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Will Instagram eat the stock photo biz?

December 18, 2012: 3:57 PM ET

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Are social photo apps laying out the roadmap for killing off companies like Getty?

FORTUNE -- Some Instagram users are in full-filtered panic mode today, after the digital photo-sharing company altered its terms of service. Basically, Instagram will allow sponsors to promote user content and associated data. So if you upload a photo of your Awesome Pretzel Chicken Tenders, don't be surprised to see it featured in the Instagram feed of Guy Fieri's American Kitchen & Bar.

As Nilay Patel points out, this is very different from Instagram selling user content to third-parties without any rules on how its used. Instead, it's closer to what Facebook (FB) does with sponsored posts. Makes sense, given that Facebook owns Instagram.

But I do have to wonder if this is the first step toward social media killing off the traditional stock imagery business. And if I'm The Carlyle Group (CG), which paid $3.3 billion to buy Getty Images just two months ago, I'd be nervous.

Imagine, for a moment, if Instagram had made this offer to users: You can opt in to a program that lets us sell your photos to third parties, and in exchange we will give you 10% of the revenue. You'll also get photo credit, if the image is sold to a news agency.

Wouldn't this present a major challenge to a company like Getty? Particularly on the digital side, where Carlyle already has acknowledged the company needs to step up its game.

To be sure, Getty offers images taken by professionals. But who's to say that a couple amateur sunset shots aren't just as good? Or that one smartphone shot from next month's presidential inauguration won't come out great? Or, again, those Awesome Pretzel Chicken Tenders?

And if Instagram is able to sell its photos for significantly less than Getty -- and perhaps offer a similar subscription service -- then social media could seriously eat into the stock photo business.

Again, Instagram isn't going there. Yet.

A Getty spokeswoman said that the company would have some related comments tomorrow, but could not share any thoughts today.

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About This Author
Dan Primack
Dan Primack
Senior Editor, Fortune

Dan Primack joined Fortune.com in September 2010 to cover deals and dealmakers, from Wall Street to Sand Hill Road. Previously, Dan was an editor-at-large with Thomson Reuters, where he launched both peHUB.com and the peHUB Wire email service. In a past journalistic life, Dan ran a community paper in Roxbury, Massachusetts. He currently lives just outside of Boston.

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