instaUpdate — Instagram now says it was all a huge mistake, that users own their pictures and there’s no way Facebook is going to sell them to anyone… but the company hasn’t yet revealed alternate legal language, which they should have been able to cobble up in an hour or two. The underlying problem of mean-spirited, self-serving, over-reaching terms of service is still with us at Instagram and almost everywhere else. Their revised terms of service were stupid and couldn’t stand. Let’s hope in their next attempt to grab rights (because that’s what this whole thing was about and probably still is) Instagram and Facebook treat their users fairly. Until they do, most of what’s below still stands.

By now most of us have read or heard that Instagram (now part of Facebook) is proposing a change to its terms of service to allow the company to use your pictures and mine in any fashion they choose, including selling the pics to third parties. So if you don’t want your baby pictures to risk being used in a beer ad, we’re told, you should close your Instagram account by January 15th. One pundit called this move Instagram committing suicide, but I think something else is going on.

Can’t you just see the meeting at Facebook in which this idea was first presented? “It’s a whole new revenue stream!” some staffer no doubt howled. “If our users are oblivious or stupid enough to let us get away with it, that is. Maybe we can sneak it through over Christmas.”

We’ll see shortly, won’t we?

This is like the story my sister tells of when she worked in the legal department at EsMark (Smith Premium Hams and other food brands) where they once tried to trademark the term soup. Lawyers with time on their hands will come up with the craziest things to burn billable hours.

Then there’s the two steps back, one step forward theory. This theory suggests there are actually two land mines contained in the new terms of service and Facebook’s plan is to cave on one while trying to scoot the other one through unnoticed. Click on the link above and see if you can find the second bullet.

Finally there’s the exit strategy theory, in which Instagram founders, now headed out the door with their $1 billion, have left a booby trap behind to destroy their creation so it won’t be an obstacle to their next very Instagram-like startup.

My money’s on soup.