WhatsApp CEO Jan Koum has explained in an interview with Wired why the company killed its $0.99-a-year subscription option.
“We’ve done really well in the consumer space,” he said. “But there is whole other aspect of communication as you go through your day: You want to communicate with businesses.”
By removing the subscription, WhatsApp is accessible to a massive number of new users, especially in emerging markets, such as India and Brazil.
“For people in India or Brazil, it’s very hard for them to pay,” said Koum. “They don’t necessary have credit cards or the infrastructure to make payments.”
Businesses will want to reach the maximum amount of people which is why Facebook, with its 1.2 billion monthly users, makes so much money from advertising.
Koum rejected the traditional advertising model in a company blog post, but the kind of reach WhatsApp has is valuable to businesses.
WhatsApp has not been specific on what kind of interaction users can have with brands, but Koum did give an example of a restaurant. “Maybe [the restaurant replies] with three different options,” he said. “I just tap on a button and the reservation is made.”
WhatsApp never publicly stated how many people paid for its service, but leaked documents revealed it made around $15 million (£10 million) in revenue in the first half of 2014, suggesting it was not many. During that period, the company lost around $250 million (£175 million).