Instagram Backs Off New Photo Policy–But Here’s How It Might Really Make Money

Image representing Kevin Systrom as depicted i...

Instagram cofounder Kevin Systrom (Image: CrunchBase)

From my Forbes.com blog The New Persuaders:

Not surprisingly, the Facebook-owned mobile photo-posting service Instagram has backed off the language in its new privacy and terms of service policies that set off a firestorm online. The worry was that people’s Instagram photos could be sold without users getting compensated (never really true) or could be used in ads (which did certainly look likely).

Apparently, neither will be the case, at least for now. Instagram cofounder Kevin Systrom just posted on the company’s blog under the title “Thank you, and we’re listening”:

I’m writing this today to let you know we’re listening and to commit to you that we will be doing more to answer your questions, fix any mistakes, and eliminate the confusion. As we review your feedback and stories in the press, we’re going to modify specific parts of the terms to make it more clear what will happen with your photos.

Legal documents are easy to misinterpret. So I’d like to address specific concerns we’ve heard from everyone:

Advertising on Instagram 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. 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.

Systrom then provides clues to how Instagram might really make money from advertising on the site:

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.

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. Our main goal is to avoid things likes advertising banners you see in other apps that would hurt the Instagram user experience. Instead, we want to create meaningful ways to help you discover new and interesting accounts and content while building a self-sustaining business at the same time.

So it seems that whatever advertising Instagram does, it will be quite a bit like Facebook’s Sponsored Stories, or even precisely like them. Although that won’t comfort people who don’t like the possibility that their actions can become an ad, they’re already subject to those terms if they use Facebook.

I wouldn’t be surprised to see Instagram follow Facebook’s well-worn playbook, which calls for the company to push the envelope, then back off a bit, rinse, repeat. But for now, pending future changes, your cute cat photos are safe from becoming ads for your local pet salon.

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Google Cuts ‘Fat Finger’ Accidental Clicks On Mobile Ads

gmobileadFrom my Forbes.com blog The New Persuaders:

Advertisers have long known about a problem with mobile ads: fat fingers.

That is, people accidentally click an ad on those little smartphone screens thanks to clumsy digits (or purposely big or hard-to-avoid ads). Realizing their mistake, they back up instantly, but the advertiser gets charged while getting only a wisp of attention from a consumer they probably didn’t want to reach anyway. Today, Google is introducing a tweak to in-app image ads that should reduce those unintentional clicks considerably.

It’s a big issue. Recent studies indicate that up to about 40% of mobile ad clicks are accidental or even fraudulent, based on the fact that people “view” the ad two seconds or less. The result, of course, is not only that advertisers get charged even though consumers had no interest in the ad, but that they obviously aren’t going to end up buying the product or service.

This may be one reason advertisers pay much less per impression for mobile ads. And that’s a problem that has investors concerned about every company from Google and Facebook to a raft of mobile and app startups, as more and more online activity moves from stationary computers to smartphones and tablets.

Google found most of the accidental clicks on app image ads happened at the outer edges of the ad, no doubt because people were trying to scroll up or click on adjacent content. So now, Google has added a prompt to “Visit site” whenever people click on the outskirts of the ad. It’s an extra click, but it also ensures that’s really what the person wanted to do. …

Read the rest of the post at The New Persuaders.

Apple’s iPad Mini Cannibalizes Other iPad Sales While Google’s Android Tablets Steal Share

Apple Introduces iPad Mini... and some new com...

From my Forbes.com blog The New Persuaders:

Apple’s grip on the tablet market it single-handedly popularized is slipping.

The maker of the iPad line of tablets still leads the market with a 55% share, according to a new report from market research firm ABI Research. But that’s down 14 percentage points in one quarter alone, and the lowest since the first iPad launched in 2010.

The problem, according to ABI, is that Apple was late to come out with a seven- to eight-inch tablet, well after the point at which it was becoming obvious that people really like that size. And when Apple did finally debut the iPad Mini, it was at a substantially high price relative to rivals such as Google’s Nexus 7 and Amazon.com’s Kindle Fire. “With the introduction of a smaller, lower-cost iPad mini, Apple has acknowledged Android’s beachhead of 7-inch-class tablets, though at the same time, it has failed to deliver a knock-out punch through innovation, pricing, and availability during the most critical selling period of the year,” ABI senior practice director Jeff Orr said in the firm’s release.

Worse, ABI says, the iPad Mini didn’t take back share from tablets powered by Google’s Android mobile operating software. Instead, people simply ended up opting for lower-cost tablets. Android’s market share rose to 44%. Another recent report from Finvista Advisors predicts that Android tablet sales will overtake the iPad’s by mid-2013. Android also recently bested Apple in smartphone shipments, at least before the iPhone 5 launched.

It’s not clear from the ABI report which companies benefited the most from the market-share shift. But it wasn’t just Google. According to one report, Google is expected to sell about 4 million Nexus 7s by the end of this year, but that’s somewhat fewer than some analysts expected.

Amazon says Kindle sales are strong, but it’s not providing specific figures to prove it. A report from Pacific Crest Securities says it’s likely to pick up a bit of market share in the fourth quarter, but not much.

The big losers are clearly every other tablet, including those running Windows–though that, too, could change if Microsoft’s new Surface tablet takes off.

Now, Apple’s share decline may well reverse in the current quarter, the first full one for the iPad Mini and other new iPad models, squarely in the heart of the holiday shopping season. And of course, it’s far better for Apple to cannibalize its own products than let others do it.

Problem is, it’s too late, at least for the moment. Now, rivals are eating some of Apple’s lunch, too.

Sorry, Retailers–Cyber Monday’s Days Are Numbered

Two cliches in one ad!

From my Forbes.com blog The New Persuaders:

Not long after Cyber Monday was invented in 2005 as an online alternative to Black Friday, I called it a “marketing myth” because it was actually not even close to a top holiday shopping day.

Then a funny thing happened–Cyber Monday, created by the National Retail Foundation’s Shop.org online unit, became a self-fulfilling prophecy as retailers jumped on the term and began offering special sales that day after the Thanksgiving holiday. By the following year, it had turned into a real phenomenon, at least for many retailers, and last year it became the heaviest shopping day ever to date. It might even happen again this year.

But now, even as many retailers have made Cyber Monday sales a stock part of their holiday strategy, I’m betting its days are numbered. Why?

* Early sales. Smart retailers noticed that before Cyber Monday, at least (and perhaps still), the period leading up to the big day actually were even more active shopping days. And in their never-ending attempt to get a step ahead of rivals, many retailers ran not just pre-Cyber Monday sales, but pre-Black Friday sales as early as the evening before Thanksgiving. Apparently they worked. They almost certainly will cannibalize Cyber Monday sales. …

Read the complete post at The New Persuaders.

Will The iPad Mini Kill Off All Of Apple’s Other Tablets?

From my Forbes.com blog The New Persuaders:

When Apple’s iPad mini debuted on Oct. 23, reviews were generally positive but a bit muted: What, no Retina display? And why is it so expensive?

But now, after a week or two of playing with it, some of the most prominent reviewers of Apple gear are never going back. Never going back, that is, to their bigger iPads.

From SplatF’s Dan Frommer:

My take after spending a bunch of the weekend with the iPad mini: This is the real iPad… The best thing about the iPad mini is its weight — it’s almost effortless to use, and that’s a big difference. … I feel more confident holding the iPad mini, which means I’m more likely to use it in more places — the whole point of an iPad.

From The Verge’s Joshua Topolsky:

There’s no tablet in this size range that’s as beautifully constructed, works as flawlessly, or has such an incredible software selection. … The iPad mini hasn’t wrapped up the “cheapest tablet” market by any stretch of the imagination. But the “best small tablet” market? Consider it captured.

From Daring Fireball’s John Gruber:

If the Mini had a retina display, I’d switch from the iPad 3 in a heartbeat. As it stands, I’m going to switch anyway. Going non-retina is a particularly bitter pill for me, but I like the iPad Mini’s size and weight so much that I’m going to swallow it.

From The Wirecutter’s Seamus Bellamy and Brian Lam:

The iPad mini is the best tablet to get and lets be honest, it’s way better than the full sized iPad for nearly everyone. I’d even go so far as to say that the full sized iPad is plain obscene after using the mini. … This isn’t just jive talk. I put my iPad on ebay (pls. bid but not too high because you should really buy a mini) and ordered a fully loaded iPad mini for myself.

I understand their attitudes completely. I don’t own an iPad (yet), but I have checked out both pretty extensively. I also have been trying out both Samsung’s full-size Galaxy tablet and Google’s Nexus 7 seven-inch tablet for several months. They’re not as slick as the iPads, but they suffice to provide a sense of the difference between the two models.

And the difference in user experience is huge, even more than you’d think from the difference in weight and size. Once I started using the Nexus 7, I virtually stopped using the Galaxy, largely because the Nexus 7 is so much easier to use. It’s easier to hold in one hand and way easier to transport without fear of dropping it. It slips into a laptop bag or even a jacket pocket easily enough that you don’t have to think twice about taking it outside the house. The iPad mini will enjoy all those advantages as well.

Taken together, the experts’ and my experiences with the smaller tablets makes me wonder if the full-sized iPads will soon be extinct. OK, not extinct but perhaps an endangered species. Already, it appears, they’re headed for eBay.

Honestly, I don’t believe people will completely stop buying the larger iPads. One look at that gorgeous Retina display, and it’s all over for no small number of people. Plus, watching videos on anything but your chest in bed is a bit cramped on a smaller tablet. And full-sized iPads, already increasingly replacements for laptop personal computers, likely will continue to benefit from that switch.

But it’s considerably less cramped on the iPad mini thanks to its larger display area compared with seven-inch rivals. And when Apple comes out with an iPad mini with a Retina display? Could be lights out for the bigger iPads.

Apple seems smart enough to figure out how to make plenty of money on, well, whatever it produces, so I’m sure it will make a lot of money on iPad minis. And even if the iPad mini cannibalizes the full-size iPads to some extent, it’s better for Apple to do the cannibalizing rather than watch rivals simply take the business away.

But a lower price is a lower price. So it will be interesting to see if that lower price on iPad minis will prompt enough more people to go for an Apple tablet to make up for any lost sales of much more expensive big iPads. Given bearish investors lately, not to mention people wondering if the company has peaked, Apple had better hope so.

Google’s Android Crushes Apple’s iOS In Smartphone Shipments–But Does It Matter?

Source: IDC

From my Forbes.com blog The New Persuaders:

Just four years after its debut, Google’s Android mobile operating software now claims 75% of mobile units shipped, according to a new report from market researcher IDC.

In the third quarter, according to IDC, some 136 million Android handsets shipped, almost double the 71 million shipped in last year’s third quarter. Devices using Apple’s iOS grew by a far lower 57%, to 26.9 million handsets, for a surprisingly low 15% market share. Don’t even ask about Blackberry or Windows Mobile. It’s a two-horse race for now.

Some folks wonder if this trend is heading toward a rerun of the Windows PC vs. the Mac. Maybe, and it’s got to be something that worries Apple CEO Tim Cook, who hardly wants to be the guy who let the mobile revolution get away.

But in the short to medium-term, it’s doubtful this is a killer for Apple. Why?

For one, Apple’s share was probably especially low in the last quarter because the eagerly awaited iPhone 5 didn’t ship until September, very late in the quarter. Add in new iPad models just introduced, in a holiday quarter when Apple devices are probably still the gift people would prefer to give over Android gadgets, and it’s hard to imagine that Apple won’t see some rebound in the fourth quarter. …

Read the complete post at The New Persuaders.

What Storm? Google Keeps Apple War Hot With New Tablets And A Phone

From my Forbes.com blog The New Persuaders:

After Hurricane Sandy forced Google to cancel an event planned in New York today to show off new Android devices, it’s launching them anyway–keeping the search giant in pitched competition with Apple.

Google introduced two new sets of tablets, in addition to a new version of its intelligent personal assistant Google Now:

* A Nexus 7 seven-inch tablet with 16 GB of memory, double the previous low-end memory, for $199, the same price, and a 32 GB model for $249.  A new version of the Nexus 7 with a cellular connection and 32 GB for $299.

* The Nexus 4 smartphone, developed with Korea’s LG. As expected, it has a 4.2-inch display, as well as wireless charging so you don’t have to plug it into a power adapter. It’s $299, on sale starting Nov. 13.

* The Nexus 10 tablet, developed with Samsung, that adds a new full-size tablet to Google’s lineup. Available Nov. 14, it costs $399 for a 16 GB model and $499 for a 32 GB model.

The smaller tablets are intended to counter last week’s announcement by Apple of the iPad mini, its don’t-call-it-a-seven-inch tablet. Apple itself has clearly felt the new heat of competition, so while the iPad mini will likely sell well during the holiday season, Google’s new devices–along with Amazon.com’s Kindle Fire tablets, which Amazon says are selling well, and perhaps even Microsoft’s Surface tablet–help make it a real contest.

7 Great Places Online To Track Hurricane Sandy

Google Crisis Map of Hurricane SandyFrom my Forbes.com blog The New Persuaders:

Assuming you’ve got power or even a cell phone signal by now, media and tech companies and tweeters galore are providing instant insight into where Hurricane Sandy is heading. Here are a few that go well beyond the reporter-in-the-rain TV coverage:

* Weather Channel livestream: The cable channel that no doubt will be seeing ratings skyrocket is running a livestream on YouTube of the latest news and frequent warnings about what to do (stay home!).

* New York Times live updates: The newspaper is posting live updates mostly on official news, along with an interactive map of evacuation zones.

* Wall Street Journal liveblog: The paper’s continuously updated blog has a wealth of information, including on-the-scene reporting of how folks are coping with the storm.

* Twitter: The hashtag #sandy brings up a (forgive me) flood of tweets related to the storm. Oddly enough, it’s not a trending topic, though “East Coast” and “FEMA” are. And not surprisingly, some people are finding ways to make a joke out of potential tragedy. A tweeter named @HurricaneSandy tweeted: YOU THINK I’M BAD? SEE WHAT HAPPENS IF MITT ROMNEY GETS ELECTED. Still, as in many crises, Twitter remains the place to get the latest, on-the-scene, unvarnished news. …

Read the complete post at The New Persuaders.

Apple CEO Tim Cook Is Blowing Smoke When He Dismisses Rival 7-Inch Tablets

Apple Introduces iPad Mini... and some new com...

Apple’s iPad mini

From my Forbes.com blog The New Persuaders:

As a company that way more often than not comes out with superior products, Apple rarely appears defensive. Today was an exception.

On Apple’s fourth-quarter earnings call, CEO Tim Cook took repeated potshots at small tablets of the kind that–yes–Apple itself just debuted. The iPad mini is clearly aimed at blunting the appeal of seven-inch tablets such as Google’s Nexus 7 and Amazon.com’s Kindle Fire.

While I think Cook is probably right that the iPad will continue to dominate tablets, and even that it continues to make the best ones, his overenthusiastic criticism of seven-inch tablets struck me as surprisingly defensive. Saying Apple didn’t set out to build a “small, cheap tablet,” he called the competitors “compromised” products. “We would never make a seven-inch tablet,” he sniffed.

Why not? Because they’re too small, he said. The iPad mini is almost an inch larger, which means a 30% larger screen and 50% larger viewing area. I’ll grant that that is noticeable, and appealing.

But c’mon. These are all tablets you can hold in one hand, and acting as if the iPad mini is something utterly unique–“in a whole different league,” as he put it–comes off more than a bit desperate. Apple is clearly playing catch-up here, and trying to position the iPad mini as nothing like the Nexus 7 or Kindle Fire only serves to make us realize that Apple actually does feel threatened by these devices that beat it to what has turned out to be a real market. …

Read the complete post at The New Persuaders.

Why Didn’t Apple Sell More iPads In Q4?

Image representing iPad as depicted in CrunchBase

Image via CrunchBase

From my Forbes.com blog The New Persuaders:

In a fiscal fourth quarter that slightly missed profit expectations, Apple reported one figure that looks especially worrisome: It sold only 14 million iPads.

You’re thinking, of course, are you crazy? Fourteen million, up 26% from a year ago ($7.5 billion worth of them), is a problem? Yes–because it’s at least 1 million below expectations already reduced by analysts who figured that if 100 million iPads were sold so far, as Apple announced at the iPad mini event, their 17.5 million fourth-quarter estimate was too high.

Update: After rising a fraction of 1% in initial after-hours trading, Apple’s shares moved up and down before flattening after the analyst call started. Shares had fallen 1% today, to $609.54.

There are a number of possible reasons iPad sales fell even shorter than expected. Here are some, pending comments on the analyst call currently underway, during which I’ll be updating this post–and there are a lot of questions on iPads:

* Cannibalization: This is the concern raised by some analysts: People who couldn’t quite justify $400 and up for a regular iPad were waiting for the iPad mini, which starts at $329. No one really knows how many people did this, but it seems likely some did. Update: Apple CEO Tim Cook essentially confirmed not cannibalization but delayed purchases thanks to iPad mini rumors.

* Shortages: When the iPad mini came out with a minimum price of $329, analysts wondered why it wasn’t closer to the other seven-inch tablets from Google and Amazon.com, whose base prices range from $159 to $199. It turns out that some components for the device are in short supply, so it didn’t make sense to price them lower and create demand Apple couldn’t fulfill. But perhaps the shortages affected current iPads as well?

* Consumer saturation: Well, I doubt it, since lower price points, the undeniable appeal of tablets to consumers, and the fact that  a lot of people still don’t have them all mean the iPad probably isn’t limited by demand. But it’s something to think about, given that 100 million have been sold already, very quickly.

And the most interesting possibility:

* Competition: Could Google’s Nexus 7, Amazon.com’s Kindle Fire, and other, full-size Android and Windows tablets finally hitting iPad sales? The market research numbers show millions of those devices have sold, so it’s a distinct possibility, especially ahead of the lower-cost iPad mini.

They’re still far below iPad sales. But it doesn’t take an Apple Genius to see that the arrival of at least decent rival tablets could be presenting real competition for the first time. That’s perhaps the most worrisome possibility if only because it seems the most likely–if not in the last quarter, at least in future quarters.

Here’s more from the analyst call: Apple is saying that it exceeded its own expectations for iPad sales. So assuming it’s not blowing smoke, maybe analysts just got ahead of themselves. Also, Apple says it had 3.4 million iPads in channel inventory in the quarter, or its target four weeks of inventory, so that’s potentially a factor in sales numbers. …

Read the complete post, with more from Tim Cook on the analyst call, at The New Persuaders.

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