Facebook's New Message to WhatsApp: Make Money (wsj.com) 75
Deepa Seetharaman, writing for WSJ: Four years after Facebook bought WhatsApp for $22 billion, it is formally starting the messaging app on a new mission: bringing in revenue. WhatsApp on Wednesday detailed plans to sell advertisements and charge big companies that want to reach their customers through its service [Editor's note: the link may be paywalled: alternative source], launching its first major revenue streams as growth at Facebook's main app is starting to decelerate. The measures are aimed at connecting businesses with WhatsApp's user base of roughly 1.5 billion accounts, WhatsApp executives said.
The announcements follow disagreements between Facebook leaders and WhatsApp's co-founders, Jan Koum and Brian Acton, over how to monetize the popular, free service. Mr. Koum and Mr. Acton resisted efforts to put ads in WhatsApp, and over the past year both men have decided to leave Facebook and the messaging app they started in 2009 -- a breakup that was the subject of a Page One article in The Wall Street Journal in June. [...] Next year, WhatsApp plans to show ads in its Status feature, company officials told the Journal. Status allows users to post montages of text, photos and video that appear for 24 hours -- similar to an Instagram tool called Stories. About 450 million people use WhatsApp Status, compared with about 400 million who use Instagram Stories, which already shows ads.
The announcements follow disagreements between Facebook leaders and WhatsApp's co-founders, Jan Koum and Brian Acton, over how to monetize the popular, free service. Mr. Koum and Mr. Acton resisted efforts to put ads in WhatsApp, and over the past year both men have decided to leave Facebook and the messaging app they started in 2009 -- a breakup that was the subject of a Page One article in The Wall Street Journal in June. [...] Next year, WhatsApp plans to show ads in its Status feature, company officials told the Journal. Status allows users to post montages of text, photos and video that appear for 24 hours -- similar to an Instagram tool called Stories. About 450 million people use WhatsApp Status, compared with about 400 million who use Instagram Stories, which already shows ads.
Re: (Score:3)
The people using WhatsApp are doing so in part with the knowledge that there doesn't appear to be any snooping going on. Adding ads to the service would pretty much destroy that reason for using it
Are you saying there can't be ads without snooping?
Re: (Score:2)
Are you saying there can't be ads without snooping?
HAHAHAHAHAHA.
Re: (Score:2)
You don't need to spy on your users to show them ads. It will only be non-targeted ads.
Re: (Score:2)
Also, giving back the money is hardly an option. I doubt very much that there was a line in the contract allowing for backsies.
Its not about taking whatsapp back from FB, they claim to be morally outraged while sitting in the palaces that selling out bought. Give the money to charities, then they can complain.
The problem here is that FB was foolish enough to buy a service like WhatsApp without having a viable strategy for making money. The people using WhatsApp are doing so in part with the knowledge that there doesn't appear to be any snooping going on. Adding ads to the service would pretty much destroy that reason for using it, at which point there's numerous other possibilities, some of which already have traction.
Its the typical silicon valley process: 1) Get Users 2) ??? 3) Profit. I guess in Facebooks defense we all thought they were insane for buying Instagram for $1-billion.
Re: (Score:1)
They donated $50M of that money to competitor Signal.
sell fake news ad's and vote trump ad's (Score:1)
sell fake news ad's and vote trump ad's
Re: (Score:1)
Re: (Score:2)
I'll counter with my plan:
1. Create genius idea
2. Get bought by facebook
3. Swim in my money
Business in the 2010s (Score:5, Insightful)
Step 1: Spend bazillions on a company that has not made profit.
Step 2: Demand magic profit.
Step 3: ???
Step 4: Divestment, the idea of profiting to the tune of the value of these unicorns is utterly absurd.
Re: (Score:2)
hehe spend bazillions because some magic fairy said you got it...now that fairy said, oops you don't.
They did have a revenue model. (Score:1)
Before the FB acquisition, WhatsApp used to have a subscription model: $1/year and the first year was free.
Cue the 'we can't all afford $1 a year' complaints.
Re: (Score:2)
$1 per year? Are you insane, that's 8.333 cents per month!
Re: (Score:2)
People don't "complain about 1USD". They just quit the service.
Guess what happens to IM service that has no people.
Re: (Score:2)
If you think that personal data of people using IM isn't worth money, I have a bridge on the moon to sell you.
Re: (Score:2)
They HAD a great way of making money (Score:5, Insightful)
When I first signed up for WhatsApp, they had a great way of making money -- 1 year free, subsequent years $1/year. I was so excited when I saw that -- FINALLY, a platform that will just let me pay to use it, rather than trying to spam me with junk and sell my information!
When FB bought the company and cancelled the yearly fee, I knew it was only a matter of time. I'm mostly surprised it took them so long.
Re: (Score:2, Troll)
When I first signed up for WhatsApp they had a great way of making money too. It was free. And the amount of money though brought in covered the costs of the weekend spent coding an instant messenger.
Re: (Score:2)
If you think coding an app that's used by literally billions of clients is a weekend's work then you should probably dust off that C++ book from 20 years ago and remember what it's like to develop.
Hell, even just assuming they used Signal's protocol unmodified and only had to build the UI it's still more than a weekend's work.
Then let's not forget the server infra to support the ... trillions of messages and billions of pictures sent *daily*. If someone could build that in a weekend they'd be the Steve Job
Re: (Score:2)
Yeah, I might have been exaggerating a bit. The iPhone version of What's App was written by a Russian guy they hired from rentacoder.com. I don't know how long it took him to write it, but there are lots of tutorials that use making an XMPP IM app as an example. Add a bit of extra time to do the RAD GUI development (also lots of tutorials).
The Blackberry port apparently took two months.
You know Steve Jobs wasn't a programmer right?
Re: (Score:2)
Yes and no. $1/yr is actually annoying to process - any customer service around it quickly exceeds the revenue. Billing, CC processing, and similar fees take a large chunk of such small transactions as well. There's a lot of ill-will that 'free until you depend on it' generates and TBH I think their $1/yr fee was a placeholder pending acquisition.
I do agree though, I wish I had the option to opt-out of ads for a $ fee on multiple platforms. Then you'd also get an idea of what the per-user revenue is for
Re: (Score:2)
Is it really so ubiquitous? I never used it and all my friends are on either iPhone, iPad or Mac - except for one who's using Windows and I contact him via Google Talk (at least that's what iMessage calls it in the input window).
If all your contacts are on Whatsapp, then yes you're boned. Just like I'm boned if I ever leave Apple.
Re: (Score:1)
Ypu're probably from the US, the only country where telco's introduced affordable unlimited sms plans in time to prevent WhatsApp and others from taking over the market. When WA came, sms costed here $0,10 per message and MMS $0,50. Now, SMS is cheaper but hardly used and MMS is phased out because noone uses it anymore. WA is abundant.
Re: (Score:2)
Canada, where I have no idea how cellphone plans work because I've never had one in my life. Way too expensive for the services offered. Communicating via iMessages, on the other hand, is free. I just need to find an open wifi network when I'm not home.
Re: (Score:2)
Re: (Score:3)
Half my friends are on Android, half are on iOS. WhatsApp lets me chat with them easily across either platform, including group chats and (free) global voice conversations. SMS / MMS is a pain in that regard. Sending images and videos is also easy. My only complaint is they don't have a PC client - The fact that you can seamlessly move from PC to mobile is one of the things I really like about Facebook messenger.
There's a web client that proxies through your phone. web.whatsapp.com.
Re: (Score:2)
You still need a phone. Fail.
Re: (Score:2)
There's a web client that proxies through your phone. web.whatsapp.com
Thanks. Still not perfect, but a considerable improvement.
Re: (Score:2)
Re: Time to look for a viable alternative (Score:1)
Re: (Score:2)
all my friends are on either iPhone, iPad or Mac - except for one who's using Windows and I contact him via Google Talk
You must not have a lot of friends, given Apple has less than 15% market share in phones and even less in PCs.
Re: (Score:2)
All my friends are in Canada.
Re: (Score:2)
Even so, it would be surprising if Apple had more than, say, 80% market share there. Having only 1 friend within the remaining 20% pretty much means you must be living under a rock. Of course if Apple only has 30 or 15% of the market in Canada, it is even worse.
Re: (Score:2)
I don't think so. Facebook gets a bit of lockin that way because it's a passive medium. You post something, your friends wander by to look at it. Same with instagram. No friends, less likes.
WhatsApp is active. I send you a message. You send me a message. Neither of us is fishing for likes, so the size of our audience doesn't matter. It's a low bar for you to install Telegram if WhatsApp starts pushing ads.
I think maybe that's something the marketers don't understand. "Social media" isn't special, i
Re: (Score:3)
Any better idea?
Anything not based on a phone number as an identifier, which prevent most PCs/tablets without a cellular connection, from using.
A phone number can also change, and is country specific. Also never use a protocol limited to one vendor.
So really, there is no reason to use Whatsapp or iMessage.
Re: (Score:2)
Telegram and Viber. Two almost as ubiquitous IM clients that would easily replace whatsapp if it ever goes pay to use, or gets annoying with ads.
And then, there's of course WeChat, which is functionally better than WhatsApp already in many ways but has other problems.
Signal, Telegram, or (best) Riot.im (Score:2)
Re: (Score:2)
I have a similar story. I got a hotmail address way before Microsoft bought them but the day they did, I stopped using it and got myself a gmail address instead. ... at the time, Google was a lesser evil than Microsoft. Today, I'm not just sure which one is more evil than the other.
Re: (Score:2)
I guess I was using something else in the meantime and forgot about it.
Re: (Score:2)
Re: (Score:3, Insightful)
Re: (Score:2)
Making money here is only "nice to have" (Score:2)
Buying WhatsApp was a defensive play by FB so that someone else could not easily muscle in on their social media turf and prick their frothy valuation.
Similarly, Google arguably overpaid for YouTube and is ballpark only breaking even today. But the strategic value of having access to the search/usage data from the most popular video gateway is too big to let a competitor own.
Re:Making money here is only "nice to have" (Score:5, Insightful)
Google didn't overpay for Youtube. Google bought the largest video site on the planet. Google now controls two of the 3 largest websites on the planet (in the western hemisphere anyway). $1.65bn was money well spent to prevent a competitor either emerging, or another well funded competitor using Youtube to undermine their ad dominance. Youtube is now making quite a bit of money for Google. Money well spent.
Re: (Score:3, Insightful)
Re: (Score:2)
Exactly!
Or Microsoft buying Skype. Or Nokia. Or Google buying Motorola.
Yes, companies can and do make bad acquisitions, but Youtube is not one of them.
Re: (Score:3)
The famous "We don't have a clue what to do with it, but someone else might - so bag it just in case" strategy? Also known as the dog in the manger.
See also: Oracle, Java.
Re: (Score:2)
But the strategic value of having access to the search/usage data from the most popular video gateway is too big to let a competitor own.
So what you're saying is they didn't overpay?
Re: (Score:2)
Yes, more or less. I am suggesting that Whatsapp profitability is not necessarily important to its purchase price.
Google did not buy Youtube to increase net profits.
FB did not buy Whatsapp to increase net profits.
These are strong and profitable companies that could become even stronger from the acquisition, perhaps. But they were necessary acquisitions to deny potential competitors a foot in the door.
So easy. (Score:1)
Ads in the status feature? (Score:2)
The instragram like story thing?
LOL Go for it, ruin it, I couldn't care less. I don't know a single person who uses that!