'#Instagate': Instagram Claims Right to License Users' Photos to Advertisers; Users Protest

Dec. 18, 2012 — -- "Dear Instagram, Good-bye old friend ... it isn't me it's you," Brian Simpson wrote on his Facebook wall as he shut down his Instagram account. It was the first thing he did when he read of Instagram's first big policy change since it was acquired by Facebook in April.

Instagram, the popular service for sharing and filtering photos shot on phones, has now released changes to its Terms of Use, which will go into effect on Jan. 16, 2013 for all users. "Our community has grown a lot since we wrote our original terms of service. To get things up to date for the millions of people now using Instagram, we're bringing you new versions of our Privacy Policy and Terms of Service," Instagram wrote on its blog.

It quickly had something of an online rebellion on its hands. Pink, the singer, was one of many who vented on Twitter: "I will be quitting Instagram today. What a bummer. You should all read their new rules."

So what did they say? Instagram pointed out a few updates, including the fact that it's not changing anything regarding who can see your photos or who owns them and that it's now sharing its systems with Facebook so it can fight spam better.

But it didn't mention something that's in the fine print.

UPDATE: Instagram's CEO has responded and assured users it will not sell their photos.

Your Photos Can Be Used By Others

"Instagram does not claim ownership of any Content that you post on or through the Service," it said. "Instead, you hereby grant to Instagram a non-exclusive, fully paid and royalty-free, transferable, sub-licensable, worldwide license to use the Content that you post on or through the Service, except that you can control who can view certain of your Content and activities on the Service as described in the Service's Privacy Policy, available here: http://instagram.com/legal/privacy/."

The legalese goes on. "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." (You can read the full Terms of Service here.)

If you read that carefully you'll understand that Instagram doesn't "own" your content, but it can license your photos to other companies. If it wanted, it says in effect, it could sell your photos to advertisers or other firms.

Another issue many are focusing on: advertising. "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."

Much of the wording and the general message is the same as Facebook's Terms of Service.

Facebook's Return on Investment

Facebook, which paid a billion dollars for the photo-sharing start-up, is at the core of the changes. The new language shows that Instagram, which has previously not displayed advertising or had any paid services, is looking to make money.

"When you pay $1 billion for a service with no revenues, as a public company you're expected to find a way to monetize it. That said, many users are likely to be surprised to discover is that their content is now how Instagram may monetize their business. While consumers may be okay with ad-supported services, providing content, sometimes personal, for ads may well cause a backlash for both Instagram and Facebook," Michael Gartenberg, research director at Gartner Inc., told ABC News.

And it's that portion of the fine print -- the language that refers to licensing or selling photos to others -- that has many users and some legal experts worried.

"Some of this sounds so open-ended. This change is very troubling," Bradley Shear, a Washington, D.C.-area attorney and blogger who is an expert on social media, told ABC News. "Obviously they want to montezie your data, but it allows them to utilize your content in any manner they see fit in perpetuity."

However, Nilay Patel, the managing editor of the tech site The Verge and a former patent attorney, has pointed out that the changes are not all that different than what Instagram has done previously. In fact, he says in a piece on The Verge, "The new terms actually make things clearer and -- importantly -- more limited."

He pointed out that the terms say that Instagram can "display" content, not change it or place a logo on it for advertising purposes. "There's a disconnect between what the terms say you are allowed to do and what any rational company would do," Patel told ABC News.

Instagram: The Insta-Revolution

But even so, the fact that the changes come from Instagram is hard to digest for many users. Some called it Instagram's "suicide note." Others have taken to calling the service "Instacreep." And then there are those who are sharing articles on how to delete their accounts.

"Sure, Facebook has always done this, but this is different for me," said Simpson, who is the social media director at Hampshire Hotels. "The difference for me is that I had a private account and I post more freely on Instagram. I am very selective of what I push to Facebook." Simpson said he fears that Instagram could now use one of his photos in an ad. "What if they used it for an ad for a product I didn't believe in?"

Simpson said he'd be willing to pay Instagram for an ad-free service. Shear said, "Users need to get used to that you get what you pay for. Consumers expect these things for free -- but there are costs to these services."

There's no way to opt out of the new terms -- the only way to avoid it is to delete your account. Luckily for those who choose that option, there are now many new apps trying to compete with Instagram, including ones from Twitter and Flickr. Last week both companies announced updates to their apps, which now include photo filter options.

Simpson is one of the new takers. "I have a lot of apps that let me edit my photos on my phone. I'll just share them on Twitter or Tumblr now."

Since publishing this article Instagram has assured users that it does not plan to sell their photos and says it will updated its Terms of Service. With that, Simpson plans to open a new account and be more selective about his followers.