A while ago I explained why I'm not crazy about the cloud. In that post I stressed that, since you're not a paying customer to "cloud" services like Facebook and Google, you don't get to decide how they're run. Now I want to talk about another aspect of the cloud that seems risky to me: you don't get to decide how the data you post to a "cloud" service is used.

Yesterday, Instagram, which was recently acquired by Facebook, released updated Terms of Service which were widely interpreted as claiming the right to sell your photos without giving you a penny of compensation. Of course this caused much outrage all over the Internet, and Instagram responded by clarifying why they changed their Terms of Service:

Our intention in updating the terms was to communicate that we'd like to experiment with innovative advertising that feels appropriate on Instagram. Instead it was interpreted by many that we were going to sell your photos to others without any compensation. This is not true and it is our mistake that this language is confusing. To be clear: it is not our intention to sell your photos. We are working on updated language in the terms to make sure this is clear.

This seems clear enough, and further on there is more clarification:

The language we proposed also raised question about whether your photos can be part of an advertisement. We do not have plans for anything like this and because of that we're going to remove the language that raised the question.

So this looks, on its face, like a good story about a cloud service. The service proposed new terms (it's important to note that the new Terms of Service will not take effect until January 16, 2013, so Instagram was not trying to slip anything by), people raised concerns, and the service responded to those concerns. There is even an explicit recognition that Instagram users own their photos, not Instagram itself:

Instagram users own their content and Instagram does not claim any ownership rights over your photos. Nothing about this has changed. We respect that there are creative artists and hobbyists alike that pour their heart into creating beautiful photos, and we respect that your photos are your photos. Period.

I always want you to feel comfortable sharing your photos on Instagram and we will always work hard to foster and respect our community and go out of our way to support its rights.

All of this sounds good. But it begs the question: if Instagram is so concerned about its users, and if it's so valuable to them, why doesn't it let them pay for the service?

The more you look at what Instagram says, the more this question comes to the fore. For example:

From the start, Instagram was created to become a business. Advertising is one of many ways that Instagram can become a self-sustaining business, but not the only one.

Yes, indeed. So why is it the only one that Instagram appears to be pursuing? And why is it continuing to pursue it when it has already led to one near miss? Instagram responded well this time, but if they weren't depending on ads for their business model, they wouldn't have had to respond at all.

What's more, the "context" they provide about their business plans makes you wonder where "innovative advertising" fits in:

To provide context, we envision a future where both users and brands alike may promote their photos & accounts to increase engagement and to build a more meaningful following. Let’s say a business wanted to promote their account to gain more followers and Instagram was able to feature them in some way. In order to help make a more relevant and useful promotion, it would be helpful to see which of the people you follow also follow this business. In this way, some of the data you produce — like the actions you take (eg, following the account) and your profile photo — might show up if you are following this business.

What does any of this have to do with ads? It's just straightforward social networking.

I should make clear that I am not accusing Instagram of being engaged in a deep conspiracy to hoodwink users, as some comments on the Hacker News thread have implied. I am quite ready to believe that they are perfectly sincere. That's the problem: they sincerely believe that pursuing "innovative advertising" is a good business model, but just charging users for a service that is obviously valuable is not.

This blind spot is not limited to Instagram, of course. Facebook itself has the same problem, although to be fair, Facebook's users fit a very different profile from Instagram's users. Google has the problem too; in fact, the problem is worse with Google, because their core search service is at a more fundamental level than social networking. And yet those core search results are now less useful because they can be skewed by personalization, and can preferentially show results from Google services over competitors. In fact, the case of Google is probably worth its own post all by itself.

Of course, the direct impact of this blind spot will be felt by the cloud services themselves, not users; but how will the services respond? It would be nice if they would respond in the obvious way, by finding ways for users to pay them directly for the value they receive. But I don't see any big push in that direction. Instead, I see cloud services looking for more and more creative ways to monetize their users' data while keeping the service free. Unless the service gets driven out of business by some competitor that does let users pay directly, there is only one way this trend can end, as far as you the user are concerned: "your" data will ultimately not be yours. It's great that Instagram wants to protect its users' rights, but it's not up against a hard choice (yet) between cashing in on its users' data and going out of business. What will happen when (not if) it is?