Dec 192012

“I’m opting out” is one of the milder reactions to Instagram’s changes to their terms and conditions.

Since the photo app was bought by Facebook for a billion dollars – and marking the high water point for Silicon Valley’s greater fool model of investment – observers have been waiting to see how Mark Zuckerberg’s team would integrate the service and get a return on their substantial investment.

Now we know. Under the new terms, Instagram will inject sponsored posts and advertising into users’ information feeds.

There’s nothing really unusual in this, almost every ‘free’ online service has something like this in order to make money. The Atlantic’s Alex Madigral makes the point that companies will continue to sell and use our information for as long as we won’t pay for software.

What’s really interesting about this is the angry reaction to the changes, showing how people are losing trust in Facebook and, more worryingly for all social media services, how people are beginning to value their private information.

Once people understand the value of their personal data, and the time they spend creating content for these services, the economics of social media services starts to change which in turns hurts the business models of Facebook and others social media sites.

We’re still in the early days of social media and the business models that underpin them are evolving quickly. Instagram’s current problems are another lesson for users, advertisers and entrepreneurs.

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