You're right that it's not a 1:1 analogy, as for example the National Geographic photos probably brought enough traffic by themselves to be useful for Instagram, if they could figure out how to benefit from traffic alone. But for most people Randall is spot-on, Instagram holds their photos and gets... ?

However the way Instagram went about these TOS changes, and their initial response are both comical examples of how not to handle stuff like this. I honestly think most understand the idea that Instagram can't host their photos forever without some way of making money from that, but the solution for Instagram can't be to expand the TOS to encompass every conceivable act and then try out solutions while saying "Oh, we pinky promise we won't do that vile thing".

Figure out the plan (or plans) first, then make the TOS fit the plan. And communicate with everyone involved during the process instead of presenting a fait accompli.