> But instagram's lack of paying users does not imply a lack of value being added. And there's almost always a way to monetize a product that is important to someone.
Whoa, hang on a sec there. Do you really believe that is true? If it is, then why couldn't Instagram make money from the app itself? If they could, why didn't they?
I'm pretty sure that if I bake cookies and go hand them out, people will take them. Knowing that people will consume my cookies in large quantities if I give them away is a long way from creating a successful, sustainable business out of the popularity of my free cookies. I'm sure my cookies are important to the people to whom I am giving them, but does that mean that I can monetize my free cookies in ways other than charging for the cookies? I doubt it. But let's be honest, that's exactly what we're talking about here- giving away a useful service with the assumption that I can make money by doing something else related to the service in the future. I still don't understand why these economics apply to internet companies and not more traditional companies, but I guess I am just old-fashioned.
Instagram is a media company. They're only just now reaching a size where their audience is big enough for advertisers to care.
It's not just Internet companies that do this - practically all media start out in the red and don't make money for at least a couple of years. CNN, as an old media example, basically gave away advertising for its first several years of existence.
But that's not what happened here. Instagram, to my knowledge, has never made a penny off of advertising. There is no clear business model. Maybe it's advertising. Maybe it's charging for additional filters. Nobody really knows, not the Instagram founders and not Facebook executives.
How does anybody know whether a business would pay for advertising on a photo sharing app? People are always talking about "just turning on the profit spigot" whenever you want. I don't see any evidence that it is that easy.
Whoa, hang on a sec there. Do you really believe that is true? If it is, then why couldn't Instagram make money from the app itself? If they could, why didn't they?
I'm pretty sure that if I bake cookies and go hand them out, people will take them. Knowing that people will consume my cookies in large quantities if I give them away is a long way from creating a successful, sustainable business out of the popularity of my free cookies. I'm sure my cookies are important to the people to whom I am giving them, but does that mean that I can monetize my free cookies in ways other than charging for the cookies? I doubt it. But let's be honest, that's exactly what we're talking about here- giving away a useful service with the assumption that I can make money by doing something else related to the service in the future. I still don't understand why these economics apply to internet companies and not more traditional companies, but I guess I am just old-fashioned.