Facebook Fumbles and Yahoo! Recovers

Mark Zuckerberg knows how to strike a nerve. Which is odd, because striking a chord is how most men and women make a lot of money.

Naturally, he stepped over the privacy line again. This time his prize purchase of 2012 — Instagram for just shy of one billion dollars — is at risk of being dropped by its users like a one-ton anchor.

The new terms of service announced this week allows Instagram the right to license all public photos to companies or organizations, as well as use them for advertising. According to The Verge, CNET suggests that this could effectively turn the site into a stock photo service without the benefit of fees paid to photographers.


There was a time not long ago when ads were made by paid professionals. Writers, photographers, illustrators and art directors all paid handsomely to craft compelling communications. Today, we have crowd sourcing and amateur talent contests at every turn. So what’s the big deal? Why are people so upset at this move by Instagram? Facebook, the company’s new parent, has the very same terms of service. Once you post your content it belongs to them, technically speaking.

We can all speculate, but for me, this is a tip of an iceberg that’s been floating out at sea and is now visible from shore. A social backlash is brewing, and rightly so. Communications technology comes flooding out of its gate, and backed by hundreds of millions in advertising and PR, the desire for the new is created before any questions are asked, much less the right questions. Take something as basic as the smart phone in your pocket. It might be a great Twitter device and a decent camera, but the phones sucks, and yet we all agree to pay big money every month for these weak voice connections. Why? Is being “always on” all that important? I don’t think it is, so in many ways smart phones are a major bill of goods that we’ve all been sold.

But back to the social storm. For its staff and its super users, I’m sure Facebook “feels like” a company that’ll be around for a long time. But that is not necessarily the case. Facebook can lose its way, and become a Groupon-like footnote. It may be true that the vast majority of Facebook and Instagram users are not concerned about their own privacy, or that of their friends and family who appear in the images they post, but if the backlash gets to be big enough, it will be heard on the news and eventually may catch on in a much bigger way.

In the meanwhile, I (and I’m sure many others) put Flickr’s new iPhone App to the test today and it is Instagram’s equal if not its clear superior. It has a zoom function, for one. Also, I often upload my best Instgram images to Flickr, so this eliminates a step. Additionally, when using the Flickr App and posting to Twitter, the images appear inline in one’s stream, which used to be a feature of Instagram’s until about a week ago. See how fast technology moves and how fluid this situation is?

By the way, here’s a TV spot from Taco Bell that illustrates the use of user generated content to move Doritos-flavored tacos:

UPDATE: Accordibng to Yahoo! News, Instagram responded with a blog post saying, “Since making these changes, we’ve heard loud and clear that many users are confused and upset about what the changes mean.” Instagram said its intent was to “experiment with innovative advertising” and promote user engagement but would remove language that implied photos would be used in ads. The intent was not to sell photos posted by users without compensation, Instagram said.

About David Burn

Co-founder and editor of AdPulp. I wrote my first ad for a political candidate when I was 17 years old. She won her race and I felt the seductive power of advertising for the first time. I worked for seven agencies in five states before launching my own practice in 2009. Today, I am head of brand strategy and creative at Bonehook in Portland, Oregon.


  1. Once upon a time I worked for a couple of real estate magazines—pretty much the armpit of graphic design. I realized quickly that the biggest problem with these magazines was that they were free to the user and, as a result, these magazines had little accountability for the experience they provided to the people who actually used their product. And believe me, the experience was awful! Good luck on quickly finding the handful of houses that actually meet your search criteria.

    Despite being a pretty terrible product, this all worked for a while because there were no other alternatives. Then the Internet came along and improved the user experience, making it possible for people to search for housing in a way that was most useful/convenient to the potential buyer rather than the egocentric sellers and advertisers.

    I recount this little tale because a similar thing is happening now with social media networks. These networks have grown immensely popular, cementing the techno-powered social networking behavior into our culture. Most of these networks have gained popularity by providing—at least initially—a superior user experience. They found a way to make it easy for people to connect, communicate, and collaborate, sometimes across great distances.

    Now, as many of these networks move out of their childhood and into their adolescence, investors are pressuring them to find a way to monetize—a reasonable expectation given that a return on investment is an investor’s ultimate motivation.

    Unfortunately for users, most of these networks have pursued advertising as the primary method of monetization. Much of this advertising—often billed as “help” (e.g. Suggestions, Recommendations, etc.)—is unwanted because it disrupts the user experience, the very thing that attracted the users to the network in the first place.

    Simply put, the business plan for most of these networks has amounted to this:
    1.) Create a cool new social network.
    2.) Attract users by making a behavior easier and/or more fun, i.e. championing the user experience.
    3.) Monetize the social network by compromising its core benefit, superior user experience.

    I’m not sure you could draft a more flawed business plan.

    What I learned working at free real estate magazines applies to social networks as well. You can only get away with a crappy user experience for as long as there are no other alternatives. And sooner or later, new alternatives will always present themselves.

    My guess is that the successful social networks (and other startups) of the future will find a way to monetize themselves that does not require a compromise to the user experience. Somewhere right now, maybe in a coffee shop, a dorm room, or a basement apartment, somebody’s working on cracking that nut.

    Facebook, Instagram, et al, consider yourself on notice.