Facebook's WhatsApp Drops 99 Cent Annual Fee, Rolls Out Biz Tools
During a session at the DLD (Digital-Life-Design) conference in Munich today, WhatsApp co-founder Jan Koum announced that his company -- which has now reached nearly 1 billion users -- would stop charging subscription fees. Instead, the Facebook-owned tech firm appears to be aiming at growing revenues by rolling out new paid tools for businesses and other organizations.
Koum made his comments during his on-stage discussion at DLD, "Whats Up WhatsApp? Two Years after the Big Deal." (The "big deal" was Facebook's acquisition of the company in 2014 for $19 billion.)
"I think the relationship with Facebook has helped us focus on growth," Koum said. "At the same time, we're able to maintain our independence, which was kind of part of the deal." He added that WhatsApp still operates like a startup, building a product the way it wants to build it.
Fee Model 'Doesn't Work That Well'
In the two years since WhatsApp became a Facebook property, the company hasn't had to put a lot of time and effort into monetization, Koum said. By this point, the firm has learned that the model of making its service free for the first year and then charging 99 cents a year thereafter "really doesn't work that well," he said.
That's because many of WhatsApp's users, particularly in developing markets, might not have bank accounts or credit cards to handle even small subscription fees. Rather than have such users worry that their communication service will be cut off, WhatsApp has decided to phase out the 99-cent charge "over the next couple of weeks," Koum said.
So how will WhatsApp be able to begin making money? Koum and co-founder Brian Acton have long made it clear they don't like the advertising-based revenue model, so the company intends to explore what Koum calls "commercial participation," that is, bringing businesses on board with paid services that complement WhatsApp's current consumer focus.
Testing Tools for Business Communication
"[P]eople 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 company said today in a blog post. "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."
During today's discussion at DLD, Koum said he envisions that WhatsApp will eventually enable users to avoid the difficulties currently involved in simple business transactions such as, for example, calling restaurants to make dinner reservations.
Today, a person might have to pick up the phone and leave a voice message if a restaurant hasn't opened yet, then wait for the restaurant to call back and -- most likely -- leave a voice message as well, meaning there's a lot of potential back-and-forth communication before a reservation can actually be made and confirmed, Koum noted.
"It's not a great user experience," he said. Just as WhatsApp currently lets users quickly and easily communicate with friends and family members, "we kind of want to experiment with doing the same with businesses," he added. "I personally just hate phone calls in general. If I can just message a business and get my point across, that would be great."