Instagram updated its terms of service on December 17, 2012, and granted itself the right to sell users photos without any notification or compensation. Instagram was prompted to issue a statement retracting the controversial terms by millions of users, among them the National Geographic Society. Following the announcement, users switched to other photo-sharing services, like Pheed and Flickr. Consequently, Instagram has changed its terms of use, correcting the issue of authorship and Page 1 of 3 The SAGE Encyclopedia of Economics and Society SAGE Contact SAGE Publications at iv] ownership of photographs.

SAGE Reference Content contribution and collaboration by the members is critical to the viability of Instagram. Several studies argue that users motivations to cocreate can be individual and related to the network structure. Users who are structurally embedded have a high number of ties to others in a network and are likely to have a greater level of sharing. Commitment, self-development, and reputation are individual motivations correlated to photo sharing. The economics of sharing photos is based on the collective intelligence of consumers and the idea that the consumer is a cocreator of value, an active agent and a resource. Instagram promotes mass collaboration through user-generated content. As cocreation is a social process based on collaboration and interaction between people, sharing photos involves users in the creation of value through thematic communities and network ties.

Companies use Instagram not only to encourage users to share photos but also to create engagement with brands, generate traffic to Web sites, establish a visual image for products and services, index content via hashtags, create interactive campaigns with hashtags, and promote competition. The MTV television channel uses Instagram to present the backstage of its programs. Nike uses Instagram to show pictures of people exercising with its brand products. The profile of Starbucks publishes pictures tagged by fans through hashtags.

Politicians use Instagram to reach out to voters in a more personal way through photos and videos. President Barack Obama has 4 million followers and a Thank you photo on election night with 294 thousand likes. Many celebrities share photos and videos of their personal and professional lives with fans. The media use Instagram to promote closer ties with their audiences and to disseminate visual content. Photographers, anonymous citizens, and civic organizations also use Instagram to publicize photos, communicate with friends, and promote causes. Gramforacause and Gramming for Good are startups that use Instagram to connect photographers with nonprofits and help spread social and environmental causes through photography. In some countries, Instagram is already showing ads in the feeds of users. The advertising on the platform will be gradual and will present sponsored publications.