Yesterday WhatsApp co-founder Jan Koum announced that the company is discontinuing its annual subscription fee, reports the Wall Street Journal. While the messaging app is free for the first year of use, users must subscribe for $1 a year thereafter. With nearly a billion users, this change in strategy is significant.

WhatsApp explains why on their blog:

“…we’re happy to announce that WhatsApp will no longer charge subscription fees. For many years, we’ve asked some people to pay a fee for using WhatsApp after their first year. As we’ve grown, we’ve found that this approach hasn’t worked well. 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. So over the next several weeks, we’ll remove fees from the different versions of our app and WhatsApp will no longer charge you for our service.”

How will WhatsApp replace that lost revenue? WhatsApp said it will test tools that will allow users to communicate directly with businesses and organizations it wants to talk to. For example, WhatsApp users might be able to reach out directly to their bank about a questionable charge or their airline about a delayed flight. Organizations would only be allowed to communicate with users with their consent.

“We all get these messages elsewhere today – through text messages and phone calls – so we want to test new tools to make this easier to do on WhatsApp, while still giving you an experience without third-party ads and spam,” WhatsApp said.

Yesterday WhatsApp also announced that, in addition to being able to use WhatsApp on smartphones, users can now utilize WhatsApp on the web.

Insider Take:

Last February Facebook acquired WhatsApp for $22 billion. At that time, WhatsApp boasted 450 million users. Facebook founder and CEO Mark Zuckerberg said he didn’t expect WhatsApp to contribute to Facebook’s bottom line until it hit a billion users, and it looks like WhatsApp is close. That may explain the timing, though a business model switch is not likely to yield immediate results.

This strategy is in line with Facebook’s plans for its Messenger app which had 800 million active monthly users worldwide in December 2015, according to Statista. Last March Zuckerberg revealed his goal at Facebook’s F8 conference in San Francisco:

“As Messenger has grown, we think this service has the potential to help people express themselves in new ways, to connect hundreds of millions of new people, and to become a communication tool for the world,” he said. “Helping people communicate more naturally with businesses will improve, I think, almost every person’s life because it’s something everyone does.”

Sound familiar? It makes sense that Facebook would combine forces with WhatsApp to absorb a huge chunk of instant message users – just under 1.8 billion users – and to leverage that audience volume to attract revenue from businesses who are willing to pay to play. We’re sure there is more at work here, and that both Messenger and WhatsApp will find other ways to monetize their services, especially without the reliable revenue stream a subscription model offers. Perhaps they’ll create an entirely new model that others can emulate.