WhatsApp founder Jan Koum announced Monday that the company is dropping the service’s annual subscription fee in an effort to remove the barriers some users faced in using the service.
“It really doesn’t work that well,” Koum said Monday, speaking at the DLD conference in Munich. He noted that while a buck a year might not sound like much, access to credit cards is not ubiquitous. “We just don’t want people to think at some point their communication to the world will be cut off.”
WhatsApp has always been free to download and use for the first year. In fact, original users of the app, who joined WhatsApp when it started out six years back, were given a free lifetime service. But in recent years, the company introduced a subscription fee of 0.99 cents after the first free year. Reports are that it may be a few weeks before the payments infrastructure is completely out of all versions of the app. And, in case you were wondering, you won’t be able to get back your buck if you have already paid for this year.
Now, if you are thinking that WhatsApp will now introduce third party Ads into the App, it’s not true. It will remain as clear as ever. But then how will they generate the revenue and stay afloat? Although the subscription fee of 0.99 cents wasn’t that big, but considering the 990+ million users, the company generated a huge amount for the company to keep it add free.
WhatsApp is FREE, but here lies the catch, there is a twist in the tale!
The hugely popular Facebook-owned app plans to introduce a worrying new revenue stream to replace the yearly cost to users. As far as a new business model, WhatsApp says it will explore ways businesses can use the service to connect with individuals, but said the goal is to avoid spam and unwanted advertising.
Here’s what WhatsApp is saying about that, according to a company blog post:
Naturally, people might wonder how we plan to keep WhatsApp running without subscription fees and if today’s announcement means we’re introducing third-party ads. The answer is no. Starting this year, we will test tools that allow you to use WhatsApp to communicate with businesses and organizations that you want to hear from. That could mean communicating with your bank about whether a recent transaction was fraudulent, or with an airline about a delayed flight. We all get these messages elsewhere today – through text messages and phone calls – so we want to test new tools to make this easier to do on WhatsApp, while still giving you an experience without third-party ads and spam.
This strategy might sound familiar. It’s the same idea behind Facebook Messenger, the company’s other standalone messaging service. With Messenger, Facebook already offers users the chance to chat with businesses, and it’s building out other features, like payments or the ability to hail a ride through Uber.
Koum said businesses are already finding ways to use WhatsApp to reach customers, but said the company could make this a lot easier. He said that the company wants to experiment with different approaches but added, “We haven’t written a single line of code yet.”
Mr Koum admitted they have not settled on a final plan yet, but as it stands, it appears WhatsApp will charge multi-national companies to conduct customer service chats and calls via WhatsApp.
For example, an airline could use the app to contact customers about a flight cancellation or upcoming delays.
On Facebook’s second quarter earnings call last year, CEO Mark Zuckerberg likened the approach on WhatsApp and Messenger to what Facebook did in 2006 and 2007 while some were calling for it to move to banner ads.
“What we decided was that over the long term, the ads and monetization would perform better if there was an organic interaction between people using the product and businesses,” he said. “So instead of focusing on ads first, what we did was we built pages, and we made that free. That way as many businesses as possible could get into the network.”
Then it built analytics and finally it added the business opportunity on top of that and Zuckerberg suggested the same would be true for the messaging products.
“The long-term bet is that by enabling people to have good organic interactions with businesses, that will end up being a massive multiplier on the value of the monetization down the road when we work on that and really focus on that in a bigger way,” he said. “So we’d ask for some patience on this to do this correctly, and the game plan will be more similar to what we did in Facebook with News Feed.”
So, what Facebook-WhatsApp is showing you as FREE, is playing with your privacy and using your data to generate revenue from Businesses. Some might call it managing and using BigData efficiently, but we the users might end up getting unneccessary calls and chats within the App! Someone might have to come up with a DND for WhatsApp as well!!