Telegram is the most used instant messaging app worldwide, only second to WhatsApp. While the company is giving strong competition to the market leader WhatsApp, its unique business model has intrigued many. For a long time, the platform has operated without allowing ads, which may make one wonder – How does Telegram make money?
In 2022, Telegram amassed a staggering 700 million users, most of which only joined in the last five years. Particularly in the aftermath of WhatsApp’s privacy policy revision two years ago, there has been a notable migration towards Telegram.
In response, individuals flocked to Telegram, enticed by its reputation as the most secure instant messaging application globally.
Let’s tour the Telegram business model and discover how a giant platform like Telegram thrives within this fiercely competitive landscape.
What Is Telegram Messenger?
Before going further, let’s glance at the platform itself. Launched back in 2013, Telegram is an open-source instant messaging platform that allows users to communicate, share multimedia, make audio/video calls, and much more.
It was developed by two Russian engineers, Nikolai Durov and Pavel Durov, who were also the creators of the popular Russian social media platform VK. Subsequently, they shifted the platform’s operations to the UK and Dubai. At present, Telegram operates through five data centers situated across different parts of the world.
The core principle of Telegram is similar to that of WhatsApp, Signal, and other IM platforms. However, Telegram is rated very high for its exceptional focus on privacy and safeguarding user data.
From the outset, the platform’s creators were averse to incorporating advertisements, as they recognized the potential risk of compromising user data and disclosing personal information to third-party vendors.
In terms of privacy, Telegram has introduced several stand-out features over the years, such as chat lock, timed photos, chat deletion for both parties, hidden messages, and Telegram secret chat.
Features of Telegram:
⮞ Telegram witnesses over 15 billion messages every day, and each one is end-to-end encrypted. This stringent security measure ensures that no third party can access the messages, providing users with a strong sense of data protection.
⮞ There is an option to edit your text after sending it, allowing users to rectify mistakes post-sending. Also, Telegram was the first IM app to enable the deletion of sent texts.
⮞ Telegram allows users to create a username, meaning they can connect to anyone without sharing their phone number. Users can show or hide their phone numbers on their profiles.
⮞ Another layer of security is the option to lock specific chats with a passcode, providing additional privacy for sensitive conversations.
⮞ All your chat history is saved to the cloud, meaning you can access it through multiple devices and platforms, such as Windows, Mac, iPhone, tablets, Linux, etc.
⮞ Telegram has a unique feature where you can delete texts for both parties.
⮞ Users can hide their “last seen” and “online” status from specific contacts, offering greater control over their online presence.
⮞ You can block calls from certain people.
⮞ There is an option to compress the images and videos before sending them. The maximum size you can send is 2 GB.
India, South America, and Asia are the biggest Telegram markets, with its popularity often surpassing WhatsApp in numerous regions.
How Telegram Makes Money?
So, how is such a giant online platform handling loads of data without advertisements? The answer is rooted in the creators’ perspective of Telegram. As per the founders, their intention was never to profit from Telegram but to provide a seamless communication channel to users. And I must say, they have succeeded in it.
Nearly all the features of Telegram are free, and the company has been running primarily on funds.
However, In 2018, the owners introduced Telegram Open Network (TON), a blockchain-based platform designed to provide services beyond messaging, such as decentralized applications and digital payments.
Telegram conducted one of the largest initial coin offerings (ICOs) to fund TON’s development, raising approximately $1.7 billion from private investors.
However, TON faced criticism, regulatory hurdles, and legal challenges, ultimately leading to its cancellation in 2020. Telegram was required to return a significant portion of the raised funds to investors, marking a setback in its ambitious plans.
At present, Telegram derives its revenue from three primary sources:
1. Donations:
In 2020, Telegram owners claimed that the company had no revenue and was operating solely on contributions and financial backing from external investors.
Until last year, all the funds acquired were channeled into the upkeep of servers, maintenance of data centers, and the salaries of individuals involved in the platform’s operations.
However, there is no clarification on the identities of the potential investors; as of a report published in 2021, Mubadala and Abu Dhabi Catalyst Partners are two major investors. They regularly provide the organization with the necessary resources, ensuring the platform operates seamlessly.
2. Funding From The Founders:
Pavel Durov, Pavel Durov, the visionary behind Telegram, has been one of the biggest financial support for the platform.
When Telegram started in 2013, Durov used his personal funds, most of which he accumulated after selling his shares of VKontakte, a Russian social networking platform he cofounded.
If reports are to be believed, Durov hasn’t made fortunes with Telegram and continues to provide financial backing to sustain the platform’s operations.
In an interview in 2015, Durov claimed that his motivation was never profit-centric and would never allow third-party advertisements on Telegram for monetary gain.
3. Telegram Premium:
2020 was the first time when Durov publicly acknowledged that Telegram required additional funds to continue its operations and that the platform would start monetizing its operations in the foreseeable future.
However, following the criticism of the TON initiative in 2020, the proprietors said they would have to resort to the freemium model to keep the operations going.
Consequently, in June 2022, Telegram Premium was launched at a monthly subscription price of $4.99. While the app remains free to download, the premium version incorporates numerous exciting features, such as premium stickers and (animated) emojis, improved privacy control, visual enhancements, faster data downloads, advanced chat management tools, zero ads in public channels, and other features.
Since then, the developers have continuously introduced new features to Telegram Premium Package to entice users, trying to entice users to migrate to the Premium tier and fortifying the company’s financial stability.
Just recently, voice-to-text conversion and real-time translation feature was added to the premium. How much it would benefit the platform remains to be seen.
Is Telegram Revenue Model Successful?
The success of any social media platform hinges upon its popularity and user base. However, any platform requires substantial financial resources, especially if it accommodates hundreds of millions of users. Just because an app is popular and adored by users doesn’t necessarily mean it’s financially successful. These are completely different scenarios.
Telegram, a darling among users, especially those prioritizing online privacy, keeps getting bigger. According to a report, more than 70% of the users who tried Telegram have eventually embraced it as their main messaging application.
Regarding economic success, one must praise how the creators have managed to survive for so long without allowing ads which are one of the primary sources of income for the majority of social media apps these days. For a company that doesn’t have huge financial backing like Meta (Whatsapp), it’s a remarkable feat to achieve.
Since the launch of Telegram Premium, which is packed with extraordinary features, the company is supposed to improve its fiscal steadiness and continue to push innovation in the times ahead.
However, the ultimate measure of success for any revenue model depends on factors such as user adoption of premium features, subscriber retention, and the platform’s ability to adapt to changing user preferences and market dynamics. The ramifications of these facets are still unfolding.
Frequently Asked Questions:
Telegram is an instant messaging app that enables users to send texts/media and make calls. It uses end-to-end encryption for security and offers exciting features like group chats, channels, and third-party bots.
The company primarily earns through Telegram Premium and external investments. The exact revenue has never been disclosed. According to the company, it didn’t make any profit up until 2020.
Yes! If we believe the words of Durov, Telegram will always be free and never allow ads in private chats.
In terms of privacy and functionality, Telegram is miles ahead of WhatsApp. However, the latter is more user-friendly and popular. Telegram has 700 million users, while WhatsApp’s user base exceeds 2 billion.
Telegram’s funding comes from private investors, including entities like Mubadala and Abu Dhabi Catalyst Partners and founder Pavel Durov’s investments.
Final Word:
Looking at the trajectory, Telegram is poised to become one of the most used social media apps. It has experienced remarkable growth within a decade, outpacing many rivals such as Viber, Signal, Kik, and numerous others. Regarding features and privacy, it’s the best; however, WhatsApp is leading the market now.
Last year, Telegram registered nearly 35 million monthly downloads, meaning the platform is expanding its user base rapidly.
Such widespread popularity and the introduction of Telegram Premium will impact how Telegram makes money. Although the owners are still prioritizing better user experience over earning millions, it will be interesting to see whether Telegram can surpass Whatsapp.
I am an engineer by education, tech writer by profession, and a motor sport fan by heart.
