http://gizmodo.com/5969572/instagram-we-dont-want-to-sell-your-photos
Still, Instagram points out that it's a business and that as a business it does probably one day or another have to sell advertising. The intention of changing the policy wasn't to suddenly appropriate your photos or sell them, but to open the door for better advertising on Instagram.
But let's take a look at what the TOS actually says. This is the
relevant passage about your photos and content as they relate to advertising/a>:
Some or all of the Service may be supported by advertising revenue. To help us deliver interesting paid or sponsored content or promotions, you agree that a business or other entity may pay us to display your username, likeness, photos (along with any associated metadata), and/or actions you take, in connection with paid or sponsored content or promotions, without any compensation to you. If you are under the age of eighteen (18), or under any other applicable age of majority, you represent that at least one of your parents or legal guardians has also agreed to this provision (and the use of your name, likeness, username, and/or photos (along with any associated metadata)) on your behalf.
Basically, Instagram can take your photos, username, location data, and actions and place them very near an advertisement for something else. The only thing Instagram can't do is modify your photo and incorporate it with the ad itself. Instagram doesn't need to tell you and it doesn't need to pay you, it can just do it. For all intents in purposes it can turn you into an advertisement.
Systrom doesn't come out and say that Instagram won't do this and instead serves us a nice bunch of babble:
To provide context, we envision a future where both users and brands alike may promote their photos & accounts to increase engagement and to build a more meaningful following. Let's say a business wanted to promote their account to gain more followers and Instagram was able to feature them in some way. In order to help make a more relevant and useful promotion, it would be helpful to see which of the people you follow also follow this business. In this way, some of the data you produce - like the actions you take (eg, following the account) and your profile photo - might show up if you are following this business.
Well that's still unbelievably vague.