Picture posting service Twitpic has apologised for seeming to claim copyright on every image users upload.
A row blew up over photographs on Twitpic following changes made to the service's terms on 10 May.
Many users cancelled their Twitpic accounts because the changes implied that the site was claiming the right to sell pictures without permission.
Twitpic defended itself and said the new rules were intended to protect users' photos from abuse by the media.
Twitpic founder Noah Everett apologised via the company blog for the "lack of clarity" in the updated Terms and Conditions.
Mr Everett stressed that Twitpic account holders own the copyright on the images and said the terms had been changed again to show "that you still own your content".
However, by signing up to Twitpic users also agree to let the service distribute their images to the company's partners.
This clause was needed, said Mr Everett, because as Twitpic has grown, a lot of the pictures that people post to it have found their way into reports about newsworthy events.
One of the most famous images posted on Twitpic came from January 2009 when a US Airways jet crash landed on the Hudson river.
By changing the terms, Twitpic hopes to limit this abuse. In this vein it recently signed an exclusive deal with the Wenn news group to syndicate images posted on Twitpic.
The apology and re-write of the terms came too late for many who said they had deleted their accounts and removed their photos.
Evidence of how strongly people felt about the issue was seen by the hashtags #twitpic and #delete trending in conjunction on the micro-blogging service.
Many also felt that the explanation did little to clear up the ambiguity over who would profit from a newsworthy photo. Mr Everett was pressed for a clearer statement via his account on Twitter. So far he has not replied.
Jim Killock, director of the Open Rights Group which campaigns on digital liberty issues, said such cases were becoming more common.
"There's a steady stream of virtual land grabs like this," he said. "But companies should remember that unreasonable terms and conditions may not be enforceable, and that in any case, customers can leave when they stop trusting a commercial service."
Twitpic's terms and conditions are similar to those of many other Twitter picture services such as Yfrog, Flickr and Instagram which all give those firms the right to redistribute images.
The row prompted MobyPictures to change its terms to include a specific clause which says it will not try to sell users' images.
Twitpic is not the first new media company to irritate its users by changing their terms and conditions. Facebook has weathered several controversial changes as has Apple, Flickr and Google.