" Free" Internet Services

Everyone loves a free service, and there seems to be a certain expectancy that services on the Internet - be it news, games, music or even search - should be free. Most of these services fund their free services through a combination of

• Advertising revenue - although the one of the most popular plug-in for Firefox (and Chrome I think) blocks advertising
• Subscription for premier/exclusive content. This works if the content is truly niche - I used to subscribe to Autosport.com because of their exclusive articles on motorsport. My interest waned; so I cancelled the subscription - but it was definitely value for money.
• Donations and product sales - quite popular with online comics etc. and some people make a living out of it
• Subsidised by non Internet products - which is quite common with a number of media sites.

In addition to media services that are powered by "paid" employees (i.e. news sites, etc) there are also user generated content sites; which rely on people contributing their own "free" effort to generate and maintain content.

Occasionally, a service provider tries a different approach - and it is always interesting to see the commentary on the resultant changes. Instagram's proposed change in terms and the outcry from the change was quite illuminating in that respect. The terms of service were actually not that different - a number of different service providers, many notably cloud providers have similar clauses - but Instagram made the conditions quite clear and easy to understand unlike a number of other providers, whose terms on reusability of submitted content is buried deep in the legal text.

For example, see YouTube's terms of service (section 8), where the contect uploader gives YouTube royalty free rights to the submitted content to be used in whatever form YouTube wishes. Yes, YouTube doesn't say it can resell the the videos; but the license doesn't restrict it from doing so (after all making money would be consistent in "provision of Service").

8. Rights you licence
8.1 When you upload or post Content to YouTube, you grant:
A. to YouTube, a worldwide, non-exclusive, royalty-free, transferable licence (with right to sub-licence) to use, reproduce, distribute, prepare derivative works of, display, and perform that Content in connection with the provision of the Service and otherwise in connection with the provision of the Service and YouTube's business, including without limitation for promoting and redistributing part or all of the Service (and derivative works thereof) in any media formats and through any media channels; and
B. to each user of the Service, a worldwide, non-exclusive, royalty-free licence to access your Content through the Service, and to use, reproduce, distribute, prepare derivative works of, display and perform such Content to the extent permitted by the functionality of the Service and under these Terms.

In fact, the proposed model has already appeared in practice; though in the example neither the service provider nor the photographer made money. In his keynote at the Virtual Goods Workshop in 2008, Renato Iannella covered a similar case; covering the use of a flickr photo in an advertising campaign half a world away. The photographer had shared the content without restriction, but at the same time did not actually have the right to share the content in the first place! Instagram's proposed terms only addressed one part - the rights of the photographer; forgotten in the commentary was the rights of the subject!

xkcd captured the conundrum and some of the absurdity of the backlash in a brilliant analogy; but Instagram has backed down and the problems with financial models for these seemingly free services remain. So far, only Google has really cracked the code of making money from free services - but as companies like Facebook become accountable to shareholders for making money; maybe we should expect more similar terms?