Most popular messaging services are free to use. Even Facebook-owned WhatsApp is free for the first year you use it, with the hope that you’ll stick around and pay a $1/year subscription fee from then on. But today the company realized that this is a silly idea and it’s time to figure out another way to make money.
“For many years, we’ve asked some people to pay a fee for using WhatsApp after their first year,” reads a blog post on the WhatsApp site. “As we’ve grown, we’ve found that this approach hasn’t worked well. Many WhatsApp users don’t have a debit or credit card number and they worried they’d lose access to their friends and family after their first year.”
The company says it will be rolling out the fee removal over the course of the coming weeks.
At only $1/year, it might seem like the company isn’t giving up much by ditching the fee. However, at nearly a billion users, you’re looking at hundreds of millions of dollars a year in gross revenue that won’t be collected. Given that Facebook paid $19 billion (with a “b”) to purchase WhatsApp not even two years ago, the company is going to have to figure out some way to make money.
The most obvious route would be advertising, but WhatsApp says it’s not going to follow the lead of its parent company and pepper you with ads, or at least not ads in the way you think of them.
“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,” writes the company. “That could mean communicating with your bank about whether a recent transaction was fraudulent, or with an airline about a delayed flight.”
Basically, WhatsApp is hoping that other companies would be willing to foot the bill for services that you already get through existing (and free) messaging services. The idea appears to be that WhatsApp could provide users a more all-in-one experience, while giving the companies a more efficient way to reach customers than just blasting out to phone numbers. Facebook already offers a similar service to businesses; WhatsApp did not explain how its plans differ.