Sharing Decline Blurs Instagram’s Picture

The size of the decline in Instagram’s original sharing couldn’t be learned, although it wasn’t as sizeable as Facebook’s double-digit year-over-over decline in posting of original content between 2014 and 2015, one person familiar with the data said. It’s also not known whether the decline has continued in recent months.

Instagram recently has considered releasing new products to promote sharing and engagement, such as live video, 360-degree video and resharing images, said several people briefed on those plans. It’s unclear whether those features will be released, but they would represent significant changes for an app reticent to make big product changes.

Instagram’s recent switch to an algorithm-based personalized feed was partly aimed at combating the sharing decline, say people familiar with the situation. The algorithm means users have seen more posts from their friends than celebrities or brands. Instagram has noticed that people share more when they see more of their friends’ posts, said one of the people. The company has also streamlined the number of steps it takes to post a photo, and launched utilities so users can post photo collages and looping and time-lapsed videos.

Instagram wouldn’t comment on the decline in sharing, or say whether it’s trended upward so far this year. A spokesperson said that people are liking more posts and commenting more frequently since the algorithm rolled out in May.

Looking Healthy

Overall, usage of Instagram is looking healthy. The number of monthly active users hit 500 million last week, up from 100 million in 2013. Sixty percent of monthly users now open the app every day, up from 50% at the beginning of 2013. The amount of time that people spend on Instagram also has held steady since 2014 at an average of 21 minutes per day, the company says.

In terms of its business, Instagram is projected to generate about $1.5 billion in ad revenue this year, its first full year of a big ad push, according to a person familiar with Instagram’s finances. That would meet internal expectations set by Facebook executives. Instagram has a big moneymaking advantage over many competitors in that it can use the same sales strategies and advertising technology as Facebook. But maintaining its ad sales growth will hinge on its success as a social platform.

The sharing decline suggests more people are browsing through photos on Instagram, rather than taking photos with it. And that underlines a major competitive threat facing Instagram: its battle with Snapchat, an app whose design makes it easy for people to take photos and share them with friends. The two have fundamentally different styles. Launched in 2010, Instagram was initially designed to make posting photos more enjoyable, as Instagram’s filters make amateur shots look high quality. Snapchat, launched a year later, takes a more lighthearted approach by letting people add cartoony features to photos although it has filters to improve look of the photos.

There are signs young people are using Snapchat more. Last December, for instance, Instagram had more U.S. users in the 18 to 34 year old age group, according to comScore, but Snapchat racked up a slightly higher average number of minutes of usage in the month. Snapchat users spent 332 minutes while Instagram users spent 317 minutes. Other apps like Musical.ly and its live streaming app Live.ly are also grabbing more young eyeballs, shooting to the top of app-store charts in recent weeks.

CEO Kevin Systrom has traditionally resisted heavy changes to the app, former employees say. But he’s brought in a new band of leaders for the product team recently. In March, Mr. Systrom recruited former Twitter executive Kevin Weil as Instagram’s new vice president of product to replace Peter Deng, who went to Oculus. Former Yahoo product director Robby Stein was brought in as a product lead.

Instagram’s recent switch to an algorithm-based personalized feed was partly aimed at combating the sharing decline.

Rocky Time

Instagram, which has roughly 400 employees, has had a rocky time trying to get more free-flowing user behavior in recent years after it tested out ephemeral products. In 2014, Instagram killed its short-lived app that launched in a few countries its app Bolt that allowed people to share photos and video with one tap. Its direct-message feature inside the app, Instagram Direct, launched a few years ago but had also struggled to take hold. A spokesperson said the feature is now getting heavy usage, but declined to share specific numbers.

Declines in sharing appear to be the new normal for feed-based social apps that Instagram has to adapt to. Twitter may be the best example. Over the past 18 months, the app has seen about a 10-percentage point drop in the number of users worldwide who said they tweeted or retweeted in the last month, according to the social media survey company GlobalWebIndex. The company’s stock then fell after reporting an overall decline in users earlier this year.

Facebook looked to fight the potential threat this year by prioritizing live video and inserting prods to post into News Feed. Facebook also announced Wednesday that its main app would prioritize posts by friends and family over media companies, likely to help boost original sharing at the flagship app.

Instagram is a different animal than Facebook that runs its product and growth teams separately, and tends to refine older features rather than launch new ones.

Leaders may now have to decide whether more of Instagram’s product and growth strategies need to follow Facebook’s lead—and Snapchat—too.

—Amir Efrati contributed to this article