Defaults: T1 = 1-3, T2/T3 = 0-0 (disabled)
+- Can override in job config
+
+### Question 4: Image Failure Handling
+**Status:** ✓ RESOLVED
+
+Decision: Log errors, continue without images
+- Images are enhancements, not required
+- Article generation continues even if images fail
+- Log includes prompt used for debugging
+
+## Notes
+- Images enhance SEO and user engagement
+- fal.ai provides fast generation (<3 seconds per image)
+- Theme consistency ensures visual coherence across project
+- Job JSON provides flexibility for different use cases
+- Graceful degradation if image generation fails
+- All API keys from `.env` file only
+