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  • How do free apps (WeChat, Line, WhatsApp) make money?

    Anil Jain

    Member

    Updated: Oct 27, 2024
    Views: 2.0K
    WhatsApp is one of the most popular free communication app.
    WeChat's popularity is increasing day by day, even they are spending crores on Advertisement.
    Recently 'Line' another free app has started spending bucks on advertisements.

    I was just wondering how these free apps makes money? Can you think of a way how these apps makes money to keep them in business (the expenses I can think off, some solid servers, Advertisements, staff, development and maintenance cost).

    Any Clue?

    -CB
    0
    Replies
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Replies

  • Sarathkumar Chandrasekaran

    Member • Jul 6, 2013

    Hi bro I Have the answer for your question.
    The path through which free apps can make money are as follows:

    1)Advertising
    2)Subscribers
    3)selling data
    4)Royalties
    5)freemium
    6)Affiliation

    Explanation I found on net:
    You quoted about Line messenger.It makes its money through" Linepop" game.At the same time it maintains the fan base(user).
    Many people prefer paid apps and Japan stands 1st by having 29% global share in paid apps in play store.
    Some apps gives the basic access for free and force to upgrade to get the premium service.
    Through MERCHANDICING and LICENSING(eg:Rovia -angrybird game maker makes profit by merchandicing and licensing.)
    Dolfin browser makes profit by driving users to install other apps.

    I hope i had the best answer.
    see you.....
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  • Kaustubh Katdare

    Administrator • Jul 6, 2013

    Well, free messaging services don't make money. Most of the companies that offer services free of cost are either backed by venture capital funds or through online advertising (CrazyEngineers).

    WhatsApp, for example is free only for 1 year from the moment you register. The company does it to make people get 'used to' it and become addicted so that once the trial expires, people pay $0.99. But for the first year; you are a liability for the company.

    The longer term strategy for most of the free services is to get acquired. For example, Google and Facebook were said to be in talks with WhatsApp to acquire them for about $1billion!
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  • Delh

    Member • Nov 10, 2013

    No wonder you have downloaded the WhatsApp application for free on your smartphone and didn’t have to pay a penny further. You may be completely addicted to that. So after one year what after that? To proceed the usage of app you have to pay them (0.99$) for one year. It is less than a dollar. So most may don’t care. But if you see the economics you can know thes usage and users of WhatApp.

    “Strategy is straight forward, you donwload the app which is free of cost, and use it free for one year. Then renew the app by paying money. If you’re an iPhone user, they start earning money right from the word go!”

    For more information go through this link #-Link-Snipped-#
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  • Kaustubh Katdare

    Administrator • Nov 10, 2013

    $0.99 is what they charge on yearly basis.
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  • Delh

    Member • Nov 10, 2013

    Even though there turnover is more than 250 crores.
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  • Kaustubh Katdare

    Administrator • Nov 10, 2013

    Delh
    Even though there turnover is more than 250 crores.
    That's quite obvious. They need to make money just like any other business. For the community they offer; I think the price is justified. I'd have loved to have a Desktop client though.

    They are processing over a billion messages per day and the infrastructure costs are going to be huge!
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  • vipul chadha

    Member • Dec 13, 2013

    Mr. Kasutubh not not satisfied with this answer because , wats app can be re downloaded rather then paying them next year
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  • Kaustubh Katdare

    Administrator • Dec 13, 2013

    vipul chadha
    Mr. Kasutubh not not satisfied with this answer because , wats app can be re downloaded rather then paying them next year
    Well, It looks like they're charging money only to iOS users and not to Android users. Or maybe they have changed the strategy to remain competitive in the game.

    I remember @#-Link-Snipped-# had mentioned that he had to pay for the messenger after 1 year of usage.
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  • vipul chadha

    Member • Dec 13, 2013

    I dont think that will have edge over it as it is million dollar game ,
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  • Kaustubh Katdare

    Administrator • Dec 13, 2013

    vipul chadha
    I dont think that will have edge over it as it is million dollar game ,
    They already do! They continue to be the biggest in the mobile messaging apps and are already bigger than twitter. They do have fast growing rivals like Viber, Snapchat (not a direct competitor), Line Messenger, WeChat and others. So when rivals are growing so fast; it doesn't make sense for WhatsApp to keep charging to their users.

    I've been using WhatsApp free of cost for more than a year and I was surprised that the app never asked me to pay. I thought I was lucky; but then found out that they're offering it free of cost. Not sure how their payment systems works.

    It's not a million dollar game. It's a billions of dollar game. The only exit that looks possible for WhatsApp is acquisition by Google, Facebook or Twitter. That said, I believe WhatsApp has the power to destroy Facebook and hurt FB where they're still bleeding - and that is mobile messaging and photos sharing.

    If WhatsApp team wants to go that way, Facebook should be worried.
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  • Delh

    Member • Dec 13, 2013

    vipul chadha
    I dont think that will have edge over it as it is million dollar game ,
    @#-Link-Snipped-# Obvioulsy they will have the turn over in million dollars .
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  • Anil Jain

    Member • Dec 13, 2013

    One of my friend who is a small start-up entrepreneur told me these small product companies just try to make sure that do not go in loss in first 3 years (and can run their business and have two time food), their main motive is to make the product big ad popular enough that big fish like Facebook, Google, Microsoft, Yahoo will acquire them with a heavy hefty price. Firstly I was not agreeing with him, but looking at trend and few aspiring bids I started having a faith in that strategy...

    Recent offer to WhatsApp was just a sign of that?
    I believe WhatsApp can not make money in straight manner as it was offered.

    -CB
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  • Vikram S Bargah

    Member • Dec 13, 2013

    vipul chadha
    Mr. Kasutubh not not satisfied with this answer because , wats app can be re downloaded rather then paying them next year
    Its true . we need to pay for the service after one year on the same mobile number. we need to pay Rs 55 INR .
    This can be checked on its setting tab which gives its account expiration details .
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  • vipul chadha

    Member • Dec 15, 2013

    I believe they will wait & they will bring a big boom through IPO ( Initial public offering ) as did facebook , 10 rupee share will go upto 400 Dollar , what do other members think
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  • Kaustubh Katdare

    Administrator • Oct 13, 2015

    Posting an update because not many people are clear about this yet.

    Remember that most of the free messaging apps listed above are either owned by major corporations (WhatsApp is owned by Facebook) or are heavily VC (Venture Capital) funded. Having cash-rich players behind them makes these app do things without caring about making money. Let me explain -

    Market First, Revenue Later:

    This is the common strategy these days. The apps are offered totally free of cost and are loaded with features and facilities that attract the new users. The success of the app comes from the number of users that use it on daily basis. The apps are willing to do anything to capture all the new and young users; because if you capture them - you can be pretty much in the game for 4-5 years.

    That's the reason, all the cash rich backers of these app only focus on getting new users - through referrals, advertising, marketing, direct lead generation and viral growth techniques. For them, capturing the bigger share of the market over the rivals is the most essential things.

    Why? Because it's all about making people addicted to the service. Once people are addicted to the service, these apps figure out ways to monetize. For example, they may offer basic services free of cost (messaging, photo sharing, video sharing etc.) but ask money for special features. For example, if you want to use your own photo as emoticon, pay them some money and you can be 'different' than others.

    If you want to make video call, then you can do so freely with up to 5 people. But if you want to add 6th person to the video conference, the service will ask you money.

    Of course, these are some of the examples. WhatsApp was bit different. While it was free in some of the countries, it charged about a dollar per year in the western markets. I think it still asks for $1/year in USA. Can someone confirm?
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  • Ankita Katdare

    Administrator • Feb 9, 2016

    Kaustubh Katdare
    I think it still asks for $1/year in USA.
    So, with a billion users they make at least half a billion dollars every year even if they take $1/year fee only from a few select markets. That sounds great.

    I think that most of these companies who crave for penetration, popularity and capturing the market, are only there to burn the investor's money to survive and eventually get sold to a bigger player. This way, the founders make a lot of money and they have the satisfaction of building a truly global product.
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