Facebook’s (NASDAQ: FB) WhatsApp said that it would no longer charge subscription fee for its messaging service. Instead it will explore new tools to allow business to interact with WhatsApp users.
WhatsApp used to charge an annual subscription fee of $0.99 for all users after their first year. But now it found that this approach didn’t work very well. The company plans to remove subscription fee from the different versions of the app over the coming weeks.
“Many WhatsApp users don't have a debit or credit card number and they worried they'd lose access to their friends and family after their first year.” The company said on Monday in a blog post.
Facebook bought the messaging service app in 2014 for $22 billion. With the support of Facebook, WhatsApp is able to spend more time to build its product and increase users base, but not just focus on generating profit. “We didn’t spend a lot of time over the past two years putting work and effort into the subscription model,” Whatsapp Chief Executive Mr. Koum said.
Without subscription fee and third-party ads fee, the company plans to test new approach to generate profit. The new business model is to allow organizations and Whatsapp’s users to communicate with each other. For example, you can communicate with your bank about whether a recent transaction was fraudulent, or with an airline about a delayed flight. This is a successful strategy that Chinese messaging app WeChat has been using.