Cost of Telegram content as a service. Messenger economy


Many people consider Telegram a messenger and use it as an advanced version of WhatsApp. I do not share this opinion, since Telegram incorporates the properties of both a messenger and a social network in which you can share content, communicate and keep in touch with an unlimited circle of people. We can safely say that Telegram is a tool of another generation, it replaced the usual messengers and became a phenomenon without any discounts. In January 2021, Telegram’s audience exceeded 500 million people, and is used all over the world. Somewhere they try to ban Telegram, somewhere, on the contrary, they welcome it. The main contribution to the popularity of Telegram was made by Russia, as the state pretended to want to block the messenger, but never made any real attempts to do so. I can’t remember such a large-scale and expensive advertising campaign for another service.

The political struggle in America pushed many people away from Facebook, Twitter, Instagram, and the almost unknown Twitter clone under the name Parler died a heroic death. People were looking for a convenient tool where they can express their thoughts, many have discovered Telegram. Facebook underestimated how users perceive their data. For many years, WhatsApp data was transmitted to Facebook and was used for various purposes, including advertising, the person for corporations turned into a product. The change in the WhatsApp user agreement highlighted this problem, they began to talk about it publicly, and many people decided that they were not a product for Facebook to sell, went in search of another tool and found Telegram. Pavel Durov mentioned that in 72 hours Telegram received 25 million users, a record without any discounts, and for it one should thank both Facebook and the censorship that was introduced in American social networks.

We can safely say that 2021 is becoming surprising for Telegram, the messenger is already required to be blocked in the United States by initiative citizens, but these are only flowers, the main events are still ahead. Many argue that Telegram only benefits from this situation, gets tens of millions of users out of nowhere, does not spend money on attracting them. A fabulous situation that you can and should enjoy, but in reality everything is not so great. The reason is that each user means additional costs, which are dead weight on Telegram. An audience of 500 million people is a noticeable political force in our world, but since its launch in 2013, Telegram has not brought its owner a dime. This business only gobbles up millions of dollars every month and looks like a charity project, but could it be? I doubt it.

Let’s try to figure out together how much Telegram content costs, how expensive the project is and where the money for it came from. Everyone can draw conclusions independently.

You need to start by assessing how Telegram has developed, how its audience has changed. Let’s take a look at the graph.

Cost of Telegram content as a service. Messenger economy

We can say that Telegram has accelerated over the past year, the growth of an audience of 200 million users can be considered a record. But by January 2022, Telegram was planning to reach an audience of one billion users, such a forecast was made in 2018, when Pavel Durov was trying to launch his own cryptocurrency. The plan looks realistic. To evaluate Telegram in the context of other social networks and messengers, let’s look at the statistics (October 2020, as you know, everything has already changed noticeably).

Cost of Telegram content as a service. Messenger economy

Huge audience, constant and explosive growth. Let’s estimate how much it costs to maintain such a colossus and what the money is spent on. Since Telegram is not a public company, we can focus on what Pavel Durov, who created the messenger, said at different times.

The first interview that may interest us dates back to 2015. It originally appeared in the American Daily Dot, but today the page with this text leads nowhere, the interview has disappeared. Here is this link.

It is extremely difficult to destroy something on the network, so I suggest that you familiarize yourself with a couple of points described in the interview. In particular, Pavel Durov said that in 2015, a million dollars a month were spent on maintaining the messenger. He spent his own money on the messenger, which he received from the sale of a stake in the social network VKontakte. And here is his direct speech: “Now we are unstable, we are spending my personal funds. We want the company to be able to cover salaries in the future, because otherwise it is not fair. And I agree that this is where we are going, what we will do in the end, come up with a sustainable business model. I think we’ll start experimenting with it soon. This will not include paid features, subscriptions, or ads. Telegram will always be free for the user. Our monetization will likely include a third party platform and revenue sharing. “

Or this passage: “We are like non-profit organizations in that we also want to spend everything that we have earned. At the same time, we want to support ourselves. Therefore, an important question that users ask us is: “Great product, free, I like it, but what happens in a year, two years, five years, when you gain more popularity and costs increase?”.

When WhatsApp and Viber reached this point, they had to sell out. Their expenses were too high and they didn’t find a way to monetize. WhatsApp had a subscription, but if you look at their results in 2014, they made $ 25 million and spent $ 280 million. This is not a sustainable model at all.

We don’t want to burn money forever, and we don’t want to make more than we can spend. We want to earn exactly as much as we need for equipment, traffic and salaries. Our team includes the best developers in the world. Some of them were the best on VKontakte, and they left after me on Telegram. They received offers from Facebook, Google. We cannot motivate them with options, because this is not a privately held company for sale. So we have to pay them competitive salaries, otherwise we wouldn’t have developers. “

What does Telegram spend money on? This is a development team, office costs and other small things, since these costs are negligible compared to the cost of traffic and servers for servicing Telegram. It is impossible to extrapolate the costs of 2015 to date, since the average Telegram user of that time and 2021 is very different. The reason is the popularity of the messenger and the fact that it allows you to create public channels that distribute information, and often these are not just text, but photos, videos, voice messages. Users have the same thing. I do not have statistics on the traffic of a Telegram user in 2015, but there is an opportunity to see such statistics for Russian users in January 2020 and January 2021, data from one of the Big Three operators. In January 2020, the average amount of transmitted data (only mobile data, Wi-Fi is not taken into account, which gives a large error, real data is higher) was 800 MB. In January 2021, we are seeing growth to 1.4 GB. It is possible to draw conclusions from these data for Russia as a whole, but in other countries the consumption profile is very different.

It should also be borne in mind that the operator sees data only on its own network. If a person uses two smartphones, then the traffic is many times higher, it is duplicated on each device! Here are my data from Telegram, they are above average for Russia (subscription to a dozen channels, active photo sharing).

Look at how much data you transfer, I think the statistics will surprise you. The only conclusion that can be drawn on the knee sounds extremely simple: today in Telegram, the amount of data per user per month is significant and is very different from what we saw in 2015. This is also supported by the fact that people consume more and more mobile traffic every year.

It is clear that Russia is notably distinguished by the cheapness of the mobile Internet, for example, in India the picture per user will be completely different. But people there also have Wi-Fi, they are no less active in consuming a variety of content. For Telegram, it doesn’t really matter how you access the app, over Wi-Fi or over a cellular network. It is important for the service how much data you transfer, as well as the fact that this data must be stored on servers, as well as pay for traffic to them. The lion’s share of Telegram’s expenses today are servers that must ensure the operation of the application, and it is also desirable to be located in different countries of the world in order to provide the best connectivity for the service.

In 2018, figures appear in the prospect for Gram cryptocurrency investors that show how the Telegram business has changed. In particular, for 2017, a figure of $ 70 million is given, of which $ 62 million was spent on equipment, traffic, servers and user verification (yes, those same SMS messages). Interestingly, the prospectus also provides a forecast for costs: 2018 – $ 100 million, 2019 – $ 130 million, 2020 – $ 170 million.

Taking into account that Telegram planned to reach an audience of one billion users by 2022, the costs can be estimated as real and built on the basis of the growth model that was laid down in the company. In 2018, no one could have predicted a pandemic, a change in the cost of storing information in data centers, an increase in the cost of traffic for large customers. We can safely lay the growth of 20% on the figures that Telegram gave in 2018 for the last year and the current period. Even according to the most conservative estimates, in 2020 the company’s expenses amounted to more than $ 200 million, while the company did not earn a single penny from its service. Even if we add up all the numbers that were cited by Telegram and consider them the minimum cost estimate, it turns out that at the end of 2020, $ 600 million was spent on the service. Considering an audience of 500 million people, this is a great result that is undeniable.

In December 2020, Pavel Durov announced for the first time that paid features would appear on Telegram. Nothing will change in the messenger for users, Telegram will remain free for them. Also, users will not see ads in their posts, which is often annoying and rejectionable. It is planned to raise money through advanced opportunities, as well as those who use Telegram for business. No specifics were announced, but Durov repeated that there was no talk of selling the company or a stake in it.

For many years Durov has been building the image of a person who fights for the rights of people, creates a tool that protects privacy, and does not monitor his users. The fact is, Telegram stores everything you send through it – messages, files, videos, and photos. For the user, this is exactly the same black box as other services, you do not know what is happening inside it, and you can only believe the words of Pavel Durov. Faith is an ephemeral thing, it can be quickly destroyed.

Since 2013, Telegram, according to Durov, lives exclusively on his money. Pavel could receive from 300 to 480 million dollars from the sale of his stake in VKontakte, estimates vary greatly. But even if we take the estimate according to the upper bar, then Telegram’s expenses have already exceeded this amount. In 2018, an ICO was held for the Gram cryptocurrency, and in a couple of rounds they raised $ 1.7 billion. But the American regulator at the end of 2019 banned the issue of Gram, the money had to be returned and the American investors had to be paid 10% on top. Interestingly, $ 470 million of the funds raised was spent on the development of a blockchain platform, as well as maintaining the work of Telegram.

In May 2020, Gram investors were offered a loan agreement, according to which the company is obliged to return all raised money by May 1, 2021 and pay 10% for the year of their use (validity period – from May 1, 2020 to April 30, 2021). Or return 72% of the amount, but then the rate will be 52.7%.

In January 2021, a rumor appeared that Durov was offered to sell from 5 to 10% of the company with a total Telegram estimate of $ 30 billion. But Durov rejected the offer, and all previous statements unambiguously indicate that the company is not for sale. Agree that it looks at least strange and surprising, because Telegram is a business that eats hundreds of millions of dollars annually. And they need to be attracted somewhere, charity cannot last indefinitely. The issue of monetization of the service is acute, but even if Telegram launches such monetization tomorrow, it will not be able to attract sufficient funds to maintain its work, the costs are already greater than the potential revenue.

Against this background, there are not so many ways to solve the problem, but this is if we talk about the business component. I think that we will see a very interesting move from Pavel Durov when he uses his trademark feature – protecting people and their personal data. No obligatory payments, but collecting data in support of Telegram, the ability to get a “tick” in front of the name that you donated some money. This is a social story that can support the service. It is also a great story to show that Telegram is independent, supported by its users, there is no one behind it. At the same time, my opinion remains unchanged that Telegram was created as an intelligence tool, and a successful tool, the whole legend around the service is built very correctly. As well as the fact that Telegram has not earned money for many years, the service simply did not face this issue. It is easy to believe in the altruism of Pavel Durov, since this is part of his image. But I repeat that Telegram is a black box for everyone outside of it, and no one knows what is happening inside, what data is stored and how, where it is transferred, and so on. Someone may consider this a conspiracy theory, but all the indirect signs speak of the same thing. The clumsy attempts to block Telegram in Russia looked like a successful PR campaign. When engineers offered 100% ways to “kill” a service, their advice was simply ignored, which paints the situation in a completely different light.

But if we put aside politics and who actually created Telegram and why, we can say that in the public field of the company it is necessary to solve one simple issue – to show that it is independent and receives money for its existence from a “pure” source. Collecting user money for this is ideal, especially since it is easy to hide funding from certain government institutions among such payments.

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