Facebook (NASDAQ:FB) made a surprising decision when it opted recently to split off Messenger from Facebook proper. New users will no longer have to sign up for the app using their Facebook credentials. Instead, they can use their phone number and contacts to sign in and preload friends to chat with.
There's a growing population of Internet users who would prefer not to have a Facebook account. Reasons range from the fact that it consumes too much data (think developing markets) to "My parents are on Facebook. Gross." With the new features Facebook introduced for Messenger in March at the F8 Developers Conference, reaching every possible user is key for the future of Messenger as a business.
Businesses on Messenger
Facebook has done an incredible job getting businesses to establish a presence on its platform. As of the second quarter of last year, Facebook had 30 million businesses with Pages on Facebook and the company said in April that the number "continues to grow." Of those businesses, 2 million are active advertisers.
The biggest selling points for Facebook Pages are that they're free, and they have the potential to reach almost anyone. With Businesses on Messenger, Facebook is trying to replicate that value proposition, letting businesses connect with their customers. The free part is easy. Reaching everyone is... not as easy.
Messenger will be hard to monetize in the long run without establishing a business presence on the platform. Users are used to a completely free service, and if Facebook starts locking certain things behind a paywall, some may decide to check out one of a dozen different messaging apps that have all proven relatively popular. Businesses are much more willing to spend money to improve themselves compared to the amount users are willing to spend on a few cool features.
Monetization through businesses could be accelerated by the adoption of the payments capabilities Facebook is rolling out through Messenger. Payments will be free for users, but Facebook could charge businesses a fee to process transactions through Messenger. Of course, a user has to be able to send money to anyone through Messenger in order for them to use it, even if that person isn't on Facebook.
Facebook also invited developers to start developing apps that integrate with Messenger to do things like send GIFs and videos. The platform is rather crude right now -- relying on the Google and Apple app stores for functionality -- and the apps aren't particularly innovative or noteworthy.
As a concept, however, Messenger Platform has a lot of potential. The idea is that a developer can create an app and accelerate its distribution by relying on the communication aspect of Messenger. This kind of natural viral-ness is only possible because Facebook Messenger has 700 million users talking among themselves and sharing content. More users mean more potential downloads.
Again, payments could come into play, here, in order to monetize the Messenger App Store as it comes into its own. Figuring out a way to bypass Google's and Apple's in-app purchase policies may take some creativity, but doing so could lead to another viable business.
Advertisements will never happen
Mark Zuckerberg has said advertisements will not be part of the monetization strategy with the company's messaging services. As a result, having an account tied to Facebook's data-gathering and ad-targeting mothership isn't that important. Nonetheless, Facebook will be able to leverage its existing relationships with businesses on its flagship platform to sell them on using -- and paying for -- services on Messenger. Likewise, developers may be attracted to develop for Messenger if it can reach ubiquity.
Therefore, requiring users to sign up for Facebook in order to use Messenger no longer made sense in light of the company's plans for monetization.
Adam Levy owns shares of Apple. The Motley Fool recommends Apple, Facebook, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Facebook, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.