How Instagram Monetizes Its Popularity: Selling You Out?

By Mike McGuire | December 18, 2012 | 0 Comments

Update: Well, at least the folks at Instagram are listening.  The company did a reasonable job of explaining the intent of the change in policies and made clear they aren’t looking to sell users photos.  However, I think the lessons I mentioned are still worth considering.

So many teaching moments wrapped up in the news that Instagram’s terms of service which includes what some view as a bit of a bombshell – that Instagram can license/sell to third parties users photos without the user/photographer having any say in the matter.

Here are a couple lessons I took away from reading the cNet story:
  • Try not to violate what trust you’ve built with consumers: suddenly deciding that you can make money off of your users creative output – without really even asking — would seem to be a really dumb idea. 
    • OK, but I get that Instagram is expected to drive revenue for Facebook.  Why wouldn’t Instagram have tried a “want to make money off your images?” offer? Would the administrative costs, the contracts, the payments been so costly as to eliminate any profit?  There are so many ways to develop a relatively automated process to do many of these tasks. The first step? Ask your users if they’re interested, maybe? 
    • I mean, really. Given the popularity of Facebook and Instagram, nobody thought that there wouldn’t be potential in actually encouraging Instagram users to allow their photos to be used commercially?   Wait, I already have a name for the contest: “Take a Shot at Fame (and maybe some $) with Your Shots.”  Instagram, you can have that for free. 
  • The worst thing you, as an online service provider/aggregator can is surpsise, and I mean in a bad way, your users. Try really, really hard to not do that.  What Instagram just did? Don’t do that.  
  • This new policy violates my “Grandma test.”  The “Grandma test” is would your Grandma being embarrassed by your business decision? Encouraging users to share their memories, to share with millions what they consider to be a creative work with the promise that they’ll always be able to access those images and control who views them.  Suddenly, (as far as the users are concerned)  you decide you can can take some of those images and license them to the highest bidder without giving a slice of the revenue pie to the person who had the inspiration, dumb luck or presence of mind to capture that image? Seems, well, selfish.  My grandma would be very, very disappointed in me if I did that. 

Thoughts?