WhatsApp – the world’s most popular messaging app – which is owned by Facebook, the world’s number one social networking website, just went free! Purchased two years ago for a whopping $ 19 billion, it doesn’t look like the company has made much profits by charging people a fee of 99 cents, Moreover, taking under consideration the fact that most users who joined the service before the subscription fee was introduced, have been using the service free of cost since inception.
So why purchase a product for so much money, and not even try to monetise it? What does Facebook really want to do with the messaging app service?
The reason given by WhatsApp for discontinuing its annual subscription fee is that it hasn’t really worked out, as planned earlier. “For many years, we have asked some people to pay a fee for using WhatsApp after their first year. As we have grown, we have found that this approach hasn’t worked well,” said WhatsApp in a blogpost. Despite not being able to charge its hundreds of millions of users the annual fee, WhatsApp said it would not subject its users to advertisements.
“Naturally, people might wonder how we plan to keep WhatsApp running without subscription fees and if today’s announcement means we are introducing third-party advertisements. The answer is no,” added WhatsApp. Without clearly defining the revenue model, WhatsApp said it would test tools starting from 2016 which could replace text messages and phone calls mode of communication among people, businesses and organisations.
Communication between businesses and people using WhatsApp? Wait, doesn’t this already take place? It could either be a grocery store or even an e-commerce store which directly communicates with a consumer via a simple conversation via WhatsApp. Whether its company PRs, beauticians or tailors, don’t most of us already communicate using WhatsApp? If one can have business transactions for free and in the convenience of their own home, for free, why would they start paying for it?
Facebook also has another acquisition to its kitty – Instagram. Today, more then uploading a picture and sharing a moment, individuals/sellers post their products on the service along with their contact number and it’s done! Without spending a penny, a person sitting at home can set up a small business. Hence, communication between businesses and people using WhatsApp is already taking place, one way or the other. Again, why would one pay for it?
However, it could turn out to be beneficial for industry giants rather than small scale retailers. For example, Vodafone or HDFC Bank sending consumers a message via WhatsApp would find it more economical rather than a SMS push to its massive user data base. WhatsApp is a cheap alternative to carrier-billed text messaging via SMS, especially for international or group messaging, companies could reach a larger audience via WhatsApp and in turn, could also work out cheaper for them.