But those who can afford to pay (either for WhatsApp or for YT Premium) are typically the ones most lucrative for the advertisers. So if I am in charge of such products, what is the incentive for me to invest into these efforts which are only going to add complexity while not making any extra money? What is the compelling reason for offering an Ad-free mode if it is going to be adopted by a tiny fraction?

Because as someone who's willing to pay to not have ads, ads are a non-starter for me. If they're forced upon me, I'll switch products, and force anyone I communicate with to switch products to continue communicating with me. (If an individual won't install Signal, I'll drop down to SMS/email for them.)

In my experience, no, you can’t force alternatives on your friends and family, unless it’s an alternative they already have.

No, they won’t install Signal. If that were a real possibility, you would have done it already. So SMS it is. But I wonder, isn’t SMS more expensive than $1 / year? SMS has had outrageously high rates compared with 3G.

In some parts of the world that’s precisely the reason for WhatsApp’s popularity.

My non-tech friends can and have and do install signal, I’m pleased to say! It costs nothing, takes them a few minutes, and there’s no downside for them. I use it all the time.

agreed - I politely ask and if they dont I make my case.

SMS is plaintext - full stop.

> If that were a real possibility, you would have done it already.

Well, no, because I'm perfectly happy using WhatsApp in its current state.

SMS has been free (or very nearly free) for at least ten years over here. Pretty much any phone plan comes with unlimited messages or something like 10k/month, which most users won't reach.

If you can't charge people even $1 for your product, then I would argue that you might as well close up now. As others pointed out, ads won't work either, because if you can't afford to pay $1 for WhatsApp, then I'm not going to be able to profit from showing you ads.

Ads aren't magical things you can slap on a product to make it profitable. For ads to work you need an audience that technically could pay for you product, but who opts not to. You need to understand that Google isn't a create example of ads working, they are the exception. Facebook sort of works, but the US (and to a minor extend the EU) audience subsidies the rest of the user base.

Your right in that the $1, even at $1 per year, Facebook wouldn't be able to recoup the purchase price of WhatsApp. They won't be able to anyway, WhatsApp was never worth $19B. Facebook vastly overpay for the company. The WhatsApp purchase should be seen solely as a way of removing a company that "stole" screen time from Facebook, and now they're looking for an excuse to shut it down and roll the users into Facebook Messenger.

"if you can't charge people even $1 for your product...."

Only folks aren't always just paying $1. He's describing folks needing to set up a freaking payment system for a small amount of money - and that some folks aren't going to be able to do that and others aren't going to be willing. That's even before you get into the actual payment of $1. And this is before even considering there are other free apps that will work. There is a limit to the inconvenience folks will go through for your product if there are simpler alternatives, and being blind to this sort of thing could kill your company.

It also doesn't mean that folks cannot profit from ads. It isn't like all ads require you to pay through the internet - On my phone, I've gotten ads from a local coffee shop chain. I liken this sort of ad a cable tv ad. It might not get folks clicking on a website, but it might get folks in your store.

I don't understand all this talk of "setting up a freaking payment system" like it's some huge technical hurdle? Do the vast majority of people not get WhatsApp through the Play Store / App Store? Isn't adding a debit / credit card or purchasing a topup card for these trivial?

All this is besides the fact that we're talking about making the subscription model an option in addition to the ad-supported model, not forcing a subscription on everyone. I don't think a single person in this thread has suggested that apart from the people using is as a straw man.

You have to know WhatsApp's user base to understand this. Here in germany it's the de-facto standard communication platform. Everyone and their mother uses WhatsApp - and I mean that literally: Lots of old, non-tech-savvy folks use the service - the kind that even see creating an account as a barrier big enough to not use the service. I still think using the phone number as account was a genius move that enabled wide-spread adoption. Anyway, my mother and her peers don't have a Paypal account, no credit card (this is germany after all, credit cards can't be expected), certainly don't have a payment method attached to their Apple ID or Google Account (You'd be surprised how many people only use free apps). Yet all of them use Whatsapp happily and quite frictionlessly.

These folks are very wary of subscriptions, regarding them as potential scams or traps and while I'm sure Whatsapp would be successful even with a recurring price tag, I'm confident the service would be nowhere near as ubiquitous as it currently is.

Okay. But not so long ago people had to pay for WhatsApp, no? Has the user base grown tremendously since it became free (i.e. because it became free)? One of the points made earlier is that before being bought by Facebook WhatsApp was a profitable operation. If that was the case then there is clearly an argument for having a relatively low cost subscription based offering...

I'm not sure if they actually ever enforced their payment/subscription. I certainly haven't been charged, but I was a user before that started if I remember correctly.

It didn't "become" free. It has always been free for some significant fraction of the userbase. As was mentioned repeatedly all over the comments here, many people have never seen the payment screen at all.

no way. I've been using android for years but never added my card details on play store. although I have a 700£ phone, I intend to spend 0£ on play store.

I would pay for whatsup through paypal or something like that.

Whatsapp already supports payments in India through UPI. Setting it up is quite trivial, and if people deem WhatsApp central to their social graph, they'll buy the app.

However India is an extremely price conscious country, and many people would jump ship if WhatApp switches to subscription only. I tend to think that people would tolerate WhatsApp ads if they get the app free.

It will be interesting to see how this will play out.

If they go with ads, I'd be very interested in seeing what kind of revenue that would generate. I believe that Facebook reported around $1.30 in revenue, per user, per year in Asia in 2016.

I still think it's weird to have a product that worth so little to people that they won't pay a dollars a year, and yet it seems to essential in their everyday life.

Regardless, it won't get Facebook the billions they spend on WhatApps back.

Most insightful comment here

Probably not representative but in my circle, 90% people did pay for whatsapp before FB bought it out. The rest either had lifetime subscription through iOS AppStore or changed their phone numbers every year just to use whatsapp.

Whatsapp is the only software I've seen Indians pay for without thinking twice. 60 rupees per year is very easy to shell out especially when it replaces SMS which would cost you many times more.

The problem in India is not that people won't pay for whatsapp, it's that majority of the people don't have a way to pay. Very small percentage of whatsapp users own credit/debit cards. If a service could integrate with telcos and let users pay through them, I'm sure a lot of Indian users would pay for a lot more services than they do right now.

Given their market penetration in India, it wouldn't surprise me if they went so far as to set up in-person payment infrastructure. Wouldn't have to be complicated - it could even be like the Steam or Hulu gift cards you pick up at BestBuy. Any shop or market stall could sell them, just ship 'em out en masse and charge the store when they activate, possibly via the app.

>If a service could integrate with telcos and let users pay through them, I'm sure a lot of Indian users would pay for a lot more services than they do right now.

Many of the telecos, however don't want their user's on WhatsApp, they want them to use SMS, I remember Airtel and other's complaining to the government about OTT services, and trying to force the government to introduce a licensing regime for them.

If WhatsApp has to depend on telecos, they for sure will screw it.

Nothing can compete with 0 rupees.

Also unlimited SMS are free these days.

How many rupees does the extra data for a year's worth of ads cost? Or are unlimited data plans common in India?

Unlimited data plans are not common in India.

On Airtel, which I use- 4G data 2Gb/day, Unlimited SMS, Unlimited calls(Anywhere in India), for 90 days, comes to like $9(around 599 rupees).

This is a pre-paid plan.

I can't think of anything that's for purchase on this planet that is actually cheaper than one freaking dollar per year.

If someone can't pay that they're a waste of bandwidth for facebook's ads, since they can't afford to purchase anything at all.

If what you say is true Facebook can pull the plug on India completely and save money. I doubt that what you say is true.

Problem is how to collect that dollar. Appstore model will not work. I think they will need to partner with telecoms provider for this.

Why won't an app store payment work? The app stores have subscription support and carrier billing.

And they take a cut of an already very small transaction.

Then have it be regional and have European users pay 1 $/€.

You can't beat free. That would result in a huge migration to FB Messenger (does it have groups?) and Telegram (which has much better groups anyway) and others.

> Messenger (does it have groups?)

Yes, and they're a PITA on so many levels. Also, Messenger already has ads.

> Telegram (which has much better groups anyway)

Yes, groups, and especially supergroups (which are highly reminiscent of IRC) are downright awesome.

How valuable is that type of market to advertisers anyways.

I don't know how you can seriously argue that $1/year is "not as inexpensive as you think." Even in poor countries, that subscription fee is ridiculously low.

Talk about living in a bubble. +everything drdaeman@ said above.

There are more people using WhatsApp in India (thanks to popularity of image/video/voice-messages) than who can actually read or have usable Bank accounts. If you think they can pay "$1" for something they can get for free (and have been using for free in past), then you are completely out of touch of reality. Apart from the amount (which is not trivial btw), there is no concept of digital payment for masses.

Also I know it's hard for HN crowd to understand, but the concept of paying to protect "Privacy" is completely foreign for majority of the users in the world. I can guarantee you majority of the users (at least in India) will happily let you track them, show targeted ads at them, give you all the personal details you need, heck even give your their Genome for for free without even blinking an eyelid. And I am not saying this is just because of ignorance on their part, but rather "Who cares if they track me" - I get free services in return.

And this is actually not a bad setup really (again I know HN crowd will get their pitchforks out at it): Show Ads to provide actual free services (like WhatsApp, Google search, Maps, etc) to the masses. It's much better IMO then charging for these services and never have the masses be able to use them (like "GPS" would be a premium service for rich people).

Disclaimer: All opinions expressed are mine and only mine and have no connection to my employer (Google).

So what's a dollar to an average Indian whatsapp user. An hour's wage, a day, week?

The average wage for most kind of hard labour is around ₹200/hour or ₹600/day in cities, which will be around $3/hour or $10/day. I believe the bigger issue is the payment system rather than money, most Indians don't use digital payments

Nothing. For poor it might make them think for a few seconds, but its still nothing.

The real issue is they can't compete with $0.

Also best way WhatsApp can work around this is to just ship their app with the phone, and bill the phone $1 * avg life of the phone.

There are a lot of cheapskates who believe anything over $0.00/forever is too much. I don't really know how many there are, but in some places (anecdotally and quite subjectively, especially poorer areas) there are people that just object to paying anything if there's a way to get something remotely similar for free. Even if that way ends up costing more in wasted time or sacrificed privacy or self-respect.

Heck, I think I'd admit was like that, once upon a time. I stopped only when I started earning enough to be able to spend relatively liberally, sometimes even without looking at the exact price, as well recognized my time's worth something too.

$1 is a meal. You can't eat Whatsapp

You can't eat a smartphone either but all of these theoretical people with zero disposable income seem to have them for some reason.

and if you can't afford $1 / year FB doesn't give two shits about you because you have no disposable income anyway.

They probably do care, indirectly. They want as many people as possible on their service. Maybe you don't have $1/year for Whatsapp and therefore aren't of much interest to Facebook for advertising either, but your friends' friends might.