[opinion] Instagram is a popular photo sharing tool on the web, and Facebook just bought it for $1 Billion. This an unprecedented move for Facebook. They’ve never made such a purchase, and they may never do it again. What intrigues me more than anything is that Instagram is nothing more than a simple photography tool. Why is it so popular, how can you use it for your own photography, and more importantly, how come it’s worth $1 Billion?
Photo sharing reinvented
Instagram is an iPhone and Android app that you use for photo sharing. If you have a smartphone that runs iOS or Android, you can download Instagram for free. The tool allows you to apply all kinds of colorful filters to the photos you take with your smartphone. Once you like what you see, you can post your photos to Facebook, Twitter, and a bunch of other social media sites.
As of now, Instagram has some 30 million users. I think it got so popular because it turns beginners into artists with a few quick taps. You don’t need to know a lot about photography to get something out Instagram. With all of the different filters, you can salvage any photo that didn’t turn out the way you would have liked. In a certain sense, Instagram compensates for the limitations of the camera and lack of decent editing tools on most smartphones. Instead of color correcting (like you would on your PC), you apply a colorful filter.
The cool thing about smartphones is that you always have a camera with you. The only downside is that once you know how to post-process your photos, your quality standard goes up. You know how to make your greens more green, so you’ll only share your photos once you’ve put them through Photoshop. With Instagram, you can snap the photo, apply a quick filter, and share it less than a minute after you took it.
Why is Instagram worth $1 Billion?
It has to do with the subscriber base and a few other things. 30 million active users is a lot, but it’s nothing compared to the 500 million users on Facebook. Right now, Facebook is on the verge of what could be a $100 billion IPO. So if you do the math, Facebook is basically using 1% of its valuation to purchase what amounts to 6% of its current user base (there’s a lot of overlap, but it’s still relevant). Now I’m not saying this math is the only logic behind the purchase, but it does shed some light on a few reasons Mark Zuckerburg may have gone after Instagram.
I think the more important thing to look at it is the tool itself. When you compare Instagram to a similar tool like Flickr, the purchase makes a lot of sense. Flickr has always had a strong user base, but it never offered the quick touchup tools, mobile access, and social media capabilities that make Instagram the perfect add-on to Facebook. The famous creator of Facebook, Mark Zuckerburg, has said that Facebook had plans to build something like Instagram, but Instagram must have built exactly what Zuckerburg was looking for. That’s usually what happens when a company like Facebook decides to make a huge purchase like this.
It’s also worth noting that Facebook hasn’t been particularly successful when it comes to sharing photos from a mobile device. They had an app, but most people didn’t use it. The ones who were really into sharing photos used Instagram. Facebook, in a nuthsell, had a problem they needed to solve. They could either try to build their own solution, or they could just purchase the one that’s already got 30 million users. When you’ve got a multi-billion dollar company, you can afford to do this sort of thing.
Facebook has never been a platform for sharing high resolution images. Flickr will probably retain that role into the future. When it comes to sharing photos on Facebook, most people prefer a more casual approach. They just want to take a quick clever little snapshot, touch it up on the spot, and document their day. When it comes to smartphones and other mobile devices, Instagram hits a certain sweet spot. That’s why it’s worth $1 billion to Facebook.
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