March 17, 2025
Episode

WhatsApp is a Cultural Force. Will it Make More Money?

WhatsApp is a Cultural Force. Will it Make More Money?
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Today’s episode is about WhatsApp—a product that, ironically, has a lot in common with music! I’m joined by Tati Cirisano from MIDiA Research. You can listen to us here or read below for highlights.

I remember when I first heard about WhatsApp. It was this little app that I was first introduced to by my Jamaican relatives. WhatsApp was the answer to those crazy long-distance fees, overages, and excessive calling cards that drove up our monthly bills. I called AT&T plenty of times to negotiate those charges. I was often unsuccessful but hey, it was worth a shot!

What started as a simple messaging solution in 2009 quickly evolved into a global phenomenon. Within five years of its launch, Facebook acquired WhatsApp for $19 billion in 2014, recognizing its explosive growth trajectory. By 2016, it had reached 1 billion users, and by 2020, that number had doubled to 2 billion monthly active users, making it the most widely used messaging platform globally. Its growth in developing markets like India, Brazil, and across Africa has been particularly remarkable, with adoption rates exceeding 90% of smartphone users in many of these regions.

Over the years, slowly but surely, many of my group chats on other platforms like GroupMe, Telegram, or disjointed group texts have now moved to WhatsApp. Even some 1-on-1 chats with friends in the U.S. have moved onto WhatsApp. It's the gateway for global communication and business.

WhatsApp is a product that:

- connects people worldwide across different cultures
- enables B2B users to build impressive businesses off of its platform
- is owned by a big tech company that values its ecosystem benefits over its standalone profits
- still struggles to monetize the cultural impact that it creates

Ironically, each of those bullet points can also apply to audio and video streaming. As the entertainment business knows too well, this is a powerful yet challenging position to be in.

Netflix, Spotify, and YouTube all faced similar challenges in monetizing massive user bases while maintaining product integrity. Streaming platforms gained power by prioritizing growth and their content libraries, just as WhatsApp focused on user experience and reliability. Netflix spent years perfecting its recommendation algorithm and user experience before scaling the service. Spotify has balanced the tandem of its free and premium tiers (much to the frustration of the rights holders who hate the free tier). Similarly, YouTube struggled for years before finding its advertising and YouTube Premium balance. WhatsApp now stands at a similar juncture.

For decades, Meta’s playbook has been to first grow a massive user base and then figure out how to make money. I’m old enough to remember when “Can Facebook make money off of mobile?” was a real concern that many had.

WhatsApp has accomplished the ‘massive user base’ with over 2 billion monthly active users. Today, it makes money from its business users through its WhatsApp Business API, click-to-message ads that integrate with Facebook and Instagram, and WhatsApp Pay. Those are just a fraction of its users.

The Business API has its success stories. Take Vodafone, which deployed WhatsApp Business to manage customer inquiries and reduced call center volumes by 30%. Delivery service Glovo uses WhatsApp to coordinate with its delivery partners, improving efficiency by 25%. Indian e-commerce platform Flipkart leverages WhatsApp for customer support, handling over 60% of its customer queries through the platform. These companies are willing to pay WhatsApp for tools that improve their customer engagement and operational efficiency.

In late 2023, WhatsApp introduced "Flows," an in-chat browsing experience that allows businesses to offer high-quality menu interfaces. Then in 2024, WhatsApp Pay expanded to more markets thanks to AI-powered business assistants that can handle routine customer inquiries. AI has huge potential to save WhatsApp and its business customers a ton of money.

But what about the rest of its 2 billion users? The pain point is that people don’t want to see ads in the middle of their text messages or group chats! Texting is too active and personal of a consumer behavior habit for ads to be seamlessly integrated. Plus, WhatsApp value prop is that its data is encrypted, so Meta can’t target WhatsApp ads specific to us beyond what it can infer from metadata. Plus, even if WhatsApp wasn’t encrypted, text-based social media advertising has always been tough. Brands have less assurance on what type of content their ads will be next to.

Even if WhatsApp releases the right mix of revenue features, its impact in the Meta family of apps may far outweigh the benefit it offers to the company’s P&L. Like Apple’s iMessage, Google’s GMail, or various content streaming products, its value within the parent company ecosystem may be strong enough.

Something that Tati and I have talked about in several episodes is how most social networks have become more entertainment platforms. They may have begun as ways to connect with your friends, but the pivot to personalized feeds of entertainment was a far more lucrative journey.

WhatsApp is one of the rare platforms that is actually “social” in the traditional sense. The path to further monetization though, is full of opportunities that would change the fabric of the product.

The “Facebook” or “Instagram” route of ad-based monetization for consumers would likely struggle at mass, but finding more ways to serve its power users, whether they’re B2B or B2C. Is likely the way to go. Enhanced storage? Advanced group messaging? They could all be on the table.

Parts of it sound a lot like the superfan strategy in music. The power users are the path to monetization on many platforms. Let’s hope the value prop is a little stronger than what we’ve seen in music.

Listen here:​​ Spotify​ | ​Apple Podcasts​ | ​Overcast

Chartmetric Stat of the Week - “Millennial Taylor Swift…?”

Last week, one of my wife’s younger co-workers asked her if Lady Gaga was her generation’s Taylor Swift. It’s a wild comment to hear about women who are three years apart in age, but I get it. Lady Gaga’s commercial prime was nearly 15 years ago.

But over the past month during her promo run for her new album, Mayhem, Gaga’s TikTok following has grown from 11 million to nearly 15 million. Even the new generation is tuning in.

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Read what the industry leaders read

Hip-hop mirrors the business world in a lot of ways. While I’ve always thought and known that, it’s great to see those ideas brought to life by someone so knowledgeable about both of those things. Huge fan of Trapital.
PPLS CHAMP
Looking forward to future episodes of Trapital. I’ve been following the newsletters for awhile and always learn something new that’s relevant to hip hop and business. Great job getting the nuggets of info from Matthew Knowles on the 1st episode, can’t wait until the next one!
Cburns08
If you’re looking for a podcast with a wealth of info on the business of hip hop, then Trapital is your new home. Dan is an excellent host who has a myriad of of experienced guests to talk their role in the business of hip hop. Check it out!
RoyalSkegee
If you work in — or have an interest in — the music business, Trapital is a must.
Samu Rast
A good friend of mine put me on this podcast and it took me some time to tap in, but once I did, I couldn’t stop listening! Dan has a talent for pulling out the narratives between lines, connecting it to the culture and then making it make sense. I’m a loyal subscriber and am thankful for the podcast!
Zealous Advocate
I am a real estate investor and came across this podcast after a recommendation from a friend who shares my loves for both hip hop and business. Often, those two interests have such polar opposite “voices” - but Dan’s podcast brings those two together for me. The result is magical. Great guests, too!
Gabriel Blue
As a guy who came up in NYC during the late 90s / early 2000s rap scene, I appreciate the history revisited by Dan, who obviously has an authentic and unique perspective on the culture. But he’s not only a hip hop historian; he’s also a visionary of art, technology and culture who curates other trend setters from across the globe. Salute!
Mrkamal
I love Dan’s ability to bring diverse and timely perspectives to the show while asking deeply insightful questions that engage the audience on so many interesting levels. I’ve learned so much in just a short period of listening. Excited for what Dan has in store for the show in the future!
Greg0188
I stumbled upon this podcast by learning about Dan / Trapital via LinkedIn. I listen to A LOT of podcasts and I decided to give it a listen. First, Dan has a calm and authentic demeanor, which are great qualities. When he’s talking to his guests it’s very conversational and easy flowing. I’m a former music industry vet so the topics are right up my alley.
Phil Stolaronek
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