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Add a symmetrical border to your image, (Image | Add Borders) using a background color that closely matches the background of your webpage.

With the Magic Wand select the border area. Immediately invert the selection by pressing CTRL + SHIFT + I on your keyboard.

Feather your selection -
Selections | Modify | Feather on the menu bar.

The example image has a feather of 20 pixels.

Immediately invert the selection again.

Select the Paintbrush Tool

• Paper Texture:asphalt
• Brush tip: round
• Opacity: 52
• Density: 67
• Size: 47
• Hardness: 50
• Step: 7

Run the brush around the perimeter of your image a couple of times.

Hit the delete key until the remnants of the squared edges are gone. The example image was 'deleted' three times.

Press CTRL + D to deselect the selection.

Reselect the border and again invert the selection. Add a drop shadow and you're done! (Image | Effects | Drop Shadow)