Why You Should Want to Pay for Software, Instagram Edition

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If you want to stop social networking services from exploiting your likeness for advertising, you've got to start paying up.

mariacheesey.jpg

PLEASE BUY THESE MARIACHEESEY CHIPS, said my Instagram of them.

Instagram is changing its terms of use in January. Included in the new legalese is one section that has some power users, including The New York Times' Nick Bilton, feeling queasy:

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.

Note the key parenthetical -- "(along with any associated metadata)" -- which you could read as "location data." In essence, if you go to the Palms in Las Vegas and snap a pic... Facebook Instagram may use that photograph in an advertisement for the Palms that reaches your friends.

Not that any of this is all that surprising. It's a free service that's been focused on building user engagement, et cetera, in hopes of selling that engagement to advertisers.

Which reminds me of this wonderful mini-rant from Pinboard's Maciej Ceglowski, who identifies the key problem:

To avoid this problem, avoid mom-and-pop projects that don't take your money! You might call this the anti-free-software movement.

If every additional user is putting money in the developers' pockets, then you're less likely to see the site disappear overnight. If every new user is costing the developers money, and the site is really taking off, then get ready to read about those synergies.

To illustrate, I have prepared this handy chart:

FreePaid
Stagnantlosing moneymaking money
Growinglosing more moneymaking more money
Explodinglosing lots of moneymaking lots of money

Under these conditions, companies have to sell themselves because they do not have a sustainable business. And when they're sold, they either A) get shut down or B) become part of an advertising machine, like Facebook's. 

Truly, the only way to get around the privacy problems inherent in advertising-supported social networks is to pay for services that we value. It's amazing what power we gain in becoming paying customers instead of the product being sold. 

Here's an alternative version of what Instagram could have done before Facebook purchased them. Instagram has, what, 100 million users? If they got $5 a month from 20 million of those users, they'd be looking at $300 million in quarterly revenue. That's a nice chunk of change when you have a baker's dozen employees. You think those guys could split more than a billion dollars a year and call it good. Or hell, make the user numbers an order of magnitude smaller: 2 million out of 10 million users. That's still $30 million dollars a quarter for 13 guys. 

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Presented by

Alexis C. Madrigal

Alexis Madrigal is the deputy editor of TheAtlantic.com. He's the author of Powering the Dream: The History and Promise of Green Technology. More

The New York Observer has called Madrigal "for all intents and purposes, the perfect modern reporter." He co-founded Longshot magazine, a high-speed media experiment that garnered attention from The New York Times, The Wall Street Journal, and the BBC. While at Wired.com, he built Wired Science into one of the most popular blogs in the world. The site was nominated for best magazine blog by the MPA and best science website in the 2009 Webby Awards. He also co-founded Haiti ReWired, a groundbreaking community dedicated to the discussion of technology, infrastructure, and the future of Haiti.

He's spoken at Stanford, CalTech, Berkeley, SXSW, E3, and the National Renewable Energy Laboratory, and his writing was anthologized in Best Technology Writing 2010 (Yale University Press).

Madrigal is a visiting scholar at the University of California at Berkeley's Office for the History of Science and Technology. Born in Mexico City, he grew up in the exurbs north of Portland, Oregon, and now lives in Oakland.

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