So it’s been all over the news outlets since yesterday afternoon, Facebook bought the photo sharing app Instagram for ONE BILLION dollars. Notice I did not say the Instagram “website”. Instagram has relatively little presence on the web; the only way to share photos is via the Instagram app on an iPhone and since last week, an Android device. Instagram had no revenue stream. Users don’t pay to use the service, ads do not appear in the apps. Users simply snap a photo or choose a photo that’s already on their phone, Instagram crops it to a square size, users can apply an artsy or nifty filter if they want and then they post their photo to the Instagram service. Anyone can comment on it or indicate that they like the photo. Users can include hashtag keywords (#keyword) for searching purposes. Instagram also gives the user the option of sending the photo to other services such as Facebook, Twitter and Flickr.
The creator of Instagram had no formal programming training; he’s a marketer that figured out how to build the apps during his off hours. The app has been a hit with iPhone users since it’s inception. I have a ton of photos on their myself.
No revenue stream + very successful app with a large userbase = one billion dollars. It’s 21st century economics! It kind of reminds me of the dot com bubble of the late 90s.
Now first of all, I have to congratulate the folks behind Instagram for making such a fantastic deal. Selling something that was created in this fashion for one billion dollars is a transaction for the history books. Well done.
The folks at Facebook say that they’re going to keep the app separate from Facebook and let it continue to do its thing. However, I have a hunch that there will be some serious data mining going on in regards to the user base; that’s how the folks at Facebook make money, data mining user activities for advertising purposes. Targeted advertising is all the rage and to recoup one BILLION dollars and make a profit one has to do a lot of targeted advertising.
Can’t say that I’m a fan of the motivation, but I am impressed by the transaction. The Facebook acquisition of Instagram will probably affect my use of Instagram. I get creeped out when Facebook offers to sell me a product based on the fact that I searched for a similar product well outside the confines of the Facebook garden. I don’t mind it as much from Google because Google is in the search business and 98% of the time, I’m using Google to search for something on the internet. It makes sense to me when Google offers me a product similar to something I was looking for because I used their product to do my search. But I have never searched for mustache wax on Facebook, yet Zuck and friends are now suggesting to me (through advertising) mustache wax, a bikini wax, shaving soap and a free skin care consultation at a high end department store. With all the photos I have taken over the years and shared on the Instagram, I’m expecting advertising suggestions for cat food, copper to make powerlines and a smattering of random products simply because of the random nature of my photos. I have to say, I’m not a fan.
I really liked Instagram and I have enjoyed chatting with folks on there and admiring the photography of others through the site. It’s kind of sad that I feel like I have to reevaluate my use of the service now because of the new overlords.
As I said on my Twitter feed this morning
