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| Instagram's abrupt TOS changes may have lasting negative effects. |
In December, users of the popular photo sharing site Instagram (now owned by Facebook) were treated
to a proverbial piece of coal for the holidays. Based on media reports from Reuters,
this is how it played out:
- On December 17th reportedly, Instagram abruptly changed its Terms of Service (TOS) to note that it could use its members’ photos, likeness and username for advertisements without permission.
- Users of the site didn’t notice at first but, rest assured, some did. News of the changes went viral.
- National Geographic magazine reportedly announced they were leaving the site due to the new terms.
- By New Year’s Eve, according to AppData reports, about 6 million of Instagram’s 16 million users who access it via Facebook left the site as well. (Although,Instagram disputes AppData’s numbers)
- A class action lawsuit was launched in California shortly following the changes.
- December 20th , according to Reuter’s,Instagram CEO Kevin Systrom apologizes and reinstates the old TOS via a blog, and added the thought that some users had misinterpreted the intent of the new TOS.
- Instagram users will reportedly be bound by a new TOS as of Jan 19th.
- As of today, I cannot find out the true impact of the fiasco as ‘Facebook no longer reports new data for this application’ according to a new search I’ve conducted on the AppData site.
We all make
mistakes.
Do I blame Instagram
for the way it handled the changes? Absolutely; to mask such a large change in
the TOS without pointing it out is simply wrong. Whether the intent was to work
on ways to monetize Instagram in the future or to take Facebook’s already
robust, intuitive advertising platform and put it into place on Instagram, it
was wrong. In business, it’s better to be up front with ‘customers.’
Do I blame
Instagram for attempting to monetize the business? Absolutely not; although some businesses are founded to serve a greater good, most are in business to make money. If you
are signed up for a free service, make no mistake, it is not free. If there is
no product being sold, no membership fee, no identifiable means to distinguish
how it is making money, chances are, the product is you and your data.
Data is a valuable
commodity these days given we are a largely consumer society.
Browsing
habits, referring sites, demographic information like family size, your job, what
school you graduated from, your birthday; even the titles and subjects of your
pictures, can tell marketers something about you. Facebook and the multitude of
free apps don’t care about when your birthday or anniversary is but, they do
care how old you are and your marital status so they can use your demographic
information to sell themselves to potential advertisers.
So what
lessons have we learned from Instagram’s PR nightmare?
Buyer beware: Instagram is not the
first business in the world to change its TOS (or a contract) to reduce your
privacy or to get more data (in this case your pictures) from you. The problem
with most TOS statements is that they are written by lawyers, for lawyers. They
are also arduous to navigate through, often having 20 or more headings; each
with 10-20 subheadings. How many times have you seen the little box on the
screen, scrolled quickly to the bottom and clicked I agree? I’ve done it plenty
of times.
Small print
and multiple pages are not generated by accident. Not only does it reduce the
chance that you will read it in full; it almost guarantees it, while
indemnifying the company against potential legal action. Read the TOS every
time you sign up for a service and when it changes to know what you’re agreeing
to.
Honesty is the best policy: It’s much
harder to win a disgruntled customer back than to be upfront with potentially bad news (anyone remember MCI WorldCom's 'delayed future billing'
or Bank of America's debit card fees?). You can rely
on the fact that many customers will not care or not take any action
whatsoever. However, you lose credibility and relevance, even with the masses,
when you anger your top customers. Maybe this was a case of anchoring to make a
watered-down monetization scheme seem less ‘bad’ to users but I doubt it; a
third of your users (your data) is too high of a price to pay.
Instagram will go away: Call this my
first bold prediction of 2013 (although I don’t know how bold it really is).
Instagram lost a third of its Facebook users in 10 days. I think the rest will eventually follow.
Without a way to monetize its data without severe scrutiny now, it is virtually
worthless to Facebook unless there is some proprietary code that is of value to
them. Now the only way they’ll be able to realize the app’s full potential is
to pawn it off on an unsuspecting suitor. If they can’t sell it, it will go
away; sooner than later. Why invest in a product that is losing money that
shows little chance that it will make money in the future?
Do you read
the TOS statements of your favorite sites? Have you uncovered some shocking
revelation when you read them that made you leave? I’d like to hear about it.
Josh Kaplan writes on various subjects including
management, information technology breakthroughs, healthcare IT recruitment and innovations, big data, IT staffing and recruitment, and technical news and trends.
