Loyalty

Arguably, Instagram has the most loyal user base around. They’ve created a perfect storm: iPhone exclusivity, emotionally engaging service, robust community, it’s extremely unique. The daily encounters on Instagram are far more intimate than what’s available on twitter, flickr or facebook. And due to the vastly diverse user base, much more valuable. These valuable interactions — combined with the addictive nature of sharing photos — are what elevates the core experience on Instagram. It’s what keeps people coming back. There’s something very emotionally rewarding about viewing and sharing pictures of your life with like-minded people. ¹

It’s OK to Charge for Things

Among all the free services I use, Instagram is one that I would happily pay for. The fantastic business model of worrying about money later while going after market share first has run its course.

Camera+ — an app I commonly use alongside Instagram — does exactly what I think Instagram should do to start generating some revenue. Camera+ is a 99¢ camera and picture editing application. Many of the image editing features are free. However, a special set of filters — which also happen to be the most desirable — are available for sale as an in-app purchase. Instagram should do the exact same thing.

There should be a continuous flow of new filters being made available to the Instagram community as in-app purchases.

Make people need to have every single filter you release. Create demand. Charge 99¢ for individual filters, and sell packs of three for $1.99. Simple. There should be no question as to whether or not people will pay for them. As explained above, don’t mess with the core experience and the loyal community will embrace any effort to generate revenue. Often times, startups feel the need to publicly rationalize their monetization strategies. Instagram wouldn’t need to explain a thing. Launch new filters. Make money. Nobody would question it. ²

Distribution

Instagram has made public comments about developing an Android application. The Instagram team is smart. They know they’ll never be able to match the user experience found on iOS devices with their Android app. Most likely, this revolves around nothing else but wanting more users. However, unless Instagram has grand plans to unveil an advertising strategy, a larger Instagram community does not explicitly equate to making money. Historically, free services that scale too quickly, ultimately rely on lesser-than-great advertising strategies. The folks running the ad-sales for these various companies obviously think their ideas are incredibly innovative. But they never are. It hasn’t happened yet and I’m not sure it ever will. People just don’t like ads.

As of December 2011, only six (or seven) people worked at Instagram. While very impressive, a small team doesn’t lend itself well to a strategy that is geared towards drastically increasing market share.

An Android app would flood the Instagram community with new members. Yes, some would be valuable (I can think of a few good friends — Android users — that I’d love to see on Instagram), yet how many would be nothing but noise? Should we look to the Android Market for that answer? ³

This is a critically important decision that Instagram needs to make. The risk in releasing an Android application — and having the iPhone community revolt due to a complete shock to the core experience — seems too high for comfort. Do they want huge market share? Or do they want to run a premium and profitable service? Do they want to be more like Microsoft or more like Apple?

Operations

As new Android users flood Instagram, the daily demand on Instagram’s team will inevitably increase. They will be responsible for maintaining two completely separate versions of the application, on two completely separate (and competing) development platforms. Even less reassuring, Android is known for having debilitating fragmentation problems.

The size of Instagram’s general business operations will increase. The infrastructure will grow. Costs will go up. There’s no way around it. Twitter has already made a lot of these mistakes. They continue to destroy their service in the hopes of finding a magical advertising solution. The key would have been to keep the service pure and utilitarian. Instead, they went the opposite route. Their mobile apps have tanked in reviews. Users have switched to third-party clients in droves. Top talent that originally helped establish the product has all but vanished. For twitter, getting advertisers on board is now their top priority. For the sake of the Instagram community, I hope we never see the service make some of the mistakes that twitter has recently made.

Moving Forward

First, Instagram needs to focus on making the iPhone app profitable without disturbing its current and devoted user base. Android users haven’t made Instagram the success that it is today. Google hasn’t had a role in any of this. Let them wait until the business model works. Make yourselves profitable. Then consider other platforms.

Take the Apple route of doing business. Maximize profits. Be happy when your market share increases by half a percent, but don’t let it drive the direction (and spirit) of the company. The service is too valuable to be exploited by the masses and made to work on all devices. That would be such a shame. Part of the inherent beauty behind Instagram, is that you know the person on the other end of that photo is holding an iPhone. Once that is lost, the service will forever be changed.

Charging for things should not be a scary thought for the Instagram team. Having a good amount of paying customers is better than having a ton of free users.

Ideally, one day in the future, when Instagram is steadily maximizing profits from its iPhone user base, the idea of an Android application can be explored. The strategy should be meticulously thought out, and the possibility of keeping the communities separate should be evaluated. People choose Android for a reason. And people choose the iPhone for a reason. It’s just the way it is.

Instagram, your service offers something no other service does. It’s truly a little slice of heaven. Please, don’t screw this up.