Facebook-owned most popular messaging app WhatsApp announced today that it’s dropping its 99 cent(USA) and about Rs 50-55 in india annual usage fee, founder Jan Koum said at DLD in Munich.
While the service is already insanely popular – with more than 900 million active monthly users – Koum says that removing the payment requirement could help it to grow even further. It’s not a lot of cash for a year of service, but it does mean that users need a payment card on file, which might be tough for some people in developing markets.
Before, a user’s first year of use was free with subsequent years charged. Now, there will be no charges for the service from users going forwards.
Of course, this leaves question marks over how WhatsApp will be monetized. Traditionally, Facebook makes money from its products by harvesting data and selling ads, but this isn’t an approach that’s likely to be welcomed by many users, and with no shortage of other messaging apps around, there are plenty of alternatives available if the company goes down this route.
WhatsApp says it’ll explore ways that let users communicate with businesses and other organizations for its future monetization but Koum noted that it is very early days – no code has been written to facilitate this change yet.
The company still wouldn’t commit to whether it will add video calling in the future or not.
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 that “We haven’t written a single line of code yet.”
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.”