WhatsApp Introduces Ads in Its App

I know lots of people that pay for YT premium. Lots of people pay for Spotify too. I even pay for Kagi.

By far the choice of most marginally savvy and above internet users is an ad-model where they themselves ad-block. Which somehow is spun to be morally righteous.

> I don’t have the actual stats, but, sadly, it seems like a gigantic chunk of the “i would rather pay a small fee to use a service rather than paying for it with exposure to ads” crowd is mostly all-talk.

That's because micropayments are still fucking annoying to do on both sides of any transaction:

- credit cards: cheap-ish at scale (2-5%), but users don't want to give random apps their CC details and integrating with Stripe/Paypal/whatever has the cost of UX flow break due to account details and 2FA compliance bullshit. In addition, every service paid-for by CC has the problem that only people with a CC can pay for it (so people in countries like Europe where "classic" bank accounts prevail are out of luck, and so are people in countries deemed too poor and/or fraud-affiliated are locked out entirely), and you gotta deal with tax and other regulatory compliance around handling payments as well. Oh and people will try to use your service to validate stolen payment credentials because a 1$ charge (especially for a well known service like Whatsapp) is most likely to be ignored by the accountholder even if fraudulent in nature, which in turn will lead to issues with chargebacks or, worst case, getting dropped entirely by the payment processor.

- in-app purchases: expensive (30% cut for the platform provider), serious headache to do when a significant chunk of the user base doesn't run phones with properly licensed Google Play Store (e.g. Huawei who aren't allowed to embed Play Store on their phones)

- bank transfer: possible, but restricted to the economic zones where there's enough customer base to justify the expenses of setting up a local company with a bank account (i.e. US, EU, India, possibly China), and transaction fees from the banks may end up being >>50% of the transaction's face value at such low amounts

- crxptxcurrency: even more of a hassle for customers to acquire, questionable legality / KYC issues, no realtime authorization due to mandatory waiting time for mining to confirm transactions

- pay by phone bill, premium numbers: possible, but need bureaucracy in each country, fraud / "my kid did it" complaints will run rampant, premium number calls are by default blocked in most if not all modern phone contracts ever since the early '00s and "dialer" fraud malware, difficult to associate with customer's phone number in the backend

In the end, if you truly want to capture a global audience with microtransaction payments, be prepared to deal with a loooooooooooooooooot of bullshit just to get started.

Long story short, we desperately need a global government effort to standardize payments at low fees. There's absolutely zero reason why banks and other intermediaries should be allowed to skim off more than 5% of any kind of transaction. ZERO.

> I don’t have the actual stats, but, sadly, it seems like a gigantic chunk of the “i would rather pay a small fee to use a service rather than paying for it with exposure to ads” crowd is mostly all-talk.

Depends on the price.

I'm guessing lots of folks are paying $1/month to Apple to upgrade from the free 5GB tier of iCloud storage to get to the 50GB tier.

WhatsApp charged people $1 per year before being acquired by Facebook:

* https://venturebeat.com/mobile/whatsapp-subscription/

Supposedly about a billion people paid for that at the time. Even if they went to $1 per month, that'd be fairly cheap (and WhatsApp ran fairly lean, personnel-wise: fifty FTEs).

I pay for Nebula and still use Youtube a ton. Nebula is nice but it doesn’t have all channels I watch.

Video is impossible to break into because of how expensive it is. Even YouTube by all accounts is just breaking even. And that is with Google's entire infrastructure and advertising machinery behind it. A new entrant simply doesn't stand a chance.

Nebula just doesn't have a product I want. I don't care for early access to Youtube videos.

Other way round. Facebook bought them in 2014, and they dropped the fee in early 2016.

The fee wasn't enforced in many developing countries, and some users elsewhere will have been jumping through the delete-and-reinstall hoops (which was painful because it lost chat history) to avoid paying.

But with 1bn active users at the time the fee was dropped, it would still have been bringing in more than enough revenue to have sustained Whatsapp as an independent business if they had chosen not to sell to FB.

Yep I paid for Whatsapp, I've even dug out the receipt email. I want my £0.79 back!

Pre acquisition Whatsapp had 450M users. Even accounting for half the revenue of 1$ going away for payment fees (30%) and taxes (20%), that would still have been a nice cushy 200 million $ a year in almost pure profit - WA had 55 (!) employees at acquisition and 550 servers [1].

That's nothing at this scale of users and speaks volumes for the ingenuity of their staff.

The only ones driving even leaner than that are StackOverflow with just nine servers [2].

[1] https://highscalability.com/how-whatsapp-grew-to-nearly-500-...

[2] https://news.ycombinator.com/item?id=34950843

I don't know, I expect it to be at least %3 as this is the general conversion rate for "free" users AFAIK.

There must be some some number that makes it viable to have free users and paid users. For games, the free users are usually those who provide the "content".

People usually demonize freemium games but IMHO its much more benign than extracting huge sums by artificially making it worse and sell attention.

it's probably under 0% even including the 2% error margin.

Don’t underestimate how expensive ads are and thus how much money they can bring in. Marco Arment, the developer of Overcast podcast player, has made remarks in the past about how the ad-supported version is completely viable and may actually make him more money per user than the price of his paid option. In his case, he runs his own contextual ad system. Obviously Meta is in a completely different league in terms of sophistication, meaning they are probably able to sell more targeted ads which means more money, and they also have the luxury of not having to pay any middlemen since they own their own ad infrastructure as well.

Part of me thinks the reason why they don’t offer that paid ad-free version of Facebook (which they built to try and appease the EU regulators) in the US is because their ARPU is so high that people would laugh at the price “Facebook/IG Premium” would have to cost.

Also, don’t forget that at least for now, paid subscriptions to social media apps would need to pay a 30% rent to the platform owner duopoly. This means that the price it would be it would cost would need to be 42% above than its ad ARPU just to break even.

I'm not sure if the number was for Facebook specifically or all Meta apps, but they did quote a number of around $70 revenue per year per US user a while ago. (with (much) lower numbers in other parts of the world)

You would not, because 90% of the years wouldn't pay and you wouldn't also to have nobody to talk to after everybody moves to the next chat app

“Can’t” is relative. I suspect there are a lot of people who pay for at least one streaming service that isn’t YouTube, but spend more hours watching YouTube in a month than they do watching that service. And of course there’s also the age-old comparison that if someone goes to Starbucks more than twice in a month, they probably spend more there than you would on YouTube Premium, and does that provide the person with as much value as YouTube does?

In my opinion, it’s rarely about “can’t” when we’re talking about 12 bucks a month or whatever. It’s about the psychology: when a free tier exists, people reframe it in their heads that paying for that thing is an extravagance. Relatedly, removing the free tier altogether also has dangerous effects, as people immediately jump to “I can’t believe you’re taking away the free thing I used to have” outrage, while nobody complains about not having free access to say, HBO.

That is the absolute beauty of the targeted ad situation, isn’t it: you can generate leads for mortgages or expensive enterprise SaaS services, that are happy to pay super high acquisition costs, maximizing revenue from your rich users, and with the same ad inventory, maximize the revenue from your poor users by advertising App Store casino games for children, payday loans, etc. You can see why Meta doesn’t bother offering a paid service here.

But Signal is free. And ad-free

Something seems to have happened in NL in March that generated some demand for it, but it seems to have vanished now:

https://trends.google.com/trends/explore?geo=NL&q=%2Fm%2F012...

In the Netherlands, was trying to promote Signal.

I switched phones and lost all my history. Now I’m fairly careful with these things, and make backups, but even I wasn’t able to get it back. Couldn’t recommend it to anyone since.

There’s a line between being secure and being useful, and they’re slightly unbalanced in Signal.

They're doing a lot more now, though. Voice notes; multi-way video and audio calls; e2ee. And they barely even charged $1/year. I never paid for it.

I agree, although that's too vague. YouTube has a different appeal. But my point is more that I wouldn't say YouTube got ads because it stopped having a focus on not having ads. It needs to pay for itself.

Also Instagram and others. It was about capturing and selling community.

> The founders, however, were never interested in an ad business and hold that POV to this day.

Fair enough, but the founders don't necessarily make these decisions. I wasn't particularly referring to them. If they got VC money (I don't know if they did or not) then the VCs must've had something in mind to get a decent return on their risk.

> things that needed to be done to make ads doable and not terrible ... none of my ideas were deemed feasible at the time

Don't sell yourself short ... they did all the things to make ads doable it was just not feasible to make them not terrible.