Free Cheese in the Mousetrap

18Dec12

Another week, another Facebook controversy. This time the blogosphere buzz is about Instagram, the popular photo sharing site purchased by Facebook last April in a cash and stock deal worth a billion dollars. For months, users wondered what Facebook had in mind for its shiny new purchase. The social media site is extremely popular with users, surely costs a ton to maintain, but has no obvious business plan. What would Facebook’s stategy for monetizing Instagram look like?

Yesterday, we found out. On January 16, 2013, in its “terms of service” document (you know, the thing no one every really reads), there will be the following in the “Rights” section:

1. Instagram does not claim ownership of any Content that you post on or through the Service. Instead, you hereby grant to Instagram a non-exclusive, fully paid and royalty-free, transferable, sub-licensable, worldwide license to use the Content that you post on or through the Service, except that you can control who can view certain of your Content and activities on the Service as described in the Service’s Privacy Policy, available here: http://instagram.com/legal/privacy/.

2. Some or all of the Service may be supported by advertising revenue. To help us deliver interesting paid or sponsored content or promotions, you agree that a business or other entity may pay us to display your username, likeness, photos (along with any associated metadata), and/or actions you take, in connection with paid or sponsored content or promotions, without any compensation to you. If you are under the age of eighteen (18), or under any other applicable age of majority, you represent that at least one of your parents or legal guardians has also agreed to this provision (and the use of your name, likeness, username, and/or photos (along with any associated metadata)) on your behalf.

3. You acknowledge that we may not always identify paid services, sponsored content, or commercial communications as such.

What this legalese means is that an Instagram user’s photos, often turned into hipster art using their battery of “creative” filters, are by default turned over to Instagram with an unlimited usage license. These images will be made available for sale to other business entities for their purposes without the photographer being compensated for it, able to prevent it, or often even knowing that it happened. Users have until January 16, 2013 to remove their images from Instagram if they don’t want to be subject to this.

Of course, many Instagram users are livid about this. They’ve been nervously wondering since April what Facebook was going to do with their beloved free photo-sharing service, and now they know: Instagram is planning to make money with their photography. I’d post links, but it’s more fun to simply Google “Instagram fury” and start reading.

I’m always amused when folks go ballistic when their “free” product ends up having strings attached. I often wonder how many of them:

  • Have ever worked in private industry, or better yet, owned their own business.
  • Are in charge of maintaining a datacenter holding terabytes of information that needs to be working 24/7.
  • Have ever read the terms of service for an online service, software application, or anything else before simply clicking “yes” and continuing on.

I’ve done all these things and can make a few relevant comments. In budgeting for a datacenter, I can assure anyone that, contrary to the feelings of the many “digitize everything” boosters, digital doesn’t mean free.  Keeping terabytes of data online in a secure, continuous manner is extremely expensive. Electrons might be free, but storing and backing them up is not.

As a former businessman, it’s obvious to me that Facebook would look for a way to monetize Instagram as soon as possible. They can do this in a number of ways:

  • Charge money for the Instagram application. This would result in lots of people electing not to try it.
  • Charge a subscription fee for the Instagram social media site. Again, many would elect not to join, and many current uses would probably drop out.
  • Monetize the membership. You can do this by sending targeted ads to users, but this is already being done on most of the popular social media sites. With Instagram, Facebook has a unique “product offering,” a vast amount of stock photography that can be marketed to companies. Sure, most of it is unusable junk, but if you’ve got billions of photos, you’re bound to have a great deal of salable imagery.

One of the blogs I read called this situation a bait-and-switch tactic, where users were lured into becoming Instagram members based on one set of terms and now the terms are being suddenly switched to Facebook’s advantage. It might look like this, but here’s what their actual terms of service say (edited for brevity):

We reserve the right to modify or terminate the Service or your access to the Service for any reason, without notice, at any time, and without liability to you.

We reserve the right, in our sole discretion, to change these Terms of Use (“Updated Terms”) from time to time.

There it is, plain as day (you can read the whole thing here). With reasonable notification, they can “switch” anything at any time. When the user clicks the “accept” button, they agree to this fact before even getting started, so where’s the bait-and-switch?

So what’s an apprehensive Instagram user to do? My advice is simple: If you don’t like the idea of your photos being sold to other corporations, take your images off Instagram and delete your account before January 16. Does this sound radical? Not to me, but I’m a bit older than most internet users, and even though I do photography for a living, I haven’t posted much of my own material on the web. I know that once it’s online, it’s essentially gone, and there’s no practical way to monitor whether one’s images are being improperly used or if one’s copyright is being violated.

Yes, copyright, a term that many advocates of “free everything” don’t like all that much. Even the most casual snapshooter is protected by copyright laws whether their images are salable or not. To Instagram users I would say, “Your photographs are yours, you don’t have to give them away.” Of course, this means dumping Instagram and finding another way to share your pictures. Many will do this, but I’m sure that many more won’t care about Instagram’s new terms. I’d guess that Facebook has already researched this and came to the same conclusion.

UPDATE: 12-19-12
I heard on the radio on the drive into work that Instagram is “clarifying” its new terms of service and that they never really intended to sell members’ images. Don’t know if this was always their intent or whether the user uproar made them change their mind, but I’ll keep an eye on the situation.

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