Eamonn Carey

The Inexorable Rise of WhatsApp

2013-03-18T07:27:44-04:00

At one point or another, it's been the number one paid app in 131 markets globally. Depending on who's estimating, it has anywhere between 200 and 350 million users around the world. Barcelona's coach uses it to make changes in games from his sick bed in New York.

WhatsApp is, according to Ben Evans and many others, the biggest social network you've never heard of. It's a phenomenon - so much so that Facebook tried (and failed) to buy it in late 2012.

For the uninitiated, WhatsApp is an app that allows you to send free messages (text, images, audio and video) to anyone for free. It does for SMS and MMS messages what Skype did for voice calls. Unlike BBM, iMessage and others, it's no walled garden. It works across networks and across Blackberry, Windows Phone, iOS, Android, Symbian and others.

Its growth has been nothing short of spectacular. According to Onavo Insights, over a third of UK iPhone owners have it on their device. In Spain, that number is a staggering 97%.

In developing markets, it's no less impressive. I'm in Saudi Arabia this week on business. On my Saudia flight over, I noticed at least a dozen people using the company's distinctive UI. Our taxi driver spent an inordinate amount of time chatting to his friends on the app while driving us, at speed, to our hotel at 2am. Executives - young and old - are rarely separated from it for long. When I tweeted about WhatApp's prevalence early on Saturday morning, I had replies from India, Indonesia, Senegal and elsewhere - all saying they were observing the same pattern.

It's not just developing markets - its demographics do not easily fit the mould of early adopters. My mum uses WhatsApp. She's been using it for three years now. By comparison, she only discovered Facebook relatively recently. Friends and colleagues report having the same experience. People who never engaged with social networks are taking to WhatsApp, WeChat and other mobile chat and messaging services in their droves.

Perhaps one of the most striking features of WhatsApp is that, unlike other social networks, the users are not the product for sale. The company's founders are vehemently opposed to the idea of introducing any type of advertising onto the platform. You pay to use WhatsApp.

The company announced a standardization of its pricing across all platforms this weekend. Previously iPhone, iPad and iPod Touch users had to pay a one off fee £0.69 up front where Android users got it for free for a year before a £0.69 per year subscription fee kicked in. Now everything works the same - one year free and an annual £0.69 subscription from then on. The initial free year on iOS is likely to result in a slew of new users finding the platform for the first time - free apps tend to get 10x or more downloads when compared to even the cheapest paid apps, so expect that 200 to 300 million users figure to creep upwards quickly over the coming months.

More users equals more potential revenue - so it came as no great surprise when rumours began to spread around a possible move into WhatsApp gaming this weekend. Though the site that originated the story has since moved to correct it, there's no doubt that such a move has already paid off for their competitors. Kakao Talk, a similar Korean app generated 82 million game downloads from 23 milion users over a three month period in 2011 - generating $51.6 million in the process. Similarly, Line, a Japanese messaging app has had well over 100 million game downloads since they launched their service in July 2012, with one game alone generating $1m in revenues in just 12 days.

Those numbers are hard to ignore for a company with an investor like Sequoia on board. Numbers like that move companies towards IPOs or Instagram-style 10-figure exits. With that said, WhatsApp's CEO, Jan Koum said in a rare interview this week "We don't have an exit strategy because we don't plan or want to think about it. We want to focus on good products."

Regardless of their lack of desire when it comes to discussing these rumours, we can expect to see them surfacing a lot more frequently over the coming months. In the same way that Instagram posed a threat to Facebook as it started to encroach on the photo-sharing functionality that was one of the key drivers of their success, WhatsApp poses a clear and present danger to Facebook, Twitter and many others.

For Facebook and Twitter, it's a threat as it provides an outlet for people to chat and share information with their friends in a way that's far more segmented and private than either of their networks. For Google, it is a potential money making machine which handles over 10 billion messages a day - all containing content which they can't access. For telcos, it's a pain and it's a partner. All are potential acquirers, as is Microsoft - who must look at charts like this (where blue represents searches for WhatsApp and red represents searches for Skype on Google) and worry.

Right now, it'a also difficult to rule out Yahoo - who, under Marissa Mayer, are taking a long hard look at mobile opportunities in the market.

My guess - it's either an IPO or Microsoft acquisition. WhatsApp's founders both came from Yahoo, so they've been down the big company road before. Their stated disdain for ads is a pretty big indicator for me. If they were to go with Google, Facebook, Yahoo or Twitter, it would be hard to avoid the eventual appearance of display ads within the app. While there are operators who could buy them out, I'd imagine the founders would balk at the restrictions that would gradually be imposed by that type of relationship. Microsoft has the financial clout to make an acquisition happen, and the amalgamation of WhatsApp and Skype would be interesting as well as a huge potential revenue centre for Microsoft.

I must admit, I'm leaning towards an IPO. The money raised would allow WhatsApp to buy or simply build a VOIP service at some point in the future. It would allow them to stay far more independent and pursue their own plans and ambitions. The risk is, as with every platform, a competitor could overtake them. Of the many ways to mitigate against that, WhatsApp's simplicity might be its saving grace and its greatest asset. Watch this space over the next 12 months, as this sector is about to get very, very interesting indeed.

IRC and the Airtime Opportunity

2012-09-04T04:12:42-04:00

I like Airtime. Any new company that has the two guys behind Napster behind it was always going to face a tough time when it launched. There was no small amount of Color-esque moaning about the amount of money they raised. People sniggered at the opening day glitches. Others still feel that Sean Parker’s portrayal in ‘The Social Network’ is effectively a live documentary feed of everything that happened in 2005 and 2006. Others again like it. I’m in that camp.

I have a confession. I was always predisposed to like anything that Parker and Fanning did post-Napster. That app was a reasonably big part of my school/college years. Obviously - like Bill Clinton, I never inhaled. Like Playboy magazine – I used it 'for the articles'.

However, in my zeal to prove my innocence, I digress. The fact that it was started by two people who met on IRC only added to its mystique. I am a child of the IRC generation. Large swathes of the late 90s centred largely around hastagged chatrooms where I honed my skills in typing, one liners and troll-baiting (or debating).

This was back when people thought I was suffering from some sort of mental issue when I met online friends offline. I was pretty chuffed to be going on dates wtih smart people I’d met online. Some of my friends and family thought I needed to be sectioned. They took the view that the Internet was filled with proto-Dahmers, rapey overweight lunatics and a cast of millions that wouldn’t look out of place as extras in a Tim Burton movie.

They were wrong. The people on the Internet were like me, except smarter, funnier, more skilled and more open. Surely, like me, some of them were never going to trouble David Bailey’s lens on a fashion shoot, but isn’t that most of the population? Maybe some of us were a little socially awkward – that’s why IRC was amazing – you could talk about anything to anyone and you didn’t need to worry about whether you’d missed that awkward spot on your upper lip when shaving or whether or not you had food in your teeth.

I miss IRC. I miss the mayhem. I miss arguing with strangers, occasionally being a dick and usually having a brilliant time talking about life, the universe, everything and the number 42. I learned more about life, love, hacking, music, movies, comedy and myself in black and white chat clients than I ever did in school or college. I met people who critiqued my early journalism work – who criticised some of my (frankly bizarre) early startup ideas. I met people who were total randomers – total strangers who came into and left chatrooms (and by extension my life) on an ad hoc basis.

So when Sean Parker and Shaun Fanning talked about how that element of the Internet had died out a little – I agreed with them. When I first started going online in the 90s – everyone was a stranger. A handful of my friends were online, but most of the communities, bulletin boards and chatrooms that I used were populated almost entirely by people I’d never met and was never likely to meet. That was the original disruption the Internet brought into my life. That was what made it great. It was open. It was all a bit odd and it was all amazing.

The last ten years have changed things a lot. Instead of using the Internet to connect with and chat to total strangers, we’ve slowly started building little walled gardens around ourselves – connecting with people we know in the real world and engaging with them online. Admittedly, services like Twitter and Instagram do encourage some level of connection with strangers. They’re still a lot more selective in terms of the viewpoints you’re exposed to than any sort of chatroom or bulletin board service.

When the Airtime guys talked about rediscovering that whole area of chatting with strangers, my interest was immediately piqued. IRC, message boards and other communities and chatrooms still exist obviously – they just seem like anachronisms in the modern world. Maybe what Evan and Biz are trying to do with Branch will address the bulletin board side of things a little – but that’s still a work in progress. It's no chatroom. The closest thing that we've had to a real shakeup in random encounters online in the last while was Chatroulette.

I don’t think anyone would disagree with the fact that the insane success of Chatroulette was at least validation of an idea that may have already existed or been discussed between the folks behind Airtime. Once you got over the bacchanal of penises on display, Chatroulette was a pretty funny experience. I always thought that a slightly more segmented and moderated version (along with some additional features) would work wonders – and that’s what I figured the guys from Airtime would do.

To an extent, that’s what exists now. I won’t go into an exhaustive description of what the platform does – check it out for yourself and you’ll see lots of pros and reasons to engage. You’ll also see cons and things that will put people off.

Chatroulette worked really well cause you didn’t have to talk. You typed. Airtime feels a lot more like a real social interaction, which can be a bit offputting if you decide you want to use it to talk to someone when 4am insomnia strikes. You can only talk to one person at a time so far. Chatrooms allowed you to carry on tons of conversations at once – one with the main room and multiple private/group chats. While that had a tendency towards information overload, it still worked really well.

With that said, I think there are massive opportunities for Airtime. I think there are some very cool partnerships that would be pretty easy to set up which would allow sports fans to talk/argue/bait one another during major events. There are media partnerships that could take advantage of this to create real time fan debates which could easily be adapted for TV.

It has almost limitless potential in education circles. Again – simple partnerships could create a platform that students could use to connect with and learn from one another. Students learning language from native speakers would be amazing. Getting some local help for history assignments would be easy. You could even allow experts to bill for their time (with a cosy 30% share of revenues generated going to Airtime). Build in some game elements, points and rewards and the potential gets even bigger.

Sean Parker talked about eliminating loneliness when he initially discussed Airtime. To me, this is the most personally interesting idea. My granddad told me that he was lonely a while back – after my granny passed away, he was at home on his own a lot. It struck me that an Airtime type app in a Smart TV would allow him to chat to like minded folks about football, fishing and everything else he’s interested in. There isn’t a child, grandchild or great grandchild alive who wouldn’t chip in some money to pay for some moderation and verification on a service like that. Guilt can be a powerful motivator...

To people who are busily knocking Airtime’s user numbers or scoffing at the ambitions of Parker and Fanning, I say give it time. They’ve got a brilliant idea waiting to happen. To fellow fans of IRC – if you’ve found a replacement for it on your smartphone, tablet or computer – let me know. If not, maybe I need to start thinking harder...

The Economics of Spotify

2011-10-28T03:28:50-04:00

The idea that Spotify is somehow bad for the music industry is farcical. I read today that Coldplay are not releasing their new album on Spotify - ostensibly because you should listen to the album as a whole rather than as individual tidbits. Oddly enough, you can still buy those individual tidbits on iTunes and listen to them in whatever order you want, but I guess I must be missing the point by saying that.

The most common complaint I hear about Spotify and other streaming services is this notion that the artists don't get paid enough. According to recent articles, artists receive around 1/3 of a penny per stream. That puts Spotify a lot more in line with Last.fm if you look at this famous infographic.

I think where a lot of people miss the point is around the pay-per-stream idea. If I buy an album that's good, there's a better-than-average chance I'll listen to it dozens of times. There are songs on my iTunes player that, were they records, would be worn down from the amount of times I've listened to them. So on a service like Spotify, those artists (I'm looking at you Pearl Jam, Tool and others) would be received 1/3 of a penny hundreds, if not thousands of times. Instead, they received a fixed fee from me several years ago. So which one of those makes more sense.

The reality is that most commercial revenues for bands nowadays comes from touring. The era of the fat advance signed in a room filled with cocaine, hookers and fat, sweaty music execs is over. What people want now is quality. Where large sections of my youth were blighted by good bands releasing crappy albums replete with endless filler tracks, now the onus is on bands to perhaps release fewer albums with better tracks that will be streamed more often - and touring more often, selling more t-shirts and merchandise to make more money. It's not rocket science.

One last point - especially for Coldplay. I use Spotify (which I pay for) a lot. I listen to a ton of new music on there. For the first time in a while, I listen to albums the whole way through. I'll playlist an entire new release and listen to it on the bus or on the tube and hear it the way the artist wanted it to be heard. Just some food for thought....

Eliminating Loneliness

2011-09-24T04:48:55-04:00

Eliminating loneliness is a lofty goal. And yet it's one that should theoretically be within our grasp. I was really interested to read that Sean Parker - you might know him better as 'that guy who Justin Timberlake played in The Social Network - was working on a new startup with just that goal in mind.

Loneliness and depression are two of the most serious issues facing the wider public today. According to the WHO, depression is one of the most serious issues in public health today. The table below shows just how serious an issue this is - by 2030, depressive disorders will be the biggest health burden on society both economically and sociologically.

I've been thinking about how new tools and various ideas could help to eliminate loneliness for quite a while now. My granny died last year, and in a conversation with my grandad over Christmas, he mentioned how lonely he'd been. This is a man for whom such an admission would not come easily, and he is by no means alone in feeling this way.

That's why I was so interested to read about Parker's new venture. People have been looking at this area for years - Jane McGonigal, the well-known games designer and author was one of the creators of Bounce back in 2006. This was a simple game which connected younger people with 'senior experience agents' who were residents of an old folks home in San Jose. The game required the participants to have a ten minute phone call where they would discuss various topics and try to find common ground or shared experiences. It worked. Almost everyone who took part once made another call. The 'senior experience agents' all reported higher moods after the calls. Simple. But effective.

I suspect what Airtime is looking at is not just this particular age group - though I'd be surprised if this wasn't part of the plan. I remember thinking when Chatroulette came out that, with a little work, it could be an amazing way to connect people and alleviate some of the burden of loneliness. Obviously it's well documented issues with dodgy content might have caused some issues, but with some level of moderation and potentially a private, paid for area to discourage trolls and (let's face it) wankers, it had real potential.

Imagine a service where you paid a certain amount each month to connect someone you care about with people who have similar interests. Think about the amount of mental stimulation they'd get from just having someone to have conversations with or even just someone 'in the room' with them - almost like ambient skyping. I'm sure some people would look at that as a way of assuaging guilt for perhaps not calling or spending enough time with that person yourself - and perhaps they'd have a point, but it would still be a good thing. The benefits that something like this would bring to people who feel isolated or lonely would be immense. There are endless ways that this could spread out - taking in ideas like Bounce and others to add elements of gaming and interactivity to it. It might sound over the top to some people, but I'd be willing to bet that the long-term benefits it would bring to people would be worth any amount of negative press around how 'eliminating loneliness' is too lofty a goal.