The news isn’t particularly surprising: Emily White, Instagram’s director of business operations, told the Wall Street Journal in September that Instagram would start running ads “within the next year.” Over 60 percent of Instagram’s users are based outside the U.S., and they’ll be free from ads for now.

From Instagram’s blog post:

“Seeing photos and videos from brands you don’t follow will be new, so we’ll start slow. We’ll focus on delivering a small number of beautiful, high-quality photos and videos from a handful of brands that are already great members of the Instagram community.”

Image-based social network Pinterest also announced a couple of weeks ago that it is rolling out ads. Both companies will face similar challenges in maintaining the visual integrity that their users have come to expect. Instagram notes that users will be able to hide ads they don’t like and “provide feedback about what didn’t feel right.”

In a brief ruling issued on Friday, US District Judge William Alsup said Instagram user Lucy Rodriguez could not proceed with a class action over the photo-sharing company’s decision to change its terms of service.

The Instagram change set off a firestorm as users — including celebrities — accused the company of claiming ownership of their photos and vowed to quit the service. The fuss quickly fizzled and Instagram, which is owned by Facebook, went ahead and updated its policy in January.

The judge’s decision did not address the source of the media controversy — user control over photos — but instead dismissed the case on procedural grounds. The decision also cited “numerous .. problems” with a rule that requires class action plaintiffs to suffer a common injury, and rejected a request to amend the claim.

As for the new Instagram terms of service, they do not (as some reported) give the company copyright in user photos. Instead, the changes appeared intended to make it easier to introduce Facebook-style advertising. (The Verge’s Nilay Patel has a good explanation of the controversy, which was widely misinterpreted).

The federal court opinion does not preclude the plaintiffs from trying again in state court but, as legal experts note, the case has always been a longshot because companies, provided they notify their users, are allowed to change their terms of service if they wish.

Instagram Class Action Dismissed

The news comes amid talk of a brewing war between Twitter, which owns Vine, and Facebook’s Instagram, which just launched a short video service of its own.

Since launching in January, Vine videos have found a niche with consumers who enjoy sharing videos with their friends, but they’ve also found a place at arts forums like the Tribeca Film Festival (see the Bambi clip below), and have attracted copyright controversy.

The Unruly survey says that Vine now has more than 13 million users, and that the service is popular with advertisers since branded Vines are four times more likely to be shared than video ads.

Despite the hype, not everyone is enamored with the idea of sharing short video on social media. My colleague, Mathew Ingram, for instance, likes Instagram but says he will never take up the video service — in part because it’s difficult to browse on the go.

Finally, Bambi fans, as promised: Here’s Gillian Jacob’s “Origin Story“:

Before someone brings it up, some of this is undoubtedly a “hey you kids — get off my lawn” response on my part. Not only am I old (so old I remember when phones couldn’t even take video) but I confess that I kind of liked Instagram the way it was, with just photos. It was quieter, more contemplative somehow. But I think there’s more to it than just liking things the way they were. Video and photos are very different animals in a lot of ways (the creator of 12seconds, an early video service, seems to agree).

Facebook and Instagram just gave you a new place to please not share short video clips.—
Dave Pell (@davepell) June 20, 2013

For one thing, video is very difficult to scan or browse quickly, which is something I (and I’m assuming other users) like to do with photos and other types of content. I browse Instagram while I’m waiting for a train, while I’m in line for something or at the airport — any time I have a couple of minutes to spare. I can scroll through a surprisingly large number of photos and get a sense of what my friends are doing, but there’s no way I’m going to be able to do the same thing with video clips.

The noise factor

There’s also the problem of crappy videos, because let’s face it, there’s going to be tons of them. As Om pointed out in an interview on BloombergWest TV, this is likely to be a serious issue for any Instagram user — and it’s a problem that is compounded by the fact that videos take a much larger investment of time. While six seconds (the time limit for Vine) or fifteen seconds (the limit for Instagram) might not seem like a lot, when you are trying to browse and the video is irritating or just poor quality, it’s like an eternity.

15 seconds feels *really* long when watching a crappy piece of content, btw (like most pre-roll ads).—
Ian Schafer (@ischafer) June 20, 2013

Drew Breunig, a blogger who works in advertising technology, described the problem well in a post earlier this year about Vine and the idea of an “Instagram for video.” Given his job, you might expect Breunig to see a short video-clip sharing service as a gold mine, since it would be perfect for video ads — but he points out a lot of good reasons why video isn’t likely to take off. In effect, he says, the math doesn’t work:

“The problem with video social networks lies in variable Y: it takes much too long and too much attention to consume a single unit of content. This results in less feedback, which dries up the volume of content, which needs to be high to maintain a cache of enticing videos. And the network fails.”

That’s not to say there can’t be video-sharing networks that many people enjoy — Vimeo is pretty good, and so is YouTube, obviously (although I would agree with Breunig that it is a very different beast from what Instagram is trying to create). But it reduces the likelihood that such a network will ever become as huge and mass-market as Instagram, because it won’t appeal to enough users.

Great for kids — and for ads

None of this is to say that Vine and even Instagram’s video feature won’t get users, because they clearly will. My daughter and her friends are obsessed with Vine, and I’m sure it will find a home with many younger users who want a place to share funny clips of them making faces or singing along to crappy pop songs or whatever amuses them. And there’s clearly some value for Facebook in appealing to that demographic, since most of them (in my experience) never use Facebook any more.

Massive excitement in the house over Instagram getting video. Apparently it's just what my graduating 8th grader & his friends need today.—
Danny Sullivan (@dannysullivan) June 20, 2013

There’s also no question that advertisers will be interested, and I think that is a big part of the reason why Twitter and Facebook/Instagram are so fired up about it: It is the perfect length for advertising, and therefore plenty of existing video assets from commercials and TV shows can be re-purposed for it, and video monetizes way better than simple banner-style ads (for now at least), which is why every media company is doing it.

So perhaps it makes sense for Facebook, and for Twitter, and for advertisers — but it doesn’t make sense for me, and I would suspect a large number of other users. And that’s why I won’t be clicking on your Instagram video, no matter how much you want me to.

Post and thumbnail photos courtesy of Shutterstock / SueC

Of course, as Om and others have already mentioned, there’s no guarantee this deal will actually be consummated: it could fall apart on valuation, as so many deals do — or Facebook could swoop in with a much higher offer and snatch Tumblr out of Yahoo’s clutches, the same way it did when it stole Instagram away from Twitter last year for close to $1 billion.

Update: According to the Wall Street Journal, the Yahoo board of directors has approved a $1.1-billion all-cash bid to acquire Tumblr.

It makes Yahoo look desperate — because it is

Even if the deal does get done, one of the risks for Mayer and Yahoo is that the company could look desperate by paying more than $1 billion for a site that had revenues of less than $15 million last year (although CEO David Karp has said that figure should hit $100 million this year). That’s an almost bubble-like multiple for a company, and there will likely be plenty of criticism from investors who believe that $1 billion could be better spent elsewhere — in other words, on businesses that would make Yahoo a better return.

But the painful fact is that Yahoo doesn’t just look desperate — in many ways it is desperate. Mayer has made some changes since she took over the ailing former web portal, including the acquisition of Summly and a number of other mobile-focused startups and services, but the company still needs to make some aggressive moves if it is going to jump-start any growth at all. And since Yahoo has about $4 billion in cash on hand, it can arguably afford to make a big bet.

Yahoo buying Tumblr makes sense. Tumblr is only big, cool, newish social platform that Yahoo can afford.—
Henry Blodget (@hblodget) May 17, 2013

For Yahoo, the addition of Tumblr would do a number of things: because of the size and profile of the deal, it would make a major statement about Mayer’s intention to do whatever it takes to revitalize the company, and it would also send a signal to Facebook and Google — and even Apple — that Yahoo is a potential force to be reckoned with when it comes to potential acquisitions. Is doing that worth $1 billion? That’s for Yahoo’s investors and board of directors to decide.

Just as important, it would inject some much-needed life and energy into the somewhat stale lineup of content that the company currently relies on, which caters more to the over-50 set than it does to anyone in the much-desired 18 to 25 demographic. More than any other network, Tumblr is the platform of choice for media-obsessed teens and 20-somethings, who spend massive amounts of time sharing photos and videos and animated GIFs on the site — an engine of potential value that Yahoo desperately needs.

Tumblr gets a massive exit

This doesn’t come without its own risks, of course: As a number of observers have noted, Tumblr’s content contains a large quantity of not only mature or arguably offensive content but outright pornography, which many argue is the source of its massive traffic numbers. How Yahoo (or Facebook for that matter) would deal with this kind of content remains to be seen.

3 q's for Yahoo: 1) Can you convert Tumblr users to Yahoo products? 2) Can you monetize Tumblr PVs? 3) What to do w/ all that Tumblr porn?—
Mark Zohar (@markzohar) May 18, 2013

For Tumblr, meanwhile, being acquired would solve a number of problems — the main one being that the company has gone well beyond the “we’re a startup so we don’t really have to make money” stage, and is facing increasing pressure from the investors who have given CEO David Karp more than $125 million in venture financing, an investment that values the company at about $800 million. Accepting a giant check from Yahoo would take care of that problem in one fell swoop, especially if it was all in cash.

With a major company like Yahoo as a partner, Tumblr could connect its massive audience of users to the firehose of ads and other monetization methods the giant web portal has, and potentially generate much more revenue than it could have by itself. The only lingering question at that point is whether Tumblr fans decide that Yahoo is poisoning the well of social content and community on the site, and decide to flee for greener pastures. In other words, does Yahoo make Tumblr into YouTube — a successful standalone network that can grow and prosper on its own — or does it become MySpace?

The only scenario where a Yahoo-Tumblr combo works is if Yahoo keeps Tumblr separate in the same way Google managed YouTube.—
Mark Birch (@marksbirch) May 18, 2013

Post and thumbnail photos courtesy of Shutterstock / ollyy and Albert Chau

However, “flattring” someone has until now remained a slightly clunky business, with the content platform needing to carry a Flattr button and with the user having to remember to click it in order to reward the creator. No longer – changes revealed on Monday make it possible to flattr someone simply by clicking the “like” or “favorite” button that’s already next to their content. At launch, 8 services are supported: Twitter, Instagram, SoundCloud, Github, Flickr, Vimeo, 500px and App.net.

That’s right: this makes it possible for you to earn money just by being an awesome tweeter.

Cashing in

Let’s remind ourselves of how Flattr works: users budget a certain amount of money that they want to donate or pay each month. Let’s say User X wants to spend $10 a month. Each time User X flattrs someone, that flattr gets added to a tally, and at the end of the month the money gets divided by that number. Flattr itself takes a 10 percent cut, so, if User X flattrs people 100 times in the month, each recipient then gets 9c.

According to Flattr co-founder Linus Olsson, there have been around 1.5 million flattrs performed since the service launched three years ago. Ignoring the fact that some pay a lot and others very little, the average monthly spend per user is around €4.50 ($5.80) and the average flattr is around €0.50. From this, we can deduce that, on average, users flattr around 9 times each month – this is really not much, and it highlights the need for Flattr to make the changes it announced today.

As Olsson explained to me, it was one thing to have a button that blog proprietors could integrate into their own self-hosted site, but it’s quite another thing to handle the content spewed out on platforms such as Twitter:

“The main way of flattring before has been the button, but the problem with the button is with most content sites today it’s impossible to integrate the button. So we have been thinking how to make it simpler to flattr and possible to flattr in places where the button cannot be added.

“The logical way was to use existing like and favorite buttons, which one can argue are empty right now. Now you can make those functions worth something. We see it as giving them the value they should have.”

This integration has not involved partnering up with Twitter and the others; instead, Flattr is simply using their APIs. “That’s one reason we didn’t do this when we started three years ago — it wasn’t possible,” Olsson pointed out.

More widespread, but more subtle

The use of APIs comes with several benefits for Flattr. For a start, it gets the startup around the problem presented to it by Apple last year. Apple rejected a podcasting app called Instacast on the basis that it included Flattr payment functionality – this apparently broke the App Store T&Cs, because it didn’t give Apple a way to claim its 30 percent cut of all in-app payments.

Now, because Flattr’s method of tapping into the core service’s APIs obviates the need for a telltale Flattr button, Apple would have no way of knowing whether the use of an app that’s plugged into Instagram or Twitter, for example, might result in someone making money without Cupertino taking a slice.

The other problem partially solved by the API approach is that of unclaimed flattrs. A Twitter user, for instance, doesn’t have to sign up to Flattr in order to have people flattr their tweets – they do, however, have to create a Flattr account in order to get the cash. So, when they create that Flattr account, authorizing Flattr on their Twitter account will tell the system that, yes, they are the person whom User X meant to credit.

That said, there is an outstanding problem: right now Flattr has no way of automatically informing people that someone out there is trying to give them money; it’s up to the user to tell their intended recipient to sign up and claim their payment (the payment only leaves the user’s account once it is claimed).

Will it work?

As I stated above, there is a lot of goodwill behind the micropayments concept, but also a number of failed attempts to make the concept work in reality.

If you view this as a chicken-and-egg dilemma, then Flattr is very much doing the right thing. After all, you’re less likely to get into being a Flattr user if the person you want to give money to hasn’t made it super-easy to take Flattr payments. Conversely, if there aren’t scores of people using the service, there is little impetus for content platforms to incorporate the Flattr button.

In theory, quietly plugging into platforms such as Twitter and Instagram makes it a heck of a lot easier for the service to gain scale. However, it raises another issue: visibility. If there’s no Flattr button, how is the company going to educate users about the scheme? How will they know that this system is in place, allowing them to reward their favorite content producers?

Olsson reckons the imminent introduction of automated notifications for content creators will help the service spread: “First people get unclaimed flattrs, get a message about them, collect them [then] flattr others.” I’m not so sure. It’s true that the services we’re talking about didn’t sport Flattr buttons in the first place, but I can’t help but feel that some extra marketing element would be needed in order to really educate potential users about the service.

Two months later, what’s the fallout? Well, nothing. Instagram’s new rules went in place in January and the site appears popular as ever (based on my own experience and Facebook’s optimism on a recent earnings call).  Meanwhile, Instagram this week issued a stinging rebuke to Lucy Funes, the California woman who is leading a class action suit against it.

In a filing to dismiss the suit, Instagram’s lawyers said the case was based on “wrongheaded, even frivolous, legal theories.” The document, reported by Reuters, added that Funes’ alleged injury was “self-inflicted” and pointed to “her failure to take the self-help measure of deleting her account.” (our emphasis)

The comments are harsh but also fair. Instagram, and every other social media company, is right when it points out that no one is forcing people to use their service and that, if you don’t like their rules, you can just leave. Instagram notes that Funes is still using the service.

This take-it-or-leave-it approach may be exasperating to consumers who feel powerless as Facebook and others turn them into product pitchmen (Instagram will follow suit soon enough). But for now, the licenses these companies impose ensure the law is on their side and, as long as people don’t pay for sites like Gmail and Twitter, advertising is the only option that will sustain them.

Unfortunately, companies that do try to be transparent about their advertising intentions are likely to be punished for their efforts. As Verge reporter and former copyright lawyer Nilay Patel explained in December, the controversy over Instagram only creates an incentive for companies to be obtuse or sneaky about their terms of service in the future.

This doesn’t mean, of course, that everything is okay. Instagram and the other companies do pose serious threats to our privacy, data and dignity. But until there is a system in which consumers have an option to pay these companies to leave us alone (would you pay $5 a month for ad-free Facebook? — I might), this is the world we’re stuck with.

The Instagram episode ultimately reflects a familiar pattern of hysteria, resignation and forgetting. There will be other examples soon enough.

In case you missed it, a San Diego law firm this week sought to run to the rescue of Instagram users who are upset that the site will change its terms of service in January. These new terms are meant to help Instagram introduce advertising practices akin to its new parent company, Facebook, which turn users into pitchmen for products.

The lawsuit, which came after weeks of uproar about the maladroit way in which Instagram rolled out the proposed changes, made for good headlines. Too bad, then, the case stands as much chance of success as that petition to deport CNN’s Piers Morgan.

Writing on Eric Goldman’s respected Technology and Marketing Law Blog, Seattle lawyer Venkat Balasubramani described the case as “flimsy,” “borderline frivolous” and “an example of lawsuits against social networks gone completely amok.”

Balasubramani, who tracks social media cases closely, points out that that the revised terms haven’t even gone into effect (meaning that users can simply leave) and that, in any case, Instagram has the right to change its terms of service if it darn well pleases. You can see the full take-down, including Goldman’s view, here.

So why are the good folks at Finkelstein & Krinsk law firm filing this case in the first place? My own hunch is that it’s a way for the firm to get on the radar as part of California’s growing cottage industry of privacy lawsuits. This involves law firms who wait for the latest privacy outrage, and then race each other up the courtroom steps to file a case. Next, they ask for Facebook (or whoever) to pay them as part of a “privacy settlement” which typically compensates lawyers and activists — but not the users whose privacy was breached. In this case, though, the only payout Finkelstein & Krinsk are likely to receive is a clobbering by Facebook’s veteran legal team.

Overall, the Instagram episode is just the latest example of the ritualistic cycle of complacency-outrage-resignation that occurs whenever users discover that websites like Facebook and Google are providing a free service in exchange for advertising data.

(Image by ollyy via Shutterstock)

As noted by Nick Bilton in a New York Times piece and by my colleague Erica Ogg — and confirmed by a post at the official Twitter blog — what Instagram has done is to remove support for the expanded view of tweets that shows up on the Twitter website and in its official apps. These tweets have a special pane that displays excerpts from blog posts and news stories published by certain partners, or photos and videos from certain external services. Twitter originally launched this as something called “expanded tweets” but it has since become a much more ambitious platform called “Twitter Cards.”

Instagram wanted to capture the value instead of Twitter

A number of services and content providers (including GigaOM) have implemented support for Twitter Cards, on the assumption that showing readers more of your content wherever they are is a good thing. But judging by Systrom’s comments at the LeWeb conference in Paris, Instagram at some point clearly decided that doing this transferred too much of the value of its content to Twitter instead of allowing it to capture that value itself. As he put it:

“This is an evolution of just where we are and where we want links from our content to go… This is not a consequence of us getting acquired. This is a consequence of us doing the best thing for our business at this time.”

As Systrom suggested in his remarks, Instagram’s relationship with Twitter is even more complicated than most other services because the company was recently acquired by Facebook — a giant platform that also has ambitions as a media company, and presumably spent almost $1 billion for the photo-sharing service so it could capture some of the referred value of those pictures. On top of all that, Twitter reportedly tried to acquire Instagram before it agreed to Facebook’s offer, and it recently announced that it will be adding photo filters similar to those offered by Instagram.

Twitter removes follow sync to Instagram. Instagram removes photos from Twitter. I’m not sure who won this war, but I know who lost: users.

—
Matt Galligan (@mg) December 05, 2012

In some ways the move by Instagram can be seen as retaliation for something Twitter did earlier this year, when it cut off the photo-sharing service’s access to Twitter’s “follow graph,” so that users could no longer easily find their Twitter connections on Instagram. But this isn’t just about Instagram and its Facebook connection, because Twitter did exactly the same thing to Tumblr recently as well — another service that had already implemented the network’s expanded-tweets feature — by cutting off its ability to connect to the Twitter follower-graph API.

It’s about Twitter’s ambitions as a media entity

On one level, this is about Twitter’s desire to become a platform rather than just a dumb pipe for distributing other people’s content, something it clearly believes it has to do in order to monetize its network and thereby justify its alleged $10-billion market value (although some critics have questioned Twitter’s approach to doing this). But it’s also about how that decision is turning Twitter into a media entity — one that is trying hard to monetize or at least to exert some control over content that is being created by other companies, whether it’s Instagram or the New York Times.

Instagram realizes showing photos inline in Twitter drives value to Twitter and none back to them. Will other Twitter Cards users wise up?

—
Dare Obasanjo (@Carnage4Life) December 05, 2012

So how should media companies think of this manoeuvring by Twitter? Blogging pioneer Dave Winer has warned repeatedly about the dangers of thinking that the service is your friend rather than a full-fledged media competitor, and there are more than a few similarities between what Twitter is doing with its expanded tweets and what Google News and other aggregators do. That kind of behavior has drawn fire from billionaire media mogul Rupert Murdoch (among others), who has accused Google of “stealing” his content by excerpting the most important parts. Newspapers in some countries including Germany are lobbying for the search engine to pay them in return for this content.

The benefit of having your links and content appear on Twitter is pretty obvious: you can reach new readers, build relationships, entice users to come to your site, and so on. And you could argue that Instagram loses more value than it gains from the expanded-tweets feature because all of its content — that is, an entire photo — is displayed inside Twitter’s frame. By contrast, a blog post or news story should arguably have enough value that showing a small excerpt (something that is arguably permitted by the “fair use” clause in copyright law anyway) shouldn’t be a big deal.

That said, however, I think moves like Instagram has made should get more media companies thinking hard about the relationship they have with Twitter. It is not just a conduit for your content to reach your users whenever and wherever you wish (if it ever was) — it is a proprietary network built by a company with monetization and expansion on its mind, and your content is part of that equation. What are you getting out of it and why? And will that change in the future as Twitter’s mission and vision evolve? And what will you do if it does?

Post and thumbnail images courtesy of Flickr users Faramarz Hashemi</a

One concrete example of this emerged within days of the Israel Defense Forces launching what they called Operation Pillar of Defense (which came complete with its own Twitter hashtag). According to several reports, the Israeli army asked citizens not to post the details of attacks or troop movements on social platforms such as Twitter, Facebook or Instagram because they might inadvertently reveal the location of specific targets. One political blog that was briefed by the IDF as part of its media strategy wrote:

“Bloggers, tweeters, and Facebook friends of Israel were reminded by our IDF contacts not to say exactly where rockets have landed or even when/where alert sirens have blared… The siren and landing reports are helping the terrorists hone their aim, making it a bit easier to target/kill civilians.

It’s one thing to say the troops are building outside of Gaza, and its something totally different reporting that you saw a tank moving down main street at 3pm… that information can tell Hamas where (and when) a land action may be coming.”

Information flow has been democratized

Anyone over a certain age or with a knowledge of military history will no doubt see the similarities between this and the “Loose Lips Sink Ships” propaganda campaigns of World War II, which warned citizens of the U.S. and other Allied countries that spreading specific information about military attacks could threaten the war effort. But that was aimed at a much smaller phenomenon — namely, people talking to others who might have connections to the military. Now, anyone with a smartphone is capable of publishing not just a few sparse details about an attack but specific longitude and latitude co-ordinates, images, video and more.

Think about what happened when the U.S. Navy Seals targeted Al-Qaeda leader Osama bin Laden at his compound in Pakistan: a computer programmer named Sohaib Athar spent a couple of hours live-tweeting details of that attack without even knowing what he was doing. If the Navy had been involved in a more prolonged attack, those details could have easily helped Al-Qaeda determine how many troops were involved, what types of aircraft, what kinds of weapons, and much more. That kind of data can change the nature of a military campaign, especially when combined with “big data”-style algorithms and mapping technology that is now commonplace.

Every war is now a social-media war

And while the Israeli military may think that it is somehow controlling the flow of information with its live-blog or its Twitter account or its Tumblr propaganda campaign, it is just one stream in a giant ocean of data flowing from individuals who are both observing and participating in the attacks — including soldiers who are posting photos of themselves to Instagram and Facebook, pictures of drone missions that are being aggregated through a site called Dronestagram, and many other similar examples. Everything that is geo-tagged becomes a potential source of crucial information about the Israeli action and the response by Hamas.

Part of my interest in this phenomenon is just the way that the media we use helps shape the world around us, but I’m also fascinated because my father was a Canadian Air Force officer who worked with NATO on designing what are called “command-and-control systems,” including the military version of modern information theory — in other words, figuring out how information flows can affect military strategy.

In the not-so-distant past, crucial information flowed primarily from the top down, and battlefield data was hard to accumulate or distribute efficiently, apart from the usual word of mouth and rumor-mongering engaged in by soldiers. The internet and social tools have altered that structure significantly, however, despite the military’s best efforts to regulate them. And during a real-time campaign, social media may be a great way of distributing the government’s marketing message about the conflict, but it’s also a great way for anyone involved to publish what could be critical details of an attack — and that is difficult, if not impossible, to defend against.

Post and thumbnail images courtesy of Flickr user Rosaura Ochoa