Even if it dropped to one million, one million users making you money is arguably better than any number of users who aren't making you money if you're running a business.
If Instagrams growth is stopped now, who profits from it? Do users get back to Facebook or other services?
Google+ and FB are in direct competition for the attention of the same users.
I don't see how the value of the users' attention determines whether or not they are on the service. If you put out free food on the street, people will come and eat it, and you will have their attention. Doesn't mean you can turn a profit doing that.
> Google+ and FB are in direct competition for the attention of the same users.
Yes, they are, but I have yet to see "user attention" be properly monetized on a large by anything other than search engine advertising. Facebook is still trying to find solid revenue sources. Their new gifts platform is the latest example of this.
Google is the exception. Or rather, search is the exception. You can make money off of search advertising because people are explicitly looking for things when they perform a web search. So if you show people good ads, they will click on them.
But how many people are going to click on ads when they're trying to connect with their friends on Facebook? Facebook's entire premise with respect to advertising is that they have more information about the user, so they can target ads better. But it doesn't matter how targeted an ad is if the user isn't interested on clicking on it when it's presented.
> Facebook is now making a non-trivial amount of money from advertising as well.
There's a big difference between "non-trivial" and "enough to turn a profit".
Photos are Facebook's biggest feature by far, and Instagram is the only company that has come close to challenging it, when you look at it in those terms, 1% isn't a lot at all
And what kind of revenue does that feature bring in exactly? How exactly does Facebook profit from providing free photo hosting to a billion people?
The "goal" of facebook is for you to share and connected with your friends. Photos are just one of the things everyone wants to share. Without it, Facebook would have a giant hole for a competitor to attack.
Facebook profits by having the most active and connected users. It's not necessary to make money from each feature. That's extremely short sighted.
Which is correct. Google provides search functionality, but makes its money from advertising.
But what feature exactly is Facebook making money off of? They seem to still be scrambling to find a revenue source. I don't understand how this situation is at all acceptable from the investors' viewpoint. That is why I say that SV has jumped the shark.
Lurkers like I are fine with regards to display ads where the number of viewers is important, and where user profiles can be created over their like/follows/follower habits.
It's not like people who don't post are necessarily bad for business.
Were there other options available to them that wouldn't have lost users? Possibly. I have no stats to back it up other than personal experience, but I would venture to say that no matter how you monetize your userbase, there's always going to be some people who expect it for free, no strings attached, and will cause a stink then leave if there's any monetizable component to it.
However how many are already Facebook users and thus already profitable?
If Instagram notified users of a change of TOS and clearly stated that the scheme would be opt-in and perhaps offer a mechanism where users could get a cut of the revenue obtained through the use of photos that they specifically flagged for commercial use, media coverage would have been completely different and I doubt that many users would leave in this scenario (or other more user friendly scenarios).