95 Answers
I would like to answer this question as I have been very interested in WhatsApp for a long time now - both in technology and the product.
TL;DR => All the rumors and misconceptions around data-mining, customising ads, selling user data to companies are baseless and false! WhatsApp is not in the game to earn money.
Here, are some of the facts around WhatsApp :
1) They believe that messaging should be private and free. They also don’t want to sell ads to earn profit.
Here, is why they don't sell ads (explained on their official blog) - Why we don't sell ads?
Excerpts from it,
No one wakes up excited to see more advertising, no one goes to sleep thinking about the ads they'll see tomorrow. We know people go to sleep excited about who they chatted with that day (and disappointed about who they didn't). We want WhatsApp to be the product that keeps you awake... and that you reach for in the morning. No one jumps up from a nap and runs to see an advertisement.Remember, when advertising is involved you the user are the product.That's our product and that's our passion. Your data isn't even in the picture. We are simply not interested in any of it.
At this point, they relied on subscriptions of $1 after one year free service and considering how quickly they grew to about 500 million, this was the way to pay for salary and other expenses.
2) There is another common rumor - “Facebook has now access to everyone’s profile, data, private chats, pictures and conversations”.
Clearing the rumor around Facebook acquiring Whatsapp - Setting the record straight
From the above blog =>
Respect for your privacy is coded into our DNA, and we built WhatsApp around the goal of knowing as little about you as possible: You don't have to give us your name and we don't ask for your email address. We don’t know your birthday. We don’t know your home address. We don’t know where you work. We don’t know your likes, what you search for on the internet or collect your GPS location. None of that data has ever been collected and stored by WhatsApp, and we really have no plans to change that.If partnering with Facebook meant that we had to change our values, we wouldn’t have done it.Speculation to the contrary isn’t just baseless and unfounded, it’s irresponsible. It has the effect of scaring people into thinking we’re suddenly collecting all kinds of new data.
After the facebook acquisition, the employees are on Facebook payroll and so they get paid from it.
3) So, what's in it for facebook to buy it for $19B?
- WhatsApp has crossed over a billion user base - One billion - WhatsApp Blog
- WhatsApp was a direct competitor of Facebook's own Messenger app and now since both are under one umbrella, Facebook can better integrate to invite more people to Facebook. This in turn means more users, it can show ads too.
- One of the most important reason - WhatsApp is built by a team of 50 people, mostly engineers and the system is able to support more than 1 Billion users. Imagine the number of messages flowing in and out every minute and yet,there isn't a single message drop or any message arriving out of order. It all works flawlessly and perfectly. The WhatsApp server is a truly magnificent piece of software and hardware coming together.
I have built messaging servers myself and know how tough it is to mix protocols (TCP vs HTTP vs WebSocket) to achieve near real-time messaging and how the machine starts to break apart around 65K connections. Yet, they boast of 2 Million connections on a single machine in 2012 - 1 million is so 2011
Having a hand on such technology contributes a lot to make the $19B worth it.
4) They don’t even earn from subscriptions anymore. They moved to a completely free business model in Jan 2016 - Making WhatsApp free and more useful.
…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. Starting this year, we will test tools that allow you to use WhatsApp to communicate with businesses and organizations that you wantto hear from.
To conclude - there are only very few things that are free and enjoyable - water. air, love and whatsapp happens to be one of them.
Originally Answered: How does whatsapp make money?
By Data mining, insight generation and selling the insights to online platforms. If you are an analyst, you can stop here, else read on. Companies like Facebook and Google are extremely clever. They make use of Barter system! Here's how it works. They give their service without any money payment and name it "Free of cost" to attract people. Since it is free, huge number of people use the service. Whatsapp keeps track of all the messages you send and searches for keywords. For example, if you text "I need X brand shoes", its algorithms are smart enough to understand your positive interest towards "brand X" and then sell this data to online selling platform like Amazon, e-bay, etc. Facebook is brilliant to understand the mentality of people as people won't use any app if they show ads or charge money for the service they provide. Thus they choose to exchange your personal information for the service that they provide (Barter system I talked about earlier). Now this is no way illegal as the Whatsapp terms and conditions clearly states all these facts but you have agreed to it without reading it! After Whatsapp carried out the end to end encryption, as per Whatsapp, they are not going to use your chat messages for their marketing business (read targeted ads). The messages are encrypted end to end, from one app to app on the other end, so their servers can’t comprehend the information. But, according to their T&C of service, they are going to use the following data:
- Your Account Information
- Phone numbers in your mobile address book
- Profile name
- Profile picture
- Status message (Status photo)
- Usage and Log Information
- Information about user activity
- Log files
- Diagnostic, crash, website, and performance logs and reports.
- Device and Connection Information
- Cookies
- Etc etc etc
Which are more convenient than reading chats! Once they get all these data, they can understand who is interested in what and then show specific ad to each specific person!
Here's a video which explains it more:
Originally Answered: How does WhatsApp make money?
Even with a large user base (900 million, source: WhatsApp Wikipedia), the company's revenue might only be hundreds of millions of dollars.
Originally Answered: How does WhatsApp make money?
It is the same question that I asked a YouTuber few minutes ago.
He haven’t replied yet. So, I have my own thoughts.
I have been using WhatsApp since it was young. If you are an old user you can still remember the old dialogue of WhatsApp. WhatsApp is free for 1 year. and end of the screen there was why we don’t carry ads.
WhatsApp used to earn a little when WhatsApp was owned by WhatsApp’s original developer.
But after Facebook has owned it in exchange of 19M dollars, everything changed. WhatsApp is now used to control your ad preference on Facebook. It is directly not a source of income to Facebook, but I think Facebook will find a way out.
Originally Answered: How does WhatsApp make money?
WhatsApp does not make any money except the subscription fee, in spite of what other people tell you.
Why does Whatsapp not want to make any money ?
Watsapp, Linkedin, Facebook,Instagram,Twitter and initially Google started on what is called the Freemium model.
What is the Freemium model ?
The Freemium model tries to gather as many users as possible initially offering a free product focussing solely on user acquisition in the beginning.
Linkedin is an excellent example of such a product and so is Facebook. It gathered many users in the beginning and focussed on monetization in the later stages of the company.
Linkedin did it through premium users and letting recruiters sign up while Facebook through Facebook ads.
Quora is another product which has not made a cent but has created a huge userbase, I am sure they have a monetization plan in the future.
Why would Facebook pay for a product which makes no money ?
Users,users and users.
Users are valuable due to network effect. If Facebook did not buy Watsapp, Google or Twitter would have taking away this chunk of million users. Big companies have incomes which scale linearly with the number of users.
So till they figure out how to monetize these users, Facebook bought the company to make sure it did not go to someone else.
So Whatsapp does not sell our data?
Watsapp has no idea about your personal details, it does not know your age, your gender and anything. If you used your Facebook login to login into Whatsapp, things would have been different. But right now, it does not do any such thing.
Originally Answered: How does WhatsApp make money?
Most of the services which are 'free' makes users their product and make money out of it. Making money by just gathering some personal information about you and showing accurate advertisements on your laptop's browser. If one would read the privacy agreement of those applications (which we hardly do) they would be surprised to see what they are accepting before they use those 'free' services. In short, you agree to trade your personal details, likes, relationships etc for using those 'free services' which are not actually free.
Believe it or not, here's the 'behind the scenes' how their algorithm works?
Buying Whatsapp for $19 billion was the smartest move Facebook made. I'll keep it short.
They collect your data, understand your likes, and sell stuff to you through their advertisers.
Don't hesitate trying it.
Have a conversation of buying new J's with someone on what's app. You will be surprised to see the deals on J's from Amazon or other marketplace very next day.
Who's the buyer?
Let's say you're on a limited budget and you open up a business, you want only the people who are interested in your services to know about your business when you advertise it online, there's no way you can get information about individuals who are interested in your services. But Facebook is known for knowing one better then his/her spouse. So you can go to Facebook open up a page ask them to advertise your campaign only to those people who are actually interested in it. Saving you some money and making Facebook a 100% profit. By selling something they got it for free.
This is how it works. And now you know why Mark Zuckerberg's net worth is doubling almost every 2 years.
It's pretty simple. You get accustomed to it and start paying if for the following year as it's free for the first year. This only applies for iOS users.
But large proportion of smartphone users in India are Andriod, the question still remains unanswered. Whatsapp doesn't generate direct revenue as it doesn't sell ads.
However, Sequoia Capital invested around $8 million in the company, and many other investors are interested in investing in the venture. In India, Reliance Communications has teamed up with WhatsApp for providing a unique scheme for Reliance's prepaid users -- a WhatsApp Plan. So, WhatsApp is making money by tie-ups with popular telecom companies as well.
Edit:
When companies invest, they obviously expect returns.
In most cases, the returns are nothing but their respective share in Whatsapp's profit. Facebook has bought Whatsapp for $19B and has a user base of over 800 million. Also, the most downloaded app on the iOS store. Lets just assume that there are 50 million iOS users which means 50 million USD revenue from iOS users every year. Please keep in mind that the actual numbers are very,very high. Also, Reliance's Tie-up in India has come up with a special plan of Rs16 pack which gives you unlimited Facebook and Whatsapp. This could work wonders for Relaince in increasing their user base.This is Reliance's 'return' in their tie-up with Whatsapp in India. The team has been working on an idea where you could send money to your friends on Facebook and will be eventually launched on Whatsapp. A certain percentage will be taken as processing fee. They have also poached PayPal's CEO to work on this project.
Originally Answered: How Whatsapp make money?
I answered this question before so I'm just going to copy and paste what I said. I still feel it is a pretty good explanation. The person replied asking "THe question is more about revenue stream of What's app not face book!" So I answered in a different way again. Both answers are bellow in order.
First Answer:
Our data.
Facebook is the largest ad platform on Earth, they want to know as much about us as possile so that they ads they sell to companies they are as targeted at possible so they companies get the best value i.e. they're not waiting money on showing an ad to someone that isn't going to like the product / thing they are advertising.
For example you can get so targeted on facebook you can make an ad for Women aged 43 in Sydney Australia that like red wine have bought tennis equipment online before and are fans of Burberry. Yes it will cost the advertiser a premium to target that person but every single person that sees their ad is someone that might actually want to buy it.
Lots of people thing that all of this is a bad thing because of privacy, but we have to stop being naive, privacy is a thing of the past. Because people know this we start to act as better humans, especially online.
When Facebook bought Whatsapp they paid $47 per user for the 360Million users.
Second Answer:
As for revenue directly from Whatsapp, there will most likely be none. They have taken away the $0.99 fee per year to encourage as many users as possible. Facebook makes far more money utilising the data generated from Whatsapp to deploy against Instagram and Facebook ad products.
When Facebook tried to buy Snapchat for $3 Billion a few years ago this would have been another way that Facebook would have monetized Whatsapp with using its data in parallel with Snapcahts Ad products.
So in short, they don't and won't make revenue directly on the Whatsapp platform they use it as a data generator.
Whatsapp is earning its revenue through three different ways:
1) Subscription Fee: Whatsapp allows it’s user to enjoy the services for free for first year. However, after that it charges $0.99 for continued service. But till date, I have not heard of a single person who has paid for this service. Interestingly, it tends to extend the free service period every time a user reaches close to the expiry date.
So this method of revenue generation that seems like the only visible revenue generation scheme is actually not generating the revenue.
2) According to our speculation, the revenue generation for Whatsapp is primarily through database. All the conversations on Whatsapp are backed up on Whatsapp servers constantly. Our conversations reflect our interests, likes, dislikes and majorly depicts our preferences. This information is invaluable to big firms where relevant tailor made products can be offered after data sorting.
Let’s take a deeper look into this!
Whatsapp users have been ever increasing since the launch currently numbering out users on any other competitor.
Given such high number of users, the number of messages exchanged per day is also incredibly high in case of Whatsapp- peaking as high as 11 billion. With such extensive information available on Whatsapp backups, the big companies are willing to pay handsome amounts for information extraction.
3) Sequoia Capital invested around $8 million in the company, and many other investors are interested in investing in the venture. In India, Reliance Communications has teamed up with WhatsApp for providing a unique scheme for Reliance's prepaid users -- a WhatsApp Plan. So, WhatsApp is making money by tie-ups with popular telecom companies as well.
Still want more : How WhatsApp Makes Money (FB)
Originally Answered: How does Whatsapp earn?
My sis asked for my WhatsApp contact I said I will install it and give.
Her reaction: you don't have WhatsApp? How do you survive?
That's how WhatsApp earns!
It has built its foundation 500 million users. Out of which at least a quarter are loyallike my sis .
It let's you use the product for free!
It ostensibly charges just less than 1$ after a year.
Why the ostensibly? I have never heard of Any one paying in my circle.
(I am sure there must be some paying though)
Now what happened to their revenue?
Before acquisition by Facebook.
Just think if they have waited for so long to build their grounds, they can monetize any time they want.
Currently they Keep extending your subscription for free. That's what keeps you using the product, isn't it?
But what happened instead ? You got used to it, or in reality addicted to it.
Now you won't mind paying $1 for it will you? You know well that you have used way more than it. Assuming you have been using it for 2 years and now you pay for the third year, value for money? 200x .
Now let's assume 50% payed for it out of the 450 million active users.
This amounts to 225 million * 1 $
Which equals? $225 mil in one go!
Monetized!
Growth rate expected in another two years ? Over 1 billion users.
Monetization: just few millions less than 1 billion. (Growth of % of loyal customers)
So it has a very strong revenue model.
What happened after acquisition?
All efforts paid off!
$19 billion! Not bad huh?
This number is thought to be too huge but in realty it would have snatched the bread and butter of Facebook. In years to come it could have monetized and have a valuation equal to Facebook and then what? Who could have the capability to acquire it. So good call by Mark Zuckerberg.
Hope this helps!
Let me say you a small story:
I am one those guys who hates adding contacts unless I feel the connection is really worth it.
So the other time I was added to a whatsapp group of unknown people and kind of was talking to one of them without saving their contacts. Later on when i was browsing on FB, I noticed that a pop head of a person with the same name, I had interacted with from the group popped up in my messenger. Curiously I clicked on the person's profile link (okay i found that the girl looked cute in the tiny pic displayed in the messenger) was shocked to see it was her from the group.
Honestly I don't know which was more shocking, the girl i was speaking to was so pretty or the fact the FB is able to keep me connected to the FB ecosystem in such a looped manner.
Alas the nerd in me won and I began to experiment, i realized that FB has leveraged and is utilizing the data it is getting from watsapp to build better system to understand the user and most important of all keeping people hooked to the social network.
Honestly I don't know which was more shocking, the girl i was speaking to was so pretty or the fact the FB is able to keep me connected to the FB ecosystem in such a looped manner.
Alas the nerd in me won and I began to experiment, i realized that FB has leveraged and is utilizing the data it is getting from watsapp to build better system to understand the user and most important of all keeping people hooked to the social network.
Now coming to the answer of the question.
Whatsapp is not the product my friend, you are the product.
FB leverages your data to corporations for targeted ads. (Corporations are gonna pay for the best source of customer info, so having the major market share is the deciding factor)
FB tries to make sure that people are hooked into FB ecosystem,so that it can maintain the traction and sell the user info to the corporations.
Fb pays to whatsapp to make sure that people are connected via FB ecosystem and the data they generate over FB.
The chain goes like this
India is a special player to these corporate giants because it is one of the upcoming markets which is where they have to gain the market share. To put things into perspective population of USA is 300 million, India on the contrary has 1.2 billion people and most of these people are getting access to the internet recently compared to the saturated western countries. So it makes much more sense to capture the market share whilst it is at its infancy rather than to break into a saturated market. Remember the net neutrality campaign for which Fb spent crores to make sure that the rules were not exactly neutral.
PS I did add her on FB
Originally Answered: How does Whatsapp make money?
After Facebook eliminated WhatsApp's 99-cent annual subscription fee, WhatsApp does not have any source of revenue. As a matter of fact, WhatsApp had a net loss of $139 million in revenue in 2014, before Facebook decided to buy it. And Facebook hasn't broken out WhatsApp's revenue in its SEC filings, which could infer that it doesn't have any conceivable revenue at the moment.
So why did Facebook pay $19 billion for WhatsApp?
The following reasons , I thought, could have played a role in Facebook's decision to buy WhatsApp.
- There is huge opportunity for growth.
- Behavioral data
- Large User Base around the world
- Ensuring that the app does not end up with Facebook’s competitors
Originally Answered: How does WhatsApp make money?
It doesn’t and it doesn’t have to.
WhatsApp does not make money or generate any revenues in conventional ways, atleast now. Prior to the acquisition of WhatsApp by Facebook, they used to charge a subscription of $0.99 per year. After Facebook acquired it, they made it free for lifetime. Basically Facebook is a advertisement company all they need is data to serve you better ads that you will click on, so that they can make money.
After acquisition by Facebook, WhatsApp will share your data with Facebook which Facebook, which in turn can serve you with relevant ads.
Basically Facebook bought a data mine with $19 Billion.
1) Facebook bought WhatsApp (19th Feb, 2014) for a colossal US$19 billion, it was being run by just 55 people. So Not much of staff to pay for.
2) Considering the user base of 700 million users who are using whats app , the first year is free . From second year on wards it charges a fee of 0.99$ . So it's one source of income . Need to exclude 70 million users from india for whom it is free for lifetime. So the revenue is about 630 million .
3) In the initial days what's app was a paid app for a long time on App Store for iOS users unlike android where it was free to download. So it was also a source of income in the past.
Assumption :
4) Not pretty sure if What's app is using it's data generated for some Big Data Analytics Companies , if so it's a huge revenue source
Indian Scenario:
What's app is free for Indian users . Reason being low penetration of debit and credit cards in Indian market . (Reason given by What's app VP Neeraj Arora
WhatsApp to be free for Indian users: Report
Originally Answered: How does whatsapp make money without ads?
This gets you instant money and frees you from all complications and later risks.
Whatsapp was started by two people and they earned billions by selling it to Mark Zuckerberg , the founder of facebook. However they still work with facebook forproduct development.
Now coming to the part as to how whatsapp earns money. The answer is 1$ at a time.
In some countries , it charges 1$ to download, whereas in other countries it costs 1$ after one year. People using iphones must be aware that even downloading it genuinely from the apple store costs them money.
Now in this way whatsapp has a 700 million userbase with constant increase in users, the yearly revenue reaches to around 700 million $ .
Also when downloads from the google play store and other stores reaches a certain limit , the app starts to get money from them. Whatsapp has above 1 billion downloads on the play store so that gives a lot of money. The playstore earns money by selling its android os to mobile companies which we buy from the market thereby indirectly providing money to playstore.
However whatsapp does not allow putting any adds or sponsered information which is the major source of income of other websites and apps.
I hope now you all know about how these companies make money directly or indirectly through us. Any doubts can be put in comments. :)
Now to consider the income sources for most mobile apps
Most apps generate revenue through the following:
- Purchases: Just like other products, apps earn money when they are purchased. $.99 per purchase might not sound like a whole lot, but it adds up (Angry Birds sells for $.99, just saying). Then of course you look at an app likeMinecraft: Pocket Edition that sells for $6.99 and made $1 million in iOS App Store revenue—on Christmas day alone.
- The “freemium” model: Even apps that are free to download make money. This freemium model allows users to download the app for free, but will then charge for extra features, lives, power-ups, and other in-game resources. Think Candy Crush and Clash of Clans.
- Advertisements: You’ve probably noticed advertisements on your favorite apps. (How can you ignore them?) Just like ads in magazines, on TV, etc. companies pay for their products and services to be seen within mobile apps.
All of this considered, there is one big thing missing. I mean, WhatsApp earns $.99 per download on iOS and $.99 per year on other platforms (after the first year). Even with a large user base, the company’s revenue might only be hundreds of millions of dollars. There is a large, unfilled gap between hundreds of millions and $19 billion.
So why was so much offered for WhatsApp? Because that is how much the app is worth to Facebook. 450 million users, growth opportunity, future prospects, keeping the app out of the hands of competitors. All of these things have a price tag.
PS:Even Bill Gates quoted that Microsoft would have loved to buy the app but feels that Facebook's offer was too high and they would have never matched that offer.
Source:https://www.idtech.com
Originally Answered: How does WhatsApp make money?
Whatsapp is earning its revenue through two different ways:
1) Subscription Fee: Whatsapp allows it’s user to enjoy the services for free for first year. However, after that it charges $0.99 for continued service. But till date, I have not heard of a single person who has paid for this service. Interestingly, it tends to extend the free service period every time a user reaches close to the expiry date.
So this method of revenue generation that seems like the only visible revenue generation scheme is actually not generating the revenue.
2)The revenue generation for Whatsapp is primarily through database management. All the conversations on Whatsapp are backed up on Whatsapp servers constantly. Our conversations reflect our interests, likes, dislikes and majorly depicts our preferences. This information is invaluable to big firms where relevant tailor made products can be offered after data sorting. Now Facebook owns all our conversations and our personal data which it uses to personalise the ads on each and everyone's page in order to increase Facebook's profits.
Source- How does Whatsapp generate revenue? What's its business Model?
Originally Answered: How does WhatsApp make its money?
Whatsapp was bought by Facebook right? You Should be checking the latest privacy documents before you go ahead and use it. It's actually quite scary. There was a 30 day opt out period but that has now ended. Whatapp was basically able to generate dollas by sharing your information with Facebook to generate ads. It's no wonder Facebook bought it out. I do not trust Whatsapp or any app that is not a combination of end to end encryption , open source programs and one that has the lowest data retention policy. Wire is a great example for messaging that keeps your data private because you know even a free service like Whatsapp ain't in it for the innovation anymore .
Originally Answered: How does WhatsApp make money without any advertisement deals?
Recently WhatsApp disclosed that they wont charge single penny from users in lifetime [not even the subscription fee which they were taking ]
Then how do they make money ?
WhatsApp categorically said the company won't be replacing the subscription fee with third-party advertisements like intrusive banner and interstitials, which nowadays is a common practice used to make free applications profitable.Instead, the company said it will explore ways businesses can use WhatsApp to connect with individuals, and will introduce new ways for users to communicate with businesses and organisations that will pay the company to target relevant communications with customers.
For example:A bank could use WhatsApp paid account to communicate with its customers about recent transactions and necessary fraud http://warnings.Anairline could use WhatsApp paid account to contact its passengers about a delayed schedule or cancelled http://flight.It is the same approach WhatsApp parent company Facebook is using with its own Messenger application, which in last month started allowing its users to book an Uber cab directly through the Messenger app.
Also companies like facebook and whatsapp make use of the data which you chat.Whatsapp server generates analytical data based on the key words which you used. Big companies pay lump sum amounts of money for this type of data. In order to optimize marketing campaigns etc.
WhatsApp has a Billion + active users. (When it was acquired)
Cost of acquiring every user is $19.
Somewhere I recently saw the average Revenue per user for Facebook is $4.46 worldwide.
What does this mean? Within four years approximately Facebook could have all that it spent to acquire WhatsApp if it makes the same revenue on this 1 Billion people.
But Facebook has access to all the conversations, data, details of everything that you have communicated using WhatsApp, that can be used for even better refined targeting of Ad's to thier users, including yourself.
So they would work towards refinement of Ads, better targeting to ensure the average revenue per user goes up and their investment returns quickly.
So thats why WhatsApp will be literally FREE!
Have you heard of BIGDATA? Do you know how facebook earns apart from ads? Do you know the job of big analysis companies? Do you know how e- commerce sites know what to suggest as an option or not?
We generate lots of data on a daily basis. The data includes our shopping habits, our research habits, interests etc. When we type msgs in whatsapp, the messages pass through the whatsapp server and then to the destination mobile no. Whatsapp server generates analytical data based on the key words used. Big companies pay big amounts of money for this type of data. In order to optimize marketing campaigns etc.
That's why whatsapp never charged us a penny and that's why facebook was ready to invest big sum of money in this venture.
Whatsapp doesn't sell ads, it sells us to ads. You can clearly read the disclaimer in privacy policy of Whatsapp.
Hops it helps.
I don't think the msgs are passed through whatsapp servers as claimed in the latest update. They did not pass in the older verdion also, they just passed through Facebook servers for analytical purpose.
Originally Answered: How does WhatsApp make money?
I believe right now Whatsapp is not making any money directly from the Whatsapp app but it should help Facebook with their advert business which is huge!
As per Mark Zuckberg’s strategy he is known for gathering enough attention on each platform before he monetize it! Ex. Facebook, Instagram..
Soon something interesting will come on Whatsapp focusing on monetizing it!
Originally Answered: How Whatsapp make money?
This is quiet interesting question! A lot of people asked me the same question and its pretty straight only few people knows the actual answer.
Whatsapp is earning its revenue through three different ways:
1) Subscription Fee: Whatsapp allows it’s user to enjoy the services for free for first year. However, after that it charges $0.99 for continued service. But till date, I have not heard of a single person who has paid for this service. Interestingly, it tends to extend the free service period every time a user reaches close to the expiry date. So this method of revenue generation that seems like the only visible revenue generation scheme is actually not generating the revenue.
2) According to our speculation, the revenue generation for Whatsapp is primarily through database. All the conversations on Whatsapp are backed up on Whatsapp servers constantly. Our conversations reflect our interests, likes, dislikes and majorly depicts our preferences. This information is invaluable to big firms where relevant tailor made products can be offered after data sorting.
3) Sequoia Capital invested around $8 million in the company, and many other investors are interested in investing in the venture.
Facebook didn't buy a famous messaging mobile app, it paid 19 Billion Dollars for the data that it can get from the messaging app.
It mines the data and retrieves the relevant information about active users and sells it or maybe sells the raw data to be mined and used to manipulate people by showing them advertisement to buy things and services.
How would it figure out who are you? Your mobile number registered on WhatsApp and Google Play or Play Store it can figure out who you are using your phone number. And it can do the rest based on this information and your device where you are using facebook and WhatsApp.
Originally Answered: Where does WhatsApp earn its revenue from?
They all are doing data mining business. Generally, data mining (sometimes called data or knowledge discovery) is the process of analyzing data from different perspectives and summarizing it into useful information - information that can be used to increase revenue, cuts costs, or both. Data mining software is one of a number of analytical tools for analyzing data. It allows users to analyze data from many different dimensions or angles, categorize it, and summarize the relationships identified. Technically, data mining is the process of finding correlations or patterns among dozens of fields in large relational databases.
Companies got the huge database about their users and their tastes & preferences which they sell off to the companies which are interested in knowing about specific segement of these users.
For example: the selfie stick concept came in market when Facebook analysed its users data about how many people upload their pictures frequently and in different poses. So, suppose the outcome of analysis was about 77%, then they shared this data to those companies who were thinking to launch a new product in market. And, after a long process the selfie stick launched and it really worked well and it was in trend.
Same process applied for the Instagram product which is a specific platform for the users to just upload their pictures and so on.
Similarly, it applies to Whatsapp revenue model too. Whatsapp also using data mining techniques to earn huge revenue even after providing free of cost and ad free product to its users.
Hope it helps. Thank you!
Originally Answered: How WhatsApp make profit?
Originally Answered: How does WhatsApp earn money even after providing everything for free?
First thing to note is, that when we are online (connected to the internet) we generate some tera bytes of tera bytes of data on every moment on a daily basis. This data includes user habits of shopping, keyword research, content interests, reading interests, watching interests etc. When you send messages over whatsapp, the messages first route through servers of whatsapp (where they are stocked and analyzed for various content present in it) and then to the receiver. This server actually is a smart code which analyses the data based on the content used.
This data is then passed on to facebook for effectively putting targetting options in their ads which are priced higher than the general type of boosts (try putting a target based and the moment you try to narrow it down the price per click goes up). The things we share on WhatsApp reflect our interests, likes, dislikes.
Consider this, Like Twitter has HashTags (#HashTag) which are often used as listening tool as to what people are saying about a trend, or a brand, The WhatsApp search function on your phone acts as a listening tool for them (if they can search it on your phone, they can read and interpret it as well) and thus they know about your behavior as a person and then facebook targets the right set of ads towards you.
“If You’re Not Paying for the Product or the Service; You’re the Product” and money would be made from you (your data, your interests, your content cravings, your constant love with your display devices etc.).
I also don’t know the exact business model.
Originally Answered: How does WhatsApp make money without any advertisement deals?
Source Quora, from the part of an answer.
Originally Answered: How WhatsApp makes money?
$1 at a time
The short answer is $1 at a time. In some countries, the app costs about $1 to download; in others, the first year is free but, each subsequent year costs $1. With over 700 million active users and about 1 million new users per day, yearly revenue can be estimated at $700 million per year.
Focusing on growth
WhatsApp is adding around a million users per day, mostly in Latin America, India and Europe. With SMS apps, growth is exponential – when one person in a social group downloads and advocates using the app, many new users download the app in order to communicate with the original person. These new users then encourage other members of their other social groups to use the app.
By increasing market penetration, the app becomes indispensable and the user base grows. As the user base grows, not only does the subscription service of $1/year bring in substantial revenue but advertising and alternative forms of monetization create hearty revenue.
Source: How WhatsApp Makes Money (FB)
Originally Answered: How does WhatsApp generate its revenue if it does not do advertisements?
1) Subscription Fee: Whatsapp allows it’s user to enjoy Whatsapp services for free for first year. However, after that it charges $0.99 for continued service. But till date, I have not heard of a single person who has paid for this service. Interestingly, Whatsapp tend to extend the free service period every time a user reaches close to the expiry date. So this method of revenue generation that seems like the only visible revenue generation scheme is actually not generating the revenue for Whatsapp.
2) According to my speculation, the revenue generation for Whatsapp is primarily through database management. All the conversations on Whatsapp are backed up on Whatsapp servers constantly. Our conversations reflect our interests, likes, dislikes and majorly depicts our preferences.
Couple of items I would like to mention -
1. If you are aware, whatsapp on Apple Store is chargeable. about 45 million users uses whatsapp through ios platform. Therefore summing up their revenue through these iphone + whatsapp users, they have collected about 45 million dollars in totalfor this app.
2. Next thing would be earnings from database management.Given such high number of users, the number of messages exchanged per day is also incredibly high in case of Whatsapp- peaking as high as 11 billion. With such extensive information available on Whatsapp backups, the big companies are willing to pay handsome amounts for information extraction. However this is merely my speculation.
3. Next its earnings from the investments it receives and its various tie ups. Recently Sequoia Capital invested around $8 million in the company, and many other investors are interested in investing in the venture. In India, Reliance Communications has teamed up with WhatsApp for providing a unique scheme for Reliance's prepaid users -- a WhatsApp Plan. So, WhatsApp is making money by tie-ups with popular telecom companies as well.
Originally Answered: How does WhatsApp make money?
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Footnotes
In some countries, the app costs about $1 to download; in others, the first year is free but, each subsequent year costs $1. With over 700 million active users and about 1 million new users per day, annual revenue can be estimated at about $700 million per year.
But the main focus of Whatsapp is to get more users on its platform. It is adding around a million users per day, mostly in Latin America, India and Europe. Currently, WeChat has an annual revenue of about $924 million with almost half of the number of Whatsapp users. But Whatsapp is trying to increase market penetration, with which this app will become indispensable.
Thus, Whatsapp has a lot of room to grow monetarily in the future with the help of advertisements, games, emoticons etc. but for now, its intention is to grow it's user base.
Originally Answered: How does whatsapp make money?
Originally Answered: How does Whatsapp earn?
The general idea is that such a user base will sooner or later bring in money.
Android Apps on Google Play - First year FREE! ($0.99 USD/year after)
Originally Answered: How does WhatsApp Messenger make money with no ads or subscription fees?
I would think that the WhatsApp founders were waiting for two possiblities:
- Hold out for a big-money acquisition (which actually happened)
- If holding out for an acquisition seemed infeasible, try to develop a revenue model (I can't speculate over what the model could have been).
The expenses of WhatsApp were taken care of by the money it had raised in its investment rounds, so it had no pressing need to generate revenue. Even if I gave 2 ways for the app to earn money, I believe that the founders and investors were solely focused on getting the company acquired in order to earn money. It is not immediately clear to me though, how is Facebook planning to justify its huge outlay in acquiring WhatsApp, considering that their servers don't store media files and chat texts permanently, which Facebook could have used for targeted advertising.
Originally Answered: How does WhatsApp earn money if there are no ads or charges for Indian users?
There are about 300 million users of whatsapp worldwide and even if half of those users are active on whatsapp and regularly share their opinions on various issues of their interest then you can imagine that how precious can the server information of whatsapp be for a company since they can extract relevant information about the interests and opinions of various sections of people worldwide and by this they can create tailor made products for their users which can help them earn huge profits.
So, for this many big companies offer huge amounts to whatsapp for extracting their server information.
Also recently they have signed a partnership deal with Reliance for providing low cost data plans to the GSM users of Reliance.
So, now you know how the company earns...
I might be wrong but this is the only way according to my opinion.
Originally Answered: How does WhatsApp make money?
Imagine if someone could eavesdrop on all your conversations with your girlfriend, your friends, your colleagues and your family.
He would know exactly how you actually are, would be aware of your deepest secrets, and a lot more about your professional and personal life.
That's what Whatsapp potentially knows about you.
It knows whether you are short tempered, it knows where you work, it knows who you like, it knows practically everything that's there to be known about you.
How and where does it help?
In the creepy world of Marketing. Facebook own Whatsapp, and has a huge advertising platform. It knows a lot about you, a lot more than what there is on your Fb profile. It uses all this information to show you targeted ads.
Facebook knows what you like and what your preferences are, and probably has you profiled based on hundreds of parameters. It uses all this information to help advertisers reach more targeted audience.
Advertising brings in a a lot of money for FB, and acquiring Whatsapp was an amazing move by Facebook to compete against the likes of Google when it comes to advertising.
Originally Answered: How does WhatsApp Messenger earn?
It sells our personal information to MNCs and show us advertisememts based as per our interests which it finds out through our chat and conversations with the people we interact with.
For instance- If you send a message to your friend in WhatsApp that you like the Moto X Play, and later open Facebook, you will see the ad ofMoto X Play at 30% discount.
Smart, right?
:)
See, companies are willing to pay huge amounts of money to know what's going on in your minds. They want to know what you're thinking, what you're talking about. Whatsapp - most likely; all this is speculation as Whatsapp refuses to reveal its method of revenue generation - sells all your conversations to major companies. These companies use text-recognition software to understand what is 'in' nowadays. This helps them change their sales tactics, advertisements, and production patterns accordingly.
How do apps like WhatsApp, WeChat and Viber earn money?
Related question
Originally Answered: How whatsapp messenger earn money?
How much money does whatsapp earn is actually a tricky question. Advertisements are the main source of advertisements. As per whatsapp’s commitment, they don’t sell ads. So, the probability of making money is nill. Similar to Wikipedia.
Initially, they offered the paid service after 1 year of free service. Now, they have said it is completely free for lifetime.
After facebook taking over whatsapp, the new terms and conditions rolled out seems to be using whatsapp database for serving interest based advertisements. Hence, understanding How Whatsapp Works with advertisement or any other revenue source decides their revenue.
I suggest you to go through the article by forbes. It will give you better idea. How Much Revenue Can Facebook's WhatsApp Generate In The Next Five Years?
Originally Answered: From where does WhatsApp earn money?
I think in future, WhatsApp could become a great platform for businesses and organizations to reach out to customers. Imagine you have a local bookstore and want to tell regulars about some new books that you have recently got in stock. Just one example off the top of my head. In the future, WhatsApp may potentially release an API and allow developers to create apps and plugins to deliver regular updates etc. to their audience. And you could charge businesses who want to use this platform. A small cut of what they earn per customer transaction would still be a huge amount.
Once you have a huge customer base, there are many things you can do to earn money from it. I guess Facebook felt that they could simply not afford to miss out on this potentially vast revenue base in the future.
Originally Answered: How whatsapp messenger earn money?
The revenue generation for Whatsapp is primarily through database management. All the conversations on Whatsapp are backed up on Whatsapp servers constantly. Our conversations reflect our interests, likes, dislikes and majorly depicts our preferences. This information is invaluable to big firms where relevant tailor made products can be offered after data.
WhatsApp Users: 315 million
Skype Users: 280 million
Line Users: 200 million
Viber Users: 200 million
WeChat Users: 195 million
WhatsApp Users: 315 million
Skype Users: 280 million
Line Users: 200 million
Viber Users: 200 million
WeChat Users: 195 million
Whatsapp users have been ever increasing since the launch currently numbering out users on any other competitor.
Given such high number of users, the number of messages exchanged per day is also incredibly high in case of Whatsapp- peaking as high as 11 billion. With such extensive information available on Whatsapp backups, the big companies are willing to pay handsome amounts for information extraction.
Given such high number of users, the number of messages exchanged per day is also incredibly high in case of Whatsapp- peaking as high as 11 billion. With such extensive information available on Whatsapp backups, the big companies are willing to pay handsome amounts for information extraction.
This data management scheme is merely a speculation. As evident, Whatsapp is not involved in ad marketing. Any user can vouch for the fact that it does not support advertisements. Whatsapp’s CEO Jan Koum clearly states that Whatsapp is meant for instant messaging and forcing advertisements would disrupt the sole meaning of that. There is no way to justify the data management ideology, but then there is no other justified revenue model as well in the store.
Hi,
Whatsapp, today, runs on Facebook’s payroll.
But Whatsapp has a history of revenue generation. It’s strategy included - make a network first, and money will follow. This strategy even worked for this company with a staff of just 50 people. Whatsapp employees did earn, and they earned in millions.
They earned through Fundings (there wasn’t much expenditure in running the application).
Earlier revenue included subscription fees, but it soon was discarded as the owners wanted to grow the userbase.
Sequoia Capital invested a total $60 million in Whatsapp in 2011 & 2013.
Facebook later bought Whatsapp for $19 billion. Hence millions of dollars to the employees again.
Now the employees are paid by facebook. The founder, Jan koum, is now among facebook’s board members.
This (hyperlinked) article explains everything about Whatsapp revenue model and it’s history.
You can learn more about Facebook and Whatsapp’s relationship in this (hyperlinked) article.
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