We have measured the absorption spectrum, the emission spectrum, the emission lifetime, and the photostability of fluorescein isothiocyanate (FITC) incorporated inside colloidal silica spheres as a function of the dye concentration in the spheres, while minimizing scattering effects. Six batches of stable, monodisperse particles were synthesized with FITC up to high densities of 0.03 M. At dye concentrations above 0.001 M, we observe a large red shift of 10 nm in the absorption and the emission spectra, as well as a strong reduction of the lifetime. At the same time, the photostability of the dye is considerably improved. These effects are caused by an increased energy transfer between the dye molecules as their concentration increases. Several excitation quenching models are examined, namely annihilation quenching, surface quenching, and a fractal distribution of quenchers. None of the models that assume a homogeneous distribution of FITC provide a sufficient explanation of the observed effects. It is suggested that the dye molecules tend to form clusters during the synthesis of the colloidal spheres. It is concluded that colloids with a low dye concentration are useful for photonic applications, whereas high dye concentrations are interesting for optical experiments in colloid science.