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updated 12/18/2012 6:16:10 PM ET 2012-12-18T23:16:10

Controversy over Instagram's revised Terms of Use exploded this week. Users were warned that under the new terms (which take effect Jan. 16), Instagram could sell their photos to other businesses for use in advertising — without giving users any say or any money.

But there is likely some confusion amongst users. While the new terms do grant  Instagram  the right to use photos for advertising — both profile photos and those posted in users' photo streams — those ads would be posted on Instagram only.

Late this afternoon (Dec. 18), Instagram posted a statement on its blog acknowledging the confusion and saying it does not intend to sell user photos for outside ads. It promised to clarify its new terms in the near future.

Ads on Instagram?

Now that Facebook owns Instagram, mobile ads are a distinct possibility.  Facebook  inserts ads into its users' newsfeeds, and a similar approach could be taken with its new acquisition. No business can survive without some revenue stream, and since users don't pay to socialize on any of the popular networks, they will see ads — and more of them. Instagram's new Terms of Use say only "Some or all of the Service may be supported by advertising revenue."

Facebook will make about $339 million on mobile ads this year, a figure that is expected to quadruple by 2014, according to analysts at eMarketer. The 100 million or so  Instagram users  have so far enjoyed an ad-free environment.

But the controversy may continue. Facebook has run into this problem before. In 2011, Facebook began using its members' photos in sponsored stories (ads that appear in the newsfeed) without offering compensation to the content owner or a way to opt out. Around 125 million Facebook users joined a class action lawsuit.

Earlier this month, the courts approved Facebook's $20 million settlement that amounts to about 2 cents per member. Facebook said it will give users more control over how their images are used, but members cannot directly opt out of being featured in sponsored stories. Rather, they can adjust their  privacy settings , so that only people allowed to see their photos would see sponsored stories that included the photos.

However, Instagram's new terms make it very clear that members may be tapped for sponsored stories both without compensation and without their explicit approval. But they still have some control over who would see these ads. While Instagram privacy settings can't be finetuned like Facebook's, Instagram users have the option to make their profiles private. A private account means that you must approve another user's request to follow you before they can see your photos. Only those who follow you would see ads using your photos. But if you like posting images for the world to see, then they might see ads with your photos, as well. Read more:  Why You Should Set Your Instagram to 'Private' .

If this rubs users the wrong way, they have only one option for now:

"If you do not agree to be bound by all of these Terms of Use, do not access or use the Service," Instagram states in the first paragraph of the new terms.

© 2012 TechNewsDaily

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