Merchant Innovation

WhatsApp Flips Subscription Business Model

WhatsApp’s 1 billion+ users will now save a dollar every year in return for popup notifications, as the Facebook-owned company moves to shift its subscription model to an ad-based business model.

“Today, we are announcing that WhatsApp is going to be free to users. We aren’t going to charge a dollar a year anymore,” said WhatsApp CEO and Cofounder Jan Koum to an audience of entrepreneurs and investors at the annual Digital Life Design conference in Munich, Reuters reported. “When we think about our philosophy of building something utilitarian, we kinda want to experiment with doing the same thing with businesses.”

The app-based company, which was acquired by Facebook for $22 billion in 2014, is now testing a notification process that would let airlines, restaurants and credit card companies directly interact with consumers on their phone’s notification layer.

“That could mean communicating with your bank about whether a recent transaction was fraudulent or with an airline about a delayed flight,” a company blog post said. “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.”

The idea behind WhatsApp’s change of business model, however, expands beyond better monetization of its platform, as the company said that its move would unlock a new user base, which, because of its subscription model, has so far been unable to access its service.

“Many WhatsApp users don’t have a debit or credit card number, and they [are] worried they’d lose access to their friends and family after their first year. So, 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,” the blog post said.

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