A frantic fart of fear frothed forth over changes to fun photo fiddling service Instagram’s terms of use. It shows how little people understand what they’re getting into when they post their photos online. Will it be a wake-up call?

Instagram implemented a simple concept — posting smartphone happy snaps made lass crap with preset effects — and was a runaway success. Facebook bought the company for a billion dollars in April this year, despite it having virtually no revenue.

But Instagram had lots of users. Some 100 million in September. And they’re uploading photos that are timestamped and linked to their movements, and released for Instagram to use for all manner of commercial purposes without payment.

That last part is the cause of all the fuss. Yesterday Instagram posted new terms of use that will come into effect on 16 January 2013. Paragraph 2 of “Rights” scared the bejesus out of people:

“2. Some or all of the Service may be supported by advertising revenue. To help us deliver interesting paid or sponsored content or promotions, you agree that a business or other entity may pay us to display your username, likeness, photos (along with any associated metadata), and/or actions you take, in connection with paid or sponsored content or promotions, without any compensation to you. If you are under the age of eighteen (18), or under any other applicable age of majority, you represent that at least one of your parents or legal guardians has also agreed to this provision (and the use of your name, likeness, username, and/or photos (along with any associated metadata) on your behalf.”

Facebook and LinkedIn already do something similar. Press the “Like” button or otherwise endorse a commercial thing, and your name and photo may be used in an promotion shown to your friends.

Somehow all this started being reported as “Instagram can now sell your photos”. People panicked, and have been downloading their photos to take elsewhere, using tools like instaport.me, even though the immediately preceding paragraph makes it quite clear:

“Instagram does not claim ownership of any Content that you post on or through the Service. Instead, you hereby grant to Instagram a non-exclusive, fully paid and royalty-free, transferable, sub-licensable, worldwide license to use the Content that you post on or through the Service, except that you can control who can view certain of your Content and activities on the Service as described in the Service’s Privacy Policy.”

Even supposedly reputable mastheads got it wrong. “Insta-rage as Instagram claims right to sell your photos”, Fairfax wrote. Which is odd, because the difference between selling and licensing a photo is the same as the difference between selling and renting a house, and they manage to get that right in the real estate pages every week.

Professional photographers know this stuff backwards, of course. It’s their business. But Instagram isn’t about professional photography.

For a while at least, Wikipedia’s page on Instagram echoed the fears: “There is no option to opt out of the changed terms of use. The only way for an Instagram user to avoid the change is to delete their account.”

Yes, that’s the definition of terms of use. Don’t like the rules? You don’t get to play.

American intellectual property lawyer Daniel Schaeffer raised an interesting point, reported at CNet:

“People in my photos, whether or not they are Facebook users, have rights. They certainly haven’t given consent to having their images appear in ads, even if I have allowed Facebook to use my photos. For instance, if I take a photo of my friend in front of a business, and the business then purchases the right to use that photo in an ad campaign, then my friend’s likeness is being used without her consent. Consents and releases are a major aspect of any advertiser’s use of photographs and video — I find it hard to imagine the drafters of the new policy took that into consideration.”

But Instagram’s terms of use make it clear that users should have sorted all this stuff before uploading:

“You represent and warrant that: (i) you own the Content posted by you on or through the Service or otherwise have the right to grant the rights and licenses set forth in these Terms of Use; (ii) the posting and use of your Content on or through the Service does not violate, misappropriate or infringe on the rights of any third party, including, without limitation, privacy rights, publicity rights, copyrights, trademark and/or other intellectual property rights …”

Instagram’s new terms of use aren’t really that different from the current rules, although the language is clearer. They’re consistent with Facebook’s. Other social networks have similar rules. In August 2011, LinkedIn even snuck in the right to use your photo in adverts and, when they copped a backlash, didn’t apologise.

Instagram has already responded. Not an apology, but certainly a clear backdown:

“Our intention in updating the terms was to communicate that we’d like to experiment with innovative advertising that feels appropriate on Instagram. Instead it was interpreted by many that we were going to sell your photos to others without any compensation. This is not true and it is our mistake that this language is confusing. To be clear: it is not our intention to sell your photos. We are working on updated language in the terms to make sure this is clear.”

Instagram also made it clear that they have no plans to use people’s photos in advertising.

The core lesson here is that services like Instagram aren’t free. You pay for them by licensing the operator to use your content and other data in various ways. If you don’t like that, well, pay for your goddam internet hosting yourself.