Jan Koum, founder of WhatsApp has stated that WhatsApp is planning to move away from its current business model to a new one. As per the new business model, WhatsApp will ditch its $1/year subscription fee, and will become a free service for end-users.
After Facebook acquired WhatsApp for nearly $22 billion 2 years ago, it was rumored that Facebook will monetize WhatsApp with ads. Facebook however, didn’t make any change to WhatsApp’s business model and decided to stick to $1 yearly fee after free use for first year.
According to Jan, WhatsApp’s current model isn’t working well for some people. Many users don’t have a credit or debit card. In such situations, users are unable to pay for subscription fees after one year of free usage. Koum has announced that WhatsApp will no longer charge fee from users and fees will be removed from different versions of WhatsApp in coming weeks.
Over the next several weeks, we’ll remove fees from the different versions of our app and WhatsApp will no longer charge you for our service.
New business model: WhatsApp will become free, but not with advertisements
According to a blog entry on WhatsApp Blog, WhatsApp is not moving towards monetization through advertisements. Rather, WhatsApp will introduce means through which, users will be able to communicate directly with businesses using WhatsApp. If implemented as intended, users will be able to receive notifications about transactions from their bank, or from an airline about delayed flight, for instance.
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.
WhatsApp’s new business model makes two things clear: First, they will not charge anything from end-users and their current WhatsApp experience will not change. Second, they will introduce deals with businesses and allow them to easily communicate with their customers through WhatsApp, in return of money.
While this looks simple at first, it is worth giving a thought whether businesses will be interested in communication through WhatsApp. Currently customers and businesses communicate with other means like text-messages and phone calls. WhatsApp must offer more convenient, cheaper and easier way of communication to lure businesses.
WhatsApp: Soon to reach one billion monthly active users
WhatsApp’s current monthly active user-base is about to reach one billion. This could be a good reason for organizations to use WhatsApp as their medium of communication. It should be also noted that Internet connectivity is still a luxury to many. Just like many users don’t have credit or debit card, it is possible that users may have phone-connectivity but no Internet. In such areas of service, businesses will still need to use current way of communication. Which means they will have to invest in multiple way of communication.
If successful, WhatsApp’s new model will attract other rival apps to introduce similar services too.
It will be interesting to see where WhatsApp’s new business model will head. One thing is clear though: wherever it is headed, it will surely be beneficial to end-users.
What are your thoughts about WhatsApp’s new business model? Will it benefit users? Will it benefit WhatsApp itself? Will businesses join hands with WhatsApp? Let us know in comments.