Is Instagram now only worth half a billion?

instagramInstagram the photo app that was bought by Facebook last year lost half of it’s daily user. Does that mean that also the value must be cut in half??? I’m just joking. But let’s get serious here. This week the theregister.co.uk published interesting numbers about the daily active users on the Instagram service.

Following an approach to actually make some money via selling the users pictures – without asking for permission or even notifying them – half of their users turned their back on the platform. Even if Instagram changed the most of the stuff in the user license back again and will not do the above described actions, the question remains how big the damage is. I guess we will have to take a closer look next month, if the numbers go up again, or if this damage was permanent.

For me that raises the question how a service like Instagram can earn money at last (and think of the other apps/services that only go for sheer user count)? By now there are loads of alternatives that do pretty much the same sort of thing – sharing nice looking pictures with modification. And obviously the users are willing to change services if they don’t like the terms any longer. I personally think that this case shows pretty well, that the user per se is not the dumb person, that will go with everything, as he sometimes ist described. Indeed it seems that at least half the users read the changes in the terms and decided to ignore the service, since their rights were significantly cut.

In the end it seems that it’s not only the huge user base that should be considered if buying some company. At least a slight vision of how to make money with the idea should be there. This example in my opinion show perfectly that the usual “let’s get a lot of users and think about a business model later” approach doesn’t work any longer. Today for nearly every app or service you have an alternative. Every day some start up is popping up to conquer the ones that are already in place. And if you do something wrong your only asset – the user base – is gone. If I were Facebook, I would really ask myself if this was worth the billion spent…

Picture by taylorhatmaker

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