News Column

Whole New Look for $1 Billion Instagram

April 10, 2012

Jessica Van Sack

Get ready for Facegram, the result of a virtual mind-meld that we're about to witness as Facebook shares its brain with Instagram. And this picture isn't pretty.

Here's the beauty of Instagram: There are no ads. It's simple and uncluttered. I don't have to worry about them changing my privacy settings or selling my content to a third party.

All of that is Facebook territory.

In shelling out enormous cash and stock in its largest purchase to date, Facebook paid nearly $1 billion for 30 million users. That equates to $33 per user, and you can bet that Mark Zuckerberg expects to recoup every penny and then some.

Instagram's staff of only a dozen employees is about to get Facebooked. Not only that, when Facebook goes public, they will have a board and investors to answer to. Not having a paid ad program is simply not going to fly.

(Sidenote: Every app developer in the nation is kicking himself or herself right now for not writing a few simple lines of code to allow users to slap some filters onto photos and share them from a mobile device. I'm talking some serious drinking going on in Kendall Square tonight.)

But Instagram's potential corruption, if it happens, won't be all Facebook's doing. Last month, Instagram co-founder Kevin Systrom said the company might be "the next big opportunity in display advertising." Systrom seemed to be suggesting that retailers could promote products organically, by uploading photos and applying the same funky filters we all do.

Although they don't have a paid ad program on the mobile app, that doesn't mean it hasn't been in the works. And pretty soon they needed to find themselves a business model to survive.

Now, I realize my worries harken back to when Google bought the money-losing YouTube for $1.65 billion in October 2006. Many Chicken Little-ers complained that YouTube would be over, but today, it remains a very separate company.

Yet I doubt Facebook, soon to hit Wall Street, will show similar wisdom.



Source: (c) 2012 the Boston Herald


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