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Comment by xkjkls | Hacker News Reader

How many of their current users would actually be paying $1 a year? Over the long term how many more? Most of these products want to be free. If I'm paying $1 a year to WhatsApp and see my friend using a different app without being charged for it, I feel like I'm getting screwed. I find it hard to think of WhatsApp truly being a long term product with that business model.

Two, claiming encouraging more ads on your platform is "squeezing locked in users for every dime possible" is only half of the equation. Have you ever talked to a business that relies on Facebook and Instagram ads? They're enormously grateful they exist. Without them hundreds of thousands of businesses would not be possible. That shouldn't be thrown aside as worthless.

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Just before WhatsApp was bought by Facebook, they were asking for that $1 per year (I remember paying it) and they had 450 million users, in spite of plenty of chat alternatives being on the market ever since the 90s.

I initially ignored it then switched to it after they started to do end to end encryption and encouraged all my friends to use it, instead of Facebook’s Messenger.

So yes, they were already popular because the app was working on all platforms, because it is easy to connect with your friends and because it did what it was supposed to do without the crap.

I’m not saying that the ads model doesn’t have its place, far from it, I’m saying that WhatsApp could have lived just fine without it.

> Just before WhatsApp was bought by Facebook, they were asking for that $1 per year (I remember paying it) and they had 450 million users, in spite of plenty of chat alternatives being on the market ever since the 90s.

How many of those users were actually paying at the time? IIRC they allowed 1 year of free use (even more depending on your country). I don't know what the churn is going to be the moment a currently free customer becomes paying, but it is definitely non-zero. I really don't think that is evidence for a long term sustainable business model if others exist with zero total subscription fees.

> I’m not saying that the ads model doesn’t have its place, far from it, I’m saying that WhatsApp could have lived just fine without it.

The biggest reason for WhatsApp's success was the cost of SMS messaging most international markets. That's actually declined significantly since its introduction, so that's another drag on their pricing power.

Could they have lived? Maybe. But I doubt they'd have 1.5 billion users like they do now, and I don't think they long term trajectory for the business would look sustainable charging $1 a year.

They had something like 50 employees didn't they? Back of napkin I'd say probably around $10,000,000 for employee packages. Multiple that by 3-5x for total operating costs and I'd speculate they'd need $30-50m to break even which is about 3% of their subscribers paying $1.

The problem is that in order to maintain their position as an app everyone can communicate on, they need everyone paying the subscription fee. Once people realize not everyone is on the app, it becomes a self fulfilling prophecy.

There’s a huge difference in the number of people willing to pay for an app “that I can connect to everyone with” and those willing to pay for an app “that I can connect to only the other people willing to pay $1 for”.

I mentioned in another comment but many countries have free data for WhatsApp plans which kind of entrenches their position. They might lose out eventually but it won't be overnight.

The power of mass usage comes into play here. IIRC, when WhatsApp launched, I was one of the early adopters. As it grew (and it became hugely popular in Brazil, where I lived) they switched to the $1/year model. Current users were auto-enrolled in a "free-for-life" plan. My friends who didn't have WhatApp would still sign up because everyone else was using it and, besides "$1/year? it's almost nothing".

Was it 1 Brazillian Real or 1 USD?

In many countries, WhatsApp is the defacto communication platform for businesses to communicate with customers.

I don't actually remember. I used to set all my settings to US/American ones because some apps were only in the US app store, so there's a good chance I was looking at the US$1 price. Not sure what my friends saw in the Brazilian app store.

It was the equivalent of US$1 in reais.

> It was the equivalent of US$1 in reais.

I think it was R$1,99, that was not exactly US$1 (even considering the stronger Real in the period), however it was not exactly equivalent to US$1 either.

At least in India, it was equivalent of $1 in my currency, i.e. Indian Rupee.

There were always alternatives, just carried certain other costs. SMS was a major competitor, and as its prices have declined significantly internationally, the friction with using it would as well.

Being the first mover is not a infinitely defensible advantage. If another app comes along but doesn't carry the $1 a year fee, it wouldn't be hard to motivate people to switch.

In Argentina many cellular plans include 30 days of WhatsApp for free on pay-as-you-go plans. Even if you lapse your payment for the 30 days you still have WhatsApp texting. Interestingly audio, photos, and video don't work.

Hundreds of thousands of businesses that exist only thanks to FB and Instagram ads?

You should provide ample evidence for such an extraordinary claim.

I remember when they had the $1 cost it was 1 year free. They captured you in that time and then you didn't mind paying the $1 when all your friends were on it.

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