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WhatsApp removes subscription fee in favor of new business model

Facebook-owned WhatsApp popular messaging service announced it is removing it’s $1 per year subscription fee. The company will set up a new business model.

The news comes straight from WhatsApp founder and current CEO Jan Koum. He announced it at the DLD conference in Munich. “We’re going to get rid of the $1 subscription. We haven’t written a single line of code, but we want to make sure people understand this is not about ads in the product,” he says, quoted by TechCrunch.

While a dollar per year may not seem much, Koum has valid reasons for his decision. “We just don’t want people to think at some point their communication to the world will be cut off”, he adds quoted by Re/Code. But there’s more to it than just that. He also says handling credit cards can be difficult and it’s too much hassle for a dollar.

Plus the chat app field is now very crowded. Almost all of the other apps, like Telegram, Snapchat, WeChat, Viber, Messenger and so on, are completely free to use at least for their main service. It doesn’t make sense for WhatsApp to be the only one that wants money for the core service.

Koum announced that the app will stop charging users immediately, although it will take some time before the payment feature is fully removed from the app. So what will the company do? According to Koum there is a whole new business model being set up at the moment. He doesn’t reveal much details, but says allowing businesses to communicate with their end users is one possibility.

This is part of what WhatsApp announced on its official blog:

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.

Currently WhatsApp has about 990 million active users per month. The app is set to crack 1 billion users very soon. By comparison, Messenger, also owned by Facebook, has about 800 million users and it is also building a whole set of business-related features. While it’s not exactly clear how will WhatsApp handle future monetization, so far it seems that Facebook hasn’t made a mistake by shelling more than $22 billion for the app in 2014.

Image credit: Flickr (CC) / Microsiervos