By now, you have probably read the uproar caused by Instagram’s proposed change to the terms of service this week.   On Monday, Instagram, which is owned by Facebook, added the following:

You agree that a business may pay Instagram to display your photos in connection with paid or sponsored content or promotions without any compensation to you.

The blogosphere immediately considered the worst case scenario (much like we lawyers do) and expressed concern that Instagram could take the cute picture of your kid and sell it so that it suddenly appeared in print, billboard or online advertisements without asking your permission or paying you.  You can read some of the alarming immediate reaction here from CNet.  Instagram eventually capitulated to the masses with a Thank You and an attempt to clarify on its blog.  You can read Professor Goldman’s take on how it relates to a Facebook class action settlement.

The change was not as drastic as many had suggested because Instagram, and many other companies, already take expansive licensing over other people’s content.  The existing terms already allow Instagram’s to “place such advertising and promotions on the Instagram Services or on, about, or in conjunction with your Content.”  Nilay Patel of the Verge argues the new language is actually better than the old.

So where is advertising going?

Facebook and Instagram have to make money.  On the blog post, Instagram unabashedly stated:

From the start, Instagram was created to become a business. Advertising is one of many ways that Instagram can become a self-sustaining business, but not the only one. Our intention in updating the terms was to communicate that we’d like to experiment with innovative advertising that feels appropriate on Instagram.

Josh Sternberg of Digiday suggests brands are still figuring out how to engage on the platform and whether to copy Facebook’s gameplan.

But is there another way?

As explained in some of the links, isn’t it just a difference of degree and not kind that a brand can use my photo or content as a “Sponsored Post” on Facebook compared to taking that picture and putting it on a billboard? I can’t really foresee brands really wanting to engage with customers with amateur content running real risks of alienation.

But to make the most out of social media, brands need content. The current strategy involves buying time on Facebook as opposed to radio, print or TV using my stuff without paying me – the creator.

Yes, I, as the content creator, get to use Facebook/YouTube/Twitter/Instagram for free. But, I also get to watch TV for free. I would turn off 30Rock before I let them broadcast to the world a picture of me in my skivvies in my living room watching the show telling the world Travis Crabtree likes 30Rock, you should too. Is the current social media advertising model much different?

Will there come a time when this changes? Will there be a way for brands to pay for quality engaging content where the masses, as content benefit financially? Brands have marketing budgets and spent the money in the past on content. They can and will still do so. The trick is whether this can be done on a platform that attracts a large engaged audience?

2013 starts in 11 days. I say why not?