As you well know, Facebook purchased Instagram last spring for $1 billion in cash and stock. That figure is probably a bit lower at the moment as the stock is worth a bit less, but let’s say it’s somewhere in the range of more hundreds of millions than most of us will ever see.
And for those of us who use Facebook for advertising, the news yesterday that Facebook will be monetizing Instagram by selling their users’ pictures without their consent, knowledge, or any form of remuneration has come as a great shock, indeed.
Just have a look on Twitter at #instagram to see the reaction for yourself. Here are a couple of highlights.
You should be concerned about #instagram new policy if you enjoy art of any kind. It’s the start of artists not getting paid for anything.
— Scott Moran (@scottmoran9876) December 18, 2012
Now #instagram has alienated all pro photographers, their left w/pix of groups of drunks, meals at Applebee’s & Starbucks cups, market that!
— Dean Hanson (@abqDean) December 18, 2012
And, in what might be the most spectacularly written overreaction of the year, one young fellow from Wired deleted his Instagram account within moments of hearing the news.
What the average individual does not understand is that in order for companies like Twitter, Facebook, Instagram, and others to survive, they must find a way of monetizing their product. You will see complaints by people that, for example, Facebook ads get in the way of them enjoying their Facebook experience.
It’s up to Facebook to explain to them that the way that they are able to pay for the many millions of dollars required each day to operate this vast network of text, photos, and videos, is by providing advertisers the means of reaching potential clients. And those who do understand this can make a decision at this point: they can either stop using the service, or continue on with the awareness that they are using this service with a caveat.
Facebook users will often threaten to delete their accounts after changes to Terms & Conditions, but there is still steady growth at Facebook, and they recently reached a billion users.
What is important for them to realize is that, at this point, after spending the kind of money that they did on Instagram, they do not have the space to start a great migration to other services like Flickr (this is likely the best news Flickr has had in years).
It seems as though people are a lot more upset about having their photos sold to third parties than they are about having their likes and interests shared with advertisers.
And in the middle of writing this, I see that Twitter has responded (which really sucks because now I have to do another outline for my conclusion). From the post:
“Advertising on Instagram From the start, Instagram was created to become a business. Advertising is one of many ways that Instagram can become a self-sustaining business, but not the only one. Our intention in updating the terms was to communicate that we’d like to experiment with innovative advertising that feels appropriate on Instagram. Instead it was interpreted by many that we were going to sell your photos to others without any compensation. This is not true and it is our mistake that this language is confusing. To be clear: it is not our intention to sell your photos. We are working on updated language in the terms to make sure this is clear.”
And: “Our main goal is to avoid things likes advertising banners you see in other apps that would hurt the Instagram user experience.”
As an advertiser, I see two things here. Firstly, that Instagram saw the massive mistake that they made today and have, at the very least, attempted to correct it. And, secondly, that they still haven’t actually worked out a way of monetizing Instagram in a way that is going to be attractive to both users and marketers.
Whether or not the damage has already been done remains to be seen. But they had a great opportunity to relegate themselves right out of relevance, and the question is, “When will they learn?”
Although Instagram is a somewhat independent team, they are still a part of a larger conglomeration that does not need any more bad press. Be assured that whatever Instagram does to monetize their app will be met with resistance. There are tons of ways that they could go about this, including promoted pictures, paid premium services, and even printing.
Monetization of a photo app isn’t an easy thing, and I think that most of us believed that Instagram would be a value-added feature of Facebook. And then just a couple of weeks ago Facebook released an update to its photo app and left us all wondering what the heck was going on.
It’s a long, uphill battle ahead for both Facebook and Instagram, but whatever they do, they’re now going to have to deal with a “Here we go again” kind of situation, instead of the usual, soon-muted kafluffle that surrounds monetization.
And let’s hope that they find a way to make use of the mountains of data that they’re accumulating to allow advertisers and users to connect on a meaningful level in what has the potential to be an amazing space for advertising.
– Marc Poirier