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
I am in a similar position. I don’t mind Google trying to sell me stuff – it’s what they do. And I get the “free” service for the ad space. Which I never click. But Facebook? No thanks. They seem to be trying to monetize everything they do bar logging in, and it doesn’t sit well with me. I wonder how long it’ll be before you log in to instagram using your FB login. That is when the app is deleted. I don’t mind sharing (of course, that’s what social media is for) but I like to control the groups I share with. And while once a tweet is out there it’s *out there* I think groups like G+ and FB are different. You choose who you share with, and I don’t like the nagging feeling that instagram won’t be like that for long…
You and I are on the same page with this. For some reason sharing via Twitter doesn’t bother me; I know that I’m putting my information into a firehose of publicity and that’s why Twitter is there, but I get kind of creeped out by Facebook. Google irks me because we are not the customer, but at least I know exactly where I stand with them, whereas I think Facebook is just following me around all over the internet, regardless if I’m using that service or not. Instagram will be deleted the second that it’s obviously tied to my Facebook account.