Creating a Socialist Social Network

~ Sunshine Skyway ~
an Instagram photo by douglas reeser.

by douglas reeser on December 29, 2012
In slightly old news now, Instagram recently drew the ire of many of its more vocal users when it attempted to update its Terms of Service (TOS) Agreement and declared that the company could sell usernames, images and more without notice or compensation. The new TOS read:

"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."

After the uproar from users and fairly widespread media coverage, Instagram backtracked and went back to the old TOS. Co-founder Kevin Systrom released a statement apologizing and attempting to explain the change:

"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." 

The backtracking worked, and it appears that millions of Instagram users have happily continued using the platform to share their pictures of the holiday season. Lost in the public relations nightmare, however, is that Instagram may have been on to something with the idea of selling users' photos. It's just that they didn't take the idea far enough.



There is a lot of money floating around the major social networks these days. Some services, including Instagram, have produced a platform that has attracted millions of users, but they have yet to figure out how to monetize the service. Still, it's the users that are valuable. In April of 2012, Facebook purchased Instagram for $1billion in cash and stock, and at the time was pushing 50 million users. In October of 2012, Facebook posted third quarter revenue of $1.26 billion, up from its second quarter revenue of $1.18 billion and up the $954 million in revenue it posted before it was publicly traded in the third quarter of 2011. Instagram is now housed under an umbrella of social networks that is bringing in some serious cash.

By the end of July of 2012, Instagram had 80 million users and over 4 billion pictures. Still, they had no revenue stream - zero dollars were earned by Instagram! Still, they were able to raise over $50 million in two years from investors, which is what largely shaped potential buyers' belief that the company would be a good acquisition. But after such a large investment, there is pressure to figure out how to monetize Instagram. Why not sell some photos?  

With privacy concerns and all the money floating around Facebook and Instagram, the move to usurp users' photos and other data (and the subsequent backtrack) is mostly seen as a mistake and a disaster averted. However, imagine, if you will, a slightly different tack. Clearly, after such a large investment, Facebook wants to see its new company start earning some money. Advertising may be the primary means of earning for the internet giants like Facebook and Google, so why not do the same with Instagram? Why not sell photos to advertisers? The issue is the need to soften such an approach so that users will support it. The answer? Share the profits with the users - make social media socialist!

Let's run a few simple numbers. Facebook could sell 100 Instagram photos per day every day all year. That would be 35,600 photos per year sold to whoever wants to buy them. If they paid users $50 per photo, that would be about $1.78 million distributed to users every year. It's safe to say Facebook is going to post $4 billion in revenue in its first year as a publicly traded company, making the $1.78 million just a tiny fraction of its revenue. Add in the revenues generated by the sales of photos, and that $50 per photo to users becomes barely a drop in the bucket.

Some may still take issue with this idea. But let the users decide with the clear and easy ability to opt in or out of the program. That may limit the number of photos available to sell, but given the chance to earn some money for their photos, I would bet that users will flock to the service in even greater numbers. And that's my point. Social media has so far made a relatively few people very rich, while providing a networking service to the masses. This model has been fairly successful, but there's no telling how big things could get if some of those profits were shared with the users. I think Instagram and Facebook should give it a try. Someone should!