Instagram: Forget photos, you're for sale

(MoneyWatch) There has been a big Internet stink about new Instagram terms of service. Many users are irate that Facebook has modified the terms of use to make money off images without any compensation to the users.

But there is something else increasingly for sale: You. The new terms not only allow Facebook (FB) to incorporate Instagram user images into ads, but allow the use of people's faces and names in ways that could give an impression of promoting and supporting a product or service. This is a significant deviation from Facebook's overall terms of use and could well foreshadow broader changes the company might make as it struggles to sharply increase revenue and justify the high prices so many investors paid for its stock.

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Many criticizing Facebook for the new Instagram terms are incorrectly saying that the company is trying to claim ownership of user images. That is not technically correct. Even the changed terms of service explicitly state that "Instagram does not claim ownership of any Content that you post on or through the Service."

Instagram/Facebook doesn't need ownership. What it has chosen to do instead is get permission to make commercial use of what people upload:

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.

However, notice that in the terms is not only mention of photos, but of usernames and, more importantly, likenesses. That means if you are a registered user of Instagram, the company could insert any likeness of you -- even a picture another Instagram user else took of you and uploaded -- along with your username in an ad. Not only do you not get compensation for it, but you apparently can't withhold permission, even if you wouldn't want your identity associated with a given advertiser, whether because of moral grounds, political affiliations or any other reason.

The reason that Facebook could try to use such wording more broadly is because it has already unsuccessfully tried to put people into ads without permission. The result earlier this year was Facebook's $10 million settlement of a lawsuit brought by people who objected to seeing their names, photographs, and likenesses used in advertising without permission or compensation.

Facebook lost the lawsuit because states typically have legislation protecting rights of publicity, which allow people to control the commercial use of their identities. But the company badly wants to make more money from advertising, its major source of revenue, to help bolster its stock price. Being able to offer user names and likenesses to advertisers for incorporation into ads would command higher prices.

The change in the Instagram terms could well presage an eventual similar shift in Facebook's terms. I've asked Facebook for clarification of any potential plan. When a response comes, I'll update the story.

Image: Flickr user mauricesvay