Since seed investments continue at a breakneck pace, and since instagram sold at many multiples of any revenue stream their existing service could have provided, I don't see much chance of startups realizing they have to change.
Likewise, user complaints are a tempest in a teapot. Does it matter to anyone how angry you are about the downward spiral of your favorite service? I actually think people enjoy their righteous indignation and are nowhere near being mad enough to consider not using the next cool free service.
Startups don't have to realize that they need to start monetizing right away.
Companies that buy startups need to realize that if they buy a startup that has only free users who aren't looking at ads, they might not be buying what they think they're buying. Because those millions of users have all been trained to expect to enjoy the service for free. So when you buy a company for its user base, you need to consider that free users are not worth what paying/ad-viewing users are worth, and if you try to charge or show them ads without creating more value for them in return, many of them might leave.
If companies that buy startups realize this, then the startups themselves will start monetizing right away, because it will be the only way to get acquired.
I think Facebook knew exactly what they were buying: a hedge against disruption by the strongest startup in the fastest growing area of relevance to Facebook, mobile photos.
I also don't think Facebook gives a shit about a lot of hand-wringing hipsters. They've been creating bad press with their decisions for years, I hardly think this little impotent uprising will ruffle their feathers.
Yes, it's also a strong possibility that Facebook didn't buy Instagram for its users, but bought Instagram simply because they didn't want to compete against Instagram.
Likewise, user complaints are a tempest in a teapot. Does it matter to anyone how angry you are about the downward spiral of your favorite service? I actually think people enjoy their righteous indignation and are nowhere near being mad enough to consider not using the next cool free service.