(This is of course orthogonal to the fact that the black market does not want these vulnerabilities.)
Criminals will always be looking, but the odds of finding vulns against a company that pays decent bounties should be far lower than against one paying a pittance, since more people should be looking due to the greater potential reward.
Also, in this case, I think that the amount of damage the company has avoided due to the vuln leaking through non-responsible disclosure is far more than $1000. Deleting photos on FB is nowhere near the same class of seriousness.
The company STORES PASSWORDS. Leaking them is serious.
Regardless, if a company isn't willing to demonstrate they value security to my satisfaction I won't be a customer.
The only problem I have is with the virulently bogus meme that companies should pay more for vulnerabilities because otherwise the "black market" will outbid them. No:
* The "black market" does not in fact want these vulnerabilities.
* Finding a vulnerability and then not using it to to enter into a criminal conspiracy simply isn't praiseworthy, and reasonable people don't have to paid not to do that. It's hard enough to do this kind of work in a society that believes there's something sketchy about finding vulnerabilities at all, without the constant chatter about how maybe they could just make a living by enabling crime.
* The argument doesn't even make logical sense. If the vulnerability is easy to find and exploit (as this one was), then no matter how severe it is, it doesn't command a high price because you could spend less money to independently rediscover it. Moreover, there are surely many other vulnerabilities to be found in the same target. The economics of the argument are all wrong.
That's a weight off...
I have no idea who you think you're replying to, but they're not my points dude...
Felonies exist and people still commit them. Should they? God no. But people with a lower moral code exist and they can be flipped to do "good work" if there's enough money for them (and I think you should get more money in general for your important work anyway). I find the notion of your profession only consisting of good people highly offending to the rest of the world.
You know who does fine in a world where that's the norm? Facebook. No matter where vulnerabilities get valued at, they will be a rounding error expense to Facebook.
You know who does not do fine in that world? Anyone smaller than Facebook.
Thankfully, that's not the norm in the real world. Unfortunately, the real norm is: if you pay a bounty at all, random people on Twitter and message boards will claim you're being negligent by not paying more for them. The lesson then is: don't offer a bug bounty. All you're doing is attracting negative attention.
You know who does fine in the real world where that's the norm? Apple and Cisco. Really, so does Facebook, despite the bullshit flak they take for their bounties.
You know who does not do fine in the real world? End-users.