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Summary:

Instagram has come under fire — as other services based on user-generated content have — for changing its terms of service in a way that suggests it might experiment with advertising. But should that really be a surprise? What else should we expect from a free service?

Amid the virtual gallons of digital ink that have been spilled about Instagram’s changes to its terms of service, there seem to be two dominant strains of thought: one is that the photo-sharing service has been infected by the same nefarious privacy virus that Facebook is notorious for, and only eternal vigilance will stop it from doing something horrible with our photos. The second is that this kind of evil behavior is a natural outcome of an ad-supported user-generated-content model, and therefore this model is broken and/or bad. But is it really that simple? Not even close.

In case you missed the brouhaha, my colleague Eliza Kern has covered the details of the original changes — which many bloggers and Instagram users took to mean that the service was planning to sell their photos without their permission — as well as the company’s follow-up blog post, in which it apologized for the misunderstanding and rolled back some of the wording in its TOS. Despite the apology or clarification, however, it seems that some users have no intention of trusting Instagram again, and have deleted their accounts and exported all of their photos.

As it does in almost every case like this — and there have been many over the past few years, involving everyone from Facebook and Google to Dropbox and Twitpic — the phrase “if you don’t pay for it, then you are the product” often gets used, in a finger-wagging sort of way that implies you should have seen this coming. And there’s some truth to that: after all, how did you think Instagram was going to pay for the server space and bandwidth to host all of your precious photos? And how did you think Facebook was going to justify paying almost $1 billion for the company?

You have to pay for free services somehow

free stuff

It would be nice if Instagram would just host the more than 4 billion photos people have uploaded for free, and without introducing advertising into the stream — just like it would be nice if Facebook didn’t flog sponsored stories at you, while it provides a billion people with free email and photo-hosting and instant messaging and free mobile apps. And it would be great if Twitter didn’t have to go down the same road in order to generate revenue. Would it be better if all of these services charged us a fee, as Alexis Madrigal at The Atlantic and others have argued?

That’s an appealing — and popular — viewpoint. But again, it’s not really that simple. As online veteran Derek Powazek notes in a smart post on this topic, the simple fact that you pay for a service doesn’t mean that you are guaranteed to be free from intrusive advertising, nor does it guarantee that the operator of the service will bow to your every whim. Powazek points out that when he had a problem with a free service (Tumblr) he got friendly support instantly, and when he had a problem with something he pays a lot of money for (internet access) he got treated like cattle. You are always the product.

In the vast majority of cases, if you are using a service provided for free on the internet, you are paying for that product or service with your attention, and that attention is going to be monetized in a variety of ways — and one of those ways is likely advertising of some kind. If you are lucky, that advertising is going to be targeted and personalized in a way that makes it more likely to be useful, and this is arguably what Instagram has in mind according to their blog post. That isn’t necessarily an evil or even negative thing to do.

In my view, this is a fair trade — I get a free service that has a lot of value, and I pay for it by looking at (and possibly even participating in) some advertising. If you don’t like this bargain, then you have other choices: for example, you can pay for alternative services like Flickr. But it’s worth pointing out that their terms of service, and those at Twitter and almost every other web-based service provider, contain wording that is virtually identical to that proposed by Instagram. Welcome to the internet.

Post and thumbnail images courtesy of Shutterstock/Javi Indy and Flickr user Alan O’Rourke

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  1. Spencer Callaghan Wednesday, December 19, 2012

    The part that keeps getting overlooked is that most people have no problem with ads, what they have a problem with is their photos being used in those ads.

    Suggesting that people wanted the service to stay ad-free forever is a straw man, no one thought that would happen. However there is a big difference between ads, sponsored posts, etc. and seeing your kids in an ad for Pampers.

    1. Thanks, Spencer — although it’s not clear to me that Instagram ever intended for that to happen (at least according to their blog post). Could they be lying? Perhaps. But it seems unlikely, unless you assume that they have suddenly become evil. Using photos in the same way as sponsored stories seems a lot more likely.

      1. And that’s fair, but before Kevin clarified it last night it was unclear.

        It’s not like Facebook didn’t try it before so it wasn’t an irrational assumption given the murky legal language.

        The good news is the uproar forced them to clarify.

      2. Facebook doesn’t use my kids photos in sponsored stories however and i think the issue is what the terms of service implies not whether or not anyone perceives anyone else as evil. At the end of the day, Capitalism is neither good nor evil — it is an economic system where morality has no place with regards to the Corporations over arching goal to deliver on shareholder value.

      3. Mathew, the language used in the original change was pretty clear wrt what became the issue. Whether they “intended to” or not, there is nowhere to hide in this legalese: ““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.” It wasn’t unclear at all.

        And they said nothing about the minor release. Assuming parents have read a TOS before their 15-year-old logs in on Instagram – LOL.

      4. Issues of evil or not evil aside, there would be issues beyond copyright with using photos taken by users in advertising. There’s a reason that stock agencies (including micro-stock) require model releases from the people in photographs. That’s standard practice for photos used “commercially” (as in a use that isn’t editorial or artistic). There was even a case around this in, if I remember correctly, Australia a few years back where some social media photo was used in an ad with, I believe, the photographer’s permission but not that of the subject in the photograph.

    2. Exactly. Other than the news that Instagram is rolling back some parts of its TOS, this article is a bit silly. Advertising is fine. Selling other people’s intellectual property, not so much.

  2. Bad news ! Good news for Yahoo !

  3. “If you are lucky, that advertising is going to be targeted and personalized in a way that makes it more likely to be useful”.

    After nearly two decades of “targeted and personalized”, CTRs have fallen to statistical zero. Nobody I know can name a single memorable online campaign. I don’t think privacy intrusions have worked well for marketers, or for consumers. Why do we continue doubling down on this failed idea?

    1. An excellent point. It’s been made before, but it needs to continue to be made over and over again.

      Online advertisement in general is a failed experiment. It’s been shown to be a failure not over the course of months, or even years, but for _decades_ now.

      The crux? Unlike television advertisement which monopolizes your visual and aural field and ‘forces’ you to watch and listen, online advertisement (regardless of how ‘targeted’ it is) is always an accompaniment to what is valuable to the online viewer. And, as an adjunct to valuable material, it is always given short shritf–and very often outright ignored.

      It will _never_ provide the value that is being hoped for it. This situation has had more than twenty years now to prove itself, and it’s failed miserably.

      Why do we continue doubling down on this failed idea?

  4. Oh that you provide an informed and thoughtful analysis Matthew. This is free to me because I would happily look at GigaOm’s ads to encourage its talented writers to be able to talk to me when are where I want. But that won’t stop the ill-informed people that do not want to pay for anything or ever make me buy the Toronto Star.

  5. OK, nobody expects a free service to also be free of advertising or monetization of some sort, the story we were given was that they were going to take our vacation pictures and sell them to the hotel we were staying at. They were going to take that picture of us passed out at a party and sell it to a rehab center to use on a billboard. That’s not the same thing as being bugged about having to see ads.

  6. There is no such thing as a free lunch folks, digital or other wise. Insightful and thoughtful analysis Matthew. Happy to pay via ads for GigaOm’s service to its readers. I would much rather pay via ads than pay for a singe copy of the Toronto Star.

  7. I don’t think Instagram’s change of TOs was ‘evil’, but I do think it was a big deal. My guess is Facebook can do with Instagram what it cannot do with Facebook anymore – build a new gen social network in which murky concepts like ‘privacy’ don’t exist. http://communicable.ca/2012/12/18/instagram-let-the-hunger-games-begin/

  8. This is easy. Instagram cannot legally sell your photographs b/c as the original artist, you have copyright protection. Each sale would constitute infringement. “Terms of Service” cannot transfer ownership of copyright, but instead grants them rights to display your photos on their service, not do whatever they want with them. Even if they put “we will sell your photos” in the terms, they are not insulated from infringement.

    1. That’s true, Brent — but the terms give Instagram a “sub-license” which allows them to use them however they wish.

  9. Happily, I’ve never used Instagram, posted very few pictures to Facebook (and those were landscapes, or advertising for my own products), and give no personal information that cannot be found in the telephone book. Still, the author blaming users for immoral management decisions is uncalled for, inaccurate, and indicates that he or she is on their payroll.

    1. Good point, Bruce — thanks for the comment.

      1. Deja vu, but the move to a falsy free cloud is more and more a question.
        We have to choose between indirect monetization system and some more direct ones.
        Move to cloud is on, for the better – ubiquity, simplicity, security, harmony with mobile devices – and for the worse : our data are spread over hermetic silo, controled by quasi-monopolies who make a living of their analysis and resale.

        The cause ? Power is on the server side.

        Our project Cozy Cloud (https://cozycloud.cc) aims to give back servers to people by developping a private personnal cloud. Cozy is you server, where you have your data and where you choose which applications can access them. Cozy can be run on you own pc or by a hosting service. Full control.
        We are at an early stage but a beta is running and a first public release is coming soon. Stay tuned !
        Oh, I forgot : our next application will be a photo sharing service :-)

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