Interesting piece on TechCrunch today about Instagram blocking a scraper that turns its data flow into RSS. Here's what I would do if I were Instagram and wanted to fend off competition from the open web on one side, and Twitter on the other.
3. It builds independence of Twitter, now, while they still have the market relatively to themselves. It will all change, dramatically, when Twitter introduces its own picture-sharing, integrated with their iPhone and iPad apps. The iPhone camera will appear to be part of Twitter.
PS: Refer to the schematic. Instagram is one of the etc's on the left side of the diagram.
PPPS: The mistake my VC friends make is they think it's either/or. Either you support the open web and are a charity, or you build a silo, monetize it, and get rich. What really happens is that the silos are eventually undermined by the open web. This happens when the market is choked with startups with nothing to lose. Some of them are going to successfully differentiate by offering users freedom. We're coming up to the part of teh cycle where the users value it. The opportunities to lock-in will come again, but first this cycle has to complete.