$1billion for a faded old picture- shrewd or stupid?
As many people who keep an eye on the digital media landscape will already know, this week has seen the sale of a company that designed an image-editing smartfone application fetch a staggering amount of money for its ex-owners. Like us here at one of central Manchester’s best public relations agencies, the final figure paid out may have raised a few eyebrows, but what’s the real value behind this deal?
We are, of course, referring to Instagram, which Facebook has just bought for the not so small sum of $1billion. The programme allows users to take pictures with their phones, and then share them with friends after applying a filter to the photograph to make it look like a Polaroid. So why is making a no-doubt average quality shot (no offence, smartphone users, but you’re hardly Jeremy Bailey) look like an older, but still average shot so valuable to a firm that already has the world and their brother posting status updates on its network.
It’s a query compounded by the fact that we are increasingly being told video, not still imagery, is the future of the internet. But then this notion misses a key point in that Joe Public is a very different beast from Tech Geek and New Media Wizard. In short, those that can be bothered will experiment with video, but anyone who felt a little frustrated after two minutes tinkering on iMovie will almost certainly continue to point and click with a still camera in order to retain a visual record, rather than spending half a day preparing a five minute clip.
Clearly there’s a long way to go before we’re all editing footage to create shorts to share with friends, so for the time being a photograph is still the choice medium for the average social networker with a visual penchant. As such by buying up Instagram Facebook is not only ensuring they control a rival (albeit far smaller) social network, but it’s also claiming a large stake in the burgeoning user generated image marketplace, with the new acquisition already boasting 30million members and counting.
On top of this, as Instagram is used through mobile phones, Zuckerberg and Co have secured another tool with which to target the mobile media customer. It’s a hugely important step, as a large number of Facebook profiles are still only updated from a desktop computer. As such it’s clear there’s more to this than one company simply fancying a pop at photography-focused computer software. Furthermore, these points suggest that whilst there are never guarantees, the real value to the buyer here has potential to reach far beyond what was originally paid.