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Should We Really Be Outraged by Instagram's Privacy Policy Change?


Much like Facebook, Instagram eventually had to monetize its business.

MINYANVILLE ORIGINAL Has the backlash to the backlash begun? After Instagram announced a loosening of its privacy policies, it, well, instantly drew the ire of netizens, with many users expressing outrage that the company might sell their pictures to advertisers without their express consent.

Here's the portion of Instagram's new terms of service that has gotten users in a tizzy:
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.

Even celebrities got into the act, with Kim Kardashian and Pink among those tweeting their displeasure at the photo-sharing app.

Many users also vowed to quit the service and sign up for other photo-sharing alternatives, including Yahoo's (NASDAQ:YHOO) newly-released Flickr app.

However, soon after the first wave of anger over Instagram's policy changes subsided, some contrarian opinions began to emerge. The gist of what several online commentators said was: Why are we surprised when a for-profit business does something that enables itself to earn money?

Sam Biddle of Gizmodo writes:
What none of these hair-pulling photo-sharing apocalypse-moaners neglect to mention is that Instagram's a business. A business that charges nothing for something that millions of people use constantly. In that sense, it's a crazy business. It's also a business that Facebook bought for one billion dollars. Facebook isn't the World Wildlife Fund or a soup kitchen-it's also a business, and one with very angry shareholders who expect to see a return on Facebook's insanely insane purchase. Ergo, Instagram needs to start making money.

Launched on the Apple (NASDAQ:AAPL) iOS platform in October 2010, Instagram quickly became a phenomenon and gained 1 million registered users in two months. It was later released to Android (NASDAQ:GOOG) in April 2012. The company had 100 million active users as of September. When a company like Instagram becomes a business behemoth without a monetization plan in place, such change should be expected. Indeed, Instagram parent company Facebook (NASDAQ:FB) basically faced the same problem. As a free social network, Facebook needed ways to monetize its services and as such recently started allowing advertisers "to target ads at users based on the email address and phone number they list on their profiles, or based on their surfing habits on other sites," noted the Wall Street Journal.

Writing at the tech blog, Matt Alexander notes technology early adopters should expect "the systematic deconstruction of our most favorite services." Once famous for its open technical standards, Twitter also made headlines this past summer after tweaking its applications programming interface (API) guidelines to clamp down on third-party developers. Founding CEO of collaborative journalism startup Publish2, Scott Karp, tweeted that "Devs [Developers] and users can better protect themselves by understanding TOS [terms of services] of free app with no biz model is placeholder at best."

"Rather than stand, mouths agape, each time a free service decides that it must make money at our relatively minor expense, is it not time that we can simply react with reasonable expectance? Of course Instagram was going to move in this direction, particularly considering its owner. Of course Twitter, after years of failing to monetize, would leverage the most user-engaged portion of its business. Maybe it's upsetting, but it's also just business," said Alexander.

In fact, it turns out that the much ballyhooed Instagram policy changes actually do not amount to much. Lauren Crabbe of PCWorld explains:

Still, the new terms were not really a change at all-at least, not in terms of any user rights, the company insisted when it originally posted the new rules. That's because the previous terms of service for the photo-sharing service included a broad statement that allowed Instagram to publish users' photos royalty-free through any media channel. And that apparently gave Instagram the ability to charge advertisers who used the likenesses and photos of Instagram users. That means that those sepia-toned photos of your cat were never safe from being repurposed. What has changed in the new terms of service is the language and specificity of the statement.

Instagram did what social networking users have been begging for-they wrote a terms of service in plain, readable language. Instead of using the long-winded, jargon-filled legalese of most user agreements, Instagram used plain English. And its message is: We can take your photo, sell it, and not pay you.

"The new terms actually make things clearer and - importantly - more limited.. Now you're only agreeing that someone else can pay Instagram to display your photos and other information only in connection with paid or sponsored content. These phrases have very specific meanings - Instagram can't sell your photos to anyone, for example. It simply doesn't have permission," adds Nilay Patel of The Verge. "The company can't sell your photos, and it can't take your photos and change them in any meaningful way."

Still, the public outcry over Instagram's policy changes appears to have rocked the company. CEO Kevin Systrom wrote a blog post yesterday addressing user worries over the issue:
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.

The language we proposed also raised question about whether your photos can be part of an advertisement. We do not have plans for anything like this and because of that we're going to remove the language that raised the question. Our main goal is to avoid things like advertising banners you see in other apps that would hurt the Instagram user experience. Instead, we want to create meaningful ways to help you discover new and interesting accounts and content while building a self-sustaining business at the same time.

Sysyrom added that it will release new revisions to its terms of service in the near future.

(See also: The Instagram Problem: Three Companies That Stopped Providing a Free Service.)

Twitter: @sterlingwong
No positions in stocks mentioned.
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