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Instagram, the popular photo-posting site, was acquired for $1 billion dollars by Facebook in April 2012, and now throngs of users believe their new, updated user policy is an intrusive land-grab of valuable intellectual property rights.  Instagram has pledged to remove offensive language,  but the trust users have placed in the social media super-power are shaken nonetheless.
Unfortunately, Instagram’s move is nothing new in the world of social media.
Other Violations of Trust
In June 2012, a class action suit was brought against Google, alleging that the social media company had, without authorization, intercepted emails, in order to review them forwords, content and thought process . Because the emails were sent from non-Google accounts, the plaintiffs claim the acts are analogous to wiretapping and eavesdropping, in violation of California’s Invasion of Privacy Act (CIPA).  In this on-going suit, Google’s response—that their processes are automated, requiring no human intervention—has done little to assure skeptics that the policy is nonetheless an affront to digital privacy rights.
During that same month, Google quietly settled a lawsuit with the Federal Trade Commission for $22.5 million dollars, after the FTC asserted that they had illegally monitored users of Apple’s Safari web-browser.  And over the past few years, the FTC has charged others, including Facebook, Twitter, and Myspace, with a range of privacy and data-security violations, from sharing private user information with advertisers (Facebook, 2012 ) to failing to protect users from security lapses (Twitter, 2010 ) to sharing web-browsing habits with advertisers (MySpace, 2012 )
A Digital Manifest Destiny
That social media companies are interested in your private information and intellectual property is unsurprising. The value, at the risk of sounding dramatic, is incalculable. Data science has become the new buzz word in social media circles , and its practitioners are modern-day miners, not all that different from those who crushed rocks and sent them through roiling sluice boxes during the gold rush era. Similarly, the social media industry seems to view the exabytes of information buried in the Internet bedrock as unclaimed property, and in their zeal to extract it, they ignore the rights of the original owners. In that, the cry of today’s digital barons rings with the same self-righteous manifest destiny tone heard over one hundred years ago.
What is it you own?
To understand what intellectual property rights you’re giving up to participate in Instagram (or another social media enterprise), it’s important to first recognize what rights you own. Under U.S. Copyright law, the creator of a work is granted several exclusive rights, including, among other things, the right of reproduction, distribution, creation of derivatives, claims of authorship, and the right to perform and display the work. And these rights extend to photographs.
The Federal Copyright Act recognizes photographs as visual works of art from the moment of creation,  which means that when you snap a picture of your family dog, your rights are vested the instant the shutter closes. And your rights are equal to those granted to even the most famous photographers, including Ansel Adams and Annie Liebovitz.
When others use, display, copy, or modify your photographs without your permission, they violate a constitutionally empowered right of ownership, regardless of whether you’ve registered a copyright. So how is it that Instagram can use your photographs?
License v. Ownership
Instagram’s claim to your images (and other content) derive from the licensing rights that you granted them when you signed up for their service. It was a legal bargain. They provide you with a valuable piece of software and functionality, and you, in return, grant them certain rights to property you own.
As a simplified example, let’s say that you own a bicycle. Because you own it, you have the right to use it any time you wish. You also have the right to allow others to use, rent, or borrow it. And when others do, assuming they have your permission, you are essentially granting them a license. You’re not transferring title to them; you’re simply allowing them to use it under certain terms and conditions.
The Instagram contract you accepted when you signed up for their service grants them similar rights to your photographs. They don’t assert ownership of the images, but they do claim a licensing right. Here’s how that portion of the contract looks:
Look closely at the following words: grant, non-exclusive, fully paid, royalty free, worldwide, and license.
Let’s illustrate Instagram’s license agreement using our bicycle example. Setting aside all other terms and conditions, you give (“grant”) Instagram the right to use your bike non-exclusively (meaning that you too can use it), but Instagram doesn’t have to pay you for their use of it (“fully-paid and royalty-free”), and you grant them to right to allow others to have the same rights (“transferable, sub-licenseable”), whether those people happen to live in Bangladesh or Bangor (“worldwide”), and the character of the agreement is...a license. So is it fair? Perhaps.
Social media giants provide an invaluable service in today’s digitally connected world. The rights you give them may be a fair bargain depending on how much you value your property in exchange for the rights you grant them. There’s a practical consideration as well: social media services need to copy your data to their servers, back it up, and transmit it to others. To do that legally, you have to grant them certain rights. But whether those rights should extend as far as they do (or could in the future) is another issue altogether.
In May 2012, Facebook was hit with a class action lawsuit demanding $15 billion dollars in damages, in which the plaintiffs allege that Facebook violated the privacy rights of 10 million users by tracking them via cookies after they logged out of their Facebook accounts. 
In 2011 Facebook was sued in another class action suit, in which plaintiffs claimed that that they used, without authorization or compensation, over 100 million user names and photos in a Sponsored Advertising program. 
Essentially, the program generated an unauthorized advertising endorsement of a product that appeared on a Facebook user’s friend’s page, after the original Facebook user “liked” a certain product. A settlement appears to have been reached  (in which Facebook has agreed to pay up to $20 million to individuals (up to $10 each) but Facebook appears undeterred. They still use a variation of this program today by displaying more clearly their intentions and a user’s ability to opt-out. Facebook says that it is generating up to $1 million per day in advertising revenue with its new Sponsored Stories program,  so it’s no surprise that Instagram would be tempted to initiate something similar.
Instagram’s Advertising Program
The language that Instagram inserted into its revised terms policy reads as follows:
"2. Some of the Instagram Services are supported by advertising revenue and may display advertisements and promotions, and you hereby agree that Instagram may place such advertising and promotions on the Instagram Services or on, about, or in conjunction with your Content. The manner, mode and extent of such advertising and promotions are subject to change without specific notice to you."
There's no question that the contractual language empowers Instagram to initiate, among other options, a Facebook-like Sponsored Stories program. It could be my fear of a digital manifest destiny making me think this way, but I wonder how intrusive they will be five years from now? What's to stop them, or any other social media company, from using not only the public images and information I post, but my private data as well? What if an image Instagram exploited damaged me, my family, or my career?
But that's the risk. And the bargain.
Where This May Lead...
Social media companies generate revenue by offering consumer-prospects to their advertisers. The more effective and targeted the consumers they deliver, the more in-demand their site becomes and the more revenue they create. And social media giants are getting quite good at this: In 2011, Facebook generated $3.8 billion in advertising alone, nearly twice what they made the prior year.  Google earns over $3 billion dollars a month from advertising. 
My guess is that Instagram hopes to following in their footsteps.
Find other DLR posts at: http://dlr-law.com/writings--pubs.html
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 http://www.bostonglobe.com/business/2012/05/08/ftc-says-myspace-violated-privacy-laws/Tqzm64VU8NHfxmTnSIoK5L/story.html http://www-01.ibm.com/software/data/infosphere/data-scientist/ 17 USC § 106
 17 USC § 101
 Registering a copyright offers the owner of the work certain protections and rights, including the right to bring suit in Federal Court, and the right to statutory damages, and attorney fees. http://www.scribd.com/doc/94051954/Facebook-Class-Action