Instagram TOS: A Picture of Failure

image_for_instagramInstagram’s recent Terms of Service kefuffle is just another example of a social media company trying to figure out how to make money, and botching the part where the lawyers come in.

A few weeks ago, Instagram updated its TOS, then beat a quick retreat and issued a semi-apology. Oh, and in case you missed it, Instagram is now owned by Facebook.

There seems to be a formula for this kind of mess. Someone creates an app that connects people. The app is well-designed, easy to use, and fun. The app takes off and draws hundreds of millions of users. Then its creators sell it off for an absurdly high price.

The new owners start to figure out how to make some money off the shiny new acquisition. These efforts are of course tied to selling access to users, i.e., advertising. The advertising is based upon content the users provide.

In Instagram’s case, the content is photographs, and not much else. So access to the people who provide them obviously has value. But what of the photos themselves? How to monetize those?

Meet the New TOS

Instagram’s new owners called in their savvy laywers to change the Instagram Terms of Service to allow the owners to advertise using the photos users provide. The lawyers dutifully drafted new TOS language that allows for all kinds of entrepreneurial “innovation” (in other words, allowing any use the owners can think up). The new TOS included this:

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.

Within hours, somebody who makes a living keeping an eye on the internet (or is just geeked-out about this stuff) read the new TOS and spread the news that it appears that Instagram now owns your photos and can do whatever the hell it wants with them and pay you nothing. Massive blowback occured within just a few days, and Instagram dumped the new TOS, reposted the old TOS and, I imagine, fired its savvy lawyers and hired a bunch of savvier ones. As so often happens, a clever person provided a funny but also very useful explanation of what the new old TOS really means to users. The key section of the new TOS is now:

Some of the Service is supported by advertising revenue and may display advertisements and promotions, and you hereby agree that Instagram may place such advertising and promotions on the Service or on, about, or in conjunction with your Content. The manner, mode and extent of such advertising and promotions are subject to change without specific notice to you.

Same as the old TOS

And, up went the “apology” about the change and the retreat. It included this:

Going forward, rather than obtain permission from you to introduce possible advertising products we have not yet developed, we are going to take the time to complete our plans, and then come back to our users and explain how we would like for our advertising business to work.

You also had deep concerns about whether under our new terms, Instagram had any plans to sell your content. I want to be really clear: Instagram has no intention of selling your photos, and we never did. We don’t own your photos – you do.

User TOS nullification

Which sounds reassuring, until one realizes that Instagram would not sell that adorable photo of your beloved dog Fido to a dog food company for ten thousand bucks and leave you in the grocery store looking at Fido on a bag of dog food without a penny in your pocket to buy Fido the dog food. Even if the new-and-improved TOS would have allowed for that, doing so would have hurt Instagram’s relationship with its users so much that those cute dog photos would start showing up on Flickr, or whatever the next big dog-photo-sharing app turns out to be.

Won’t get fooled again?

This is legal realism in action—people making the law by deciding where they put their dog pictures. It used to be called “voting with your feet.” In this instance, Facebook, giant corporation, sets out to try to make money by exploiting the content its users provide. Individual users get angry, and threaten to stop providing content. Giant corporation backs down. And those carefully-drafted legal documents turn out to not really mean much after all.

(photo: dachshund puppy from Shutterstock)

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