On an audience basis, Instagram is a huge hit. The photo-sharing social media site now has more than 100 million followers, up from 30 million followers about a year ago. But, as we know, this alone does not make Instagram a success. It also needs a business model to monetize its performance. This is quite important to Facebook, which invested a lot to acquire Instagram.
As reported by Victor Luckerson for Time: “A picture’s worth much more than a thousand words to Facebook. Last April, the social media giant agreed to buy the quickly growing photo-sharing social network Instagram for $715 million. The sky-high purchase price, well above Instagram’s $500 million valuation at the time, led some to wonder if Facebook was helping to fuel another tech bubble. A year later, the jury’s still out on whether Instagram will one day reap huge profits, but the company is laying groundwork to put the monetization machine in motion. By many metrics, Instagram has had an impressive year under Facebook. [Yet], despite the large growth numbers, it’s difficult to say whether Instagram has earned its price tag. The company earns no money and has not talked about monetization strategies its executives are mulling, though CEO Kevin Systrom has said that Instagram’s goal is to become a self-sustaining business.”
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