Instagram asserts the right to sell your photos

You are not the customer, you are the product.

Instagram, the photo-oriented social network which was purchased by Facebook for $700m in cash and shares last April, has revealed the new terms of service which it will be implementing from January next year, and they mark a new direction out for the company.

The passage which is getting all the attention online is the second section under the heading "Rights":

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. If you are under the age of eighteen (18), or under any other applicable age of majority, you represent that at least one of your parents or legal guardians has also agreed to this provision (and the use of your name, likeness, username, and/or photos (along with any associated metadata)) on your behalf.

Instagram is not just taking adverts, as many predicted would happen once the Facebook acquisition was complete; it is also claiming the right to sell use of your photos to businesses to make ads with.

That's a pretty big step up from previous practice, but is similar in tone to what Facebook has been doing with their social marketing for a while now. As Nick Bergus learned, Facebook's method isn't without hitches. When he posted a jokey link to a 55-gallon barrel of "Passion"-brand lubricant, it was adopted by Facebook into an advert which was then shown to all his friends.

The problem with the Instagram extension of this concept is two-fold. Firstly, just as with the Bergus screw-up, recontextualising a picture as an advert changes what it says, frequently for the worse. But secondly, it feels like a Rubicon has been crossed if the "user-generated content" being used is undoubtedly a creative work – which even the blandest Instagram photos are – and if money changes hands without including the actual creator of that work.

In addition, of course, there's the idiot factor: People seem to forget how public Instagram is, and finding themselves included on a national poster campaign could be a nasty way to find that out.

As ever with this sort of change, there is likely to be a disconnect between the rights the ToS claim, and Instagram's actual plans. I would be surprised, for instance, if they intended to sell user images for use as generic stock photos, rather than for Instagram-specific ad campaigns. But I would also be surprised if these terms didn't give them the right to do that if they so desired.

Oh, and you can't actually reject these terms. If you're still using the service on 16 January, you are deemed to have accepted them.

It seems almost too perfect that in the same week that Instagram launches an anti-user change, Flickr – remember Flickr? – has released a new iPhone app which brings a host of Instagram-like changes to the service, including far quicker access to the camera, better Twitter integration and, yes, filters. A number of people are suggesting switching to (or back to) the service as a result.

The best thing about this switch is that it isn't just kicking the can down the road. After all, the reason Instagram included these changes is because it has to make money. The Atlantic's Alexis Madrigal makes the point:

[C]ompanies have to sell themselves because they do not have a sustainable business. And when they're sold, they either A) get shut down or B) become part of an advertising machine, like Facebook's.

Truly, the only way to get around the privacy problems inherent in advertising-supported social networks is to pay for services that we value. It's amazing what power we gain in becoming paying customers instead of the product being sold.

Flickr, by contrast, does have a paid service, and has for years. There's no guarantee it won't take the quick buck – but it has a business model which involves treating users as the customer, not the product. And that's a nice change from the norm, these days.

Instagram.

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Let's turn RBS into a bank for the public interest

A tarnished symbol of global finance could be remade as a network of local banks. 

The Royal Bank of Scotland has now been losing money for nine consecutive years. Today’s announcement of a further £7bn yearly loss at the publicly-owned bank is just the latest evidence that RBS is essentially unsellable. The difference this time is that the Government seems finally to have accepted that fact.

Up until now, the government had been reluctant to intervene in the running of the business, instead insisting that it will be sold back to the private sector when the time is right. But these losses come just a week after the government announced that it is abandoning plans to sell Williams & Glynn – an RBS subsidiary which has over 300 branches and £22bn of customer deposits.

After a series of expensive delays and a lack of buyer interest, the government now plans to retain Williams & Glynn within the RBS group and instead attempt to boost competition in the business lending market by granting smaller "challenger banks" access to RBS’s branch infrastructure. It also plans to provide funding to encourage small businesses to switch their accounts away from RBS.

As a major public asset, RBS should be used to help achieve wider objectives. Improving how the banking sector serves small businesses should be the top priority, and it is good to see the government start to move in this direction. But to make the most of RBS, they should be going much further.

The public stake in RBS gives us a unique opportunity to create new banking institutions that will genuinely put the interests of the UK’s small businesses first. The New Economics Foundation has proposed turning RBS into a network of local banks with a public interest mandate to serve their local area, lend to small businesses and provide universal access to banking services. If the government is serious about rebalancing the economy and meeting the needs of those who feel left behind, this is the path they should take with RBS.

Small and medium sized enterprises are the lifeblood of the UK economy, and they depend on banking services to fund investment and provide a safe place to store money. For centuries a healthy relationship between businesses and banks has been a cornerstone of UK prosperity.

However, in recent decades this relationship has broken down. Small businesses have repeatedly fallen victim to exploitative practice by the big banks, including the the mis-selling of loans and instances of deliberate asset stripping. Affected business owners have not only lost their livelihoods due to the stress of their treatment at the hands of these banks, but have also experienced family break-ups and deteriorating physical and mental health. Others have been made homeless or bankrupt.

Meanwhile, many businesses struggle to get access to the finance they need to grow and expand. Small firms have always had trouble accessing finance, but in recent decades this problem has intensified as the UK banking sector has come to be dominated by a handful of large, universal, shareholder-owned banks.

Without a focus on specific geographical areas or social objectives, these banks choose to lend to the most profitable activities, and lending to local businesses tends to be less profitable than other activities such as mortgage lending and lending to other financial institutions.

The result is that since the mid-1980s the share of lending going to non-financial businesses has been falling rapidly. Today, lending to small and medium sized businesses accounts for just 4 per cent of bank lending.

Of the relatively small amount of business lending that does occur in the UK, most is heavily concentrated in London and surrounding areas. The UK’s homogenous and highly concentrated banking sector is therefore hampering economic development, starving communities of investment and making regional imbalances worse.

The government’s plans to encourage business customers to switch away from RBS to another bank will not do much to solve this problem. With the market dominated by a small number of large shareholder-owned banks who all behave in similar ways (and who have been hit by repeated scandals), businesses do not have any real choice.

If the government were to go further and turn RBS into a network of local banks, it would be a vital first step in regenerating disenfranchised communities, rebalancing the UK’s economy and staving off any economic downturn that may be on the horizon. Evidence shows that geographically limited stakeholder banks direct a much greater proportion of their capital towards lending in the real economy. By only investing in their local area, these banks help create and retain wealth regionally rather than making existing geographic imbalances worce.

Big, deep challenges require big, deep solutions. It’s time for the government to make banking work for small businesses once again.

Laurie Macfarlane is an economist at the New Economics Foundation