Instagram: Does It Matter That It Will Make Money on Your Pics?
Instagram announced the company will soon begin using your content to sell targeted advertising products to the highest bidder. Does this bother you? Should it matter?
This recent announcement has created a virtual firestorm, with bloggers and pundits rising up in unison to trash the company. A recent article on Mashable accused Instagram of "signing your life away," and even the hacker group Anonymous joined the fray, calling for a general boycott of the service unless the new terms are revised.
I don't know about you, but I love Instagram. I downloaded the app more than a year ago (the service has been around for just over two years) and use it all the time. If I'm walking around the city and see something interesting, I snap a quick pic and upload it to the service, sharing it with my community. I guess deep down I always thought it would be cool to be a photographer, but never made the time to follow up on it, buy the equipment learn the art behind the art, so to speak.
Prior to the digital revolution, let's face it, photography looked anything but easy or convenient. I recall friends who were photographers spending hours in darkrooms, not to mention plunking down thousands of dollars on expensive film, chemicals and other equipment. The rise of the camera-enabled smartphone changed all of that. Armed with a smartphone a fraction the size of camera from 20 years ago, any aspiring photographer could take amazingly high-quality pictures. With smartphone adoption rates in the US now more than 50 percent, a whopping total of 119.3 million people are now potentially part of the club.
For many professionals in photo industry, Instagram has been an annoyance from the start. A popular article appearing in the Guardian earlier this year accused the service of debasing photography, suggesting that its bevy of filters are in fact the antithesis of creativity, and make all pictures look more or less the same. Personally, I thought this criticism was a bit unfair and smacked of professional snobbery. I wasn't alone. A great article by Chas Edwards that appeared on Ad Age quipped that this predictable rant was what happens when members of a professional community are displeased because amateurs get a chance to compete.
So getting back to Instagram's new terms, what they reveal is that Instagram is developing a revenue model, nothing more. This shouldn't be too shocking to most readers. Let's face it, it was inevitable that Facebook was going to want to monetize on its $1 billion investment at some point. While on one hand, I understand people are annoyed with the abruptness of this change, but on the other I think it's much ado about nothing.
Now I'm sure many users who have been using the service for as long as a couple years probably feel like this is a bait and switch. But, don't forget that they've been using the service for free all this time, while Instagram (and now for Facebook) has plunked down money to pay for developers to write code, servers to host their product, and so on. In order to pay for these costs, the firm needs to develop a revenue model.
So as a business, what is its options? Well, I see three possibilities. The first option is to charge the users for accessing the service. On the face of it, that's a non-starter. Charging for access is the very antithesis of social media, so no way it's going to fly. Could you imagine the ensuing firestorm if Instagram had announced a monthly fee for accessing the service? Not in a million years.
Another option would have been to create some kind of image selling service à la iStock Photo or Getty Images. In theory this sounds reasonable, but that would have required developing a an entirely new front-end Web presence to sell the photos, not to mention tons of marketing, lots of time to organize and classify the content, working out how the royalties would work, and so on. In other words, it would have been like starting a new business. After acquiring Instagram for $1 billion, do you think Facebook wants to tool around trying to experiment with a new business for this firm? No way.
The third option is selling targeted advertising, which is frankly a no brainer. Why is that? For starters, the model has already been proven by Facebook, which has made an art form out of monetizing on user generated content and lots of eyeballs. During Q3 2012, Facebook reported $1.3 billion in earnings, up 32 percent from the same period last year. Furthermore, seeing as Facebook is the parent company, it has a prebuilt and tested advertising infrastructure, not to mention trained and effective sales staff, ready to bring the product to market.
The way I see it, this option was a foregone conclusion the moment the ink was dry on the deal with Facebook earlier in the year. It was only a matter of time. So, still unhappy with Instagram's decision? All I can say is if it bothers you so much, you should have left back in September when the service was officially acquired.
If you have any comments you'd like to share, please let me know in your comments.
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Rio Longacre is a Sales & Marketing Professional with more than 10 years of experience in the direct marketing trenches. He has worked closely with businesses across many different vertical markets, helping them effectively leverage the use of data, personalization technologies and tracking platforms. Longacre is currently employed as a Managing Consultant, Marketing, Sales & Service Consulting at Capgemini Consulting, a premier management consulting firm. He is based in the company's New York City office, which is located in Midtown Manhattan. He has also previously worked as an online media buyer and digital marketing strategist.
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