Telegram Premium: Explained
A turbulent journey of maintaining the current level of expertise and serving the users while covering up the costs.
I received many requests over X (formerly Twitter) asking me to explain why Telegram decided to opt in for a payment-subscription like model as it “promised” to stay free, forever. Although I agree, this comes out late since it’s been quite a few months since the time the model was launched, I was not in enough capacity to completely write and give fair information to the public. Please accept my apologies. Even now, I have quite a headache but anyways, as they say, the show must go on!
A brief history of Pavel Durov
Telegram was founded by Pavel & Nikolai Durov (or popularly known as the Durov brothers). Before founding Telegram, these brothers founded the Russian social-networking site, VKontakte (VK) which led the social revolution in Russia and Ukraine. The app spiraled up to the top and was trending on respective app stores. Pavel Durov was considered the “Mark Zuckerberg of Russia” since VK was something similar to Facebook. Pavel started it soon after his graduation and the app blew despite being initially limited to the university circle — an invite-only app.
Sooner or later, the problems started knocking their door. Protestors in Ukraine started communicating using the platform and the censorship in Russia was tightened. Opposition parties also used VK to spread their message which was protested by the Duma. Due to all of this, he was subjected to police standoffs and confrontations including a few deliberate to frame him and achieve the goal under duress. In 2012, Mail.ru group wanted to take the ownership of VK, he posted this image.
The self-imposed exile and the birth of Telegram
Due to the frequent run-ins with law enforcement, the brothers acquired a St. Kitts & Nevis citizenship. They started building Telegram which was headquartered in Berlin and later shifted to Dubai. Pavel was giving the financial input, paying out all the development and other costs out of his own pocket whereas Nikolai gave the technical input, meaning he saw over all the technical development works.
The idea of a secure messenger came when Durov had his door knocked by the FSB when he was amidst the censorship chaos and the force of blocking opposition leaders, parties and voices that the Russian Federation didn’t like.
Why a premium subscription?
You may wonder, why bring a premium subscription when the users were promised that Telegram will stay free, forever.
Well, to honestly put it out, forever is a word shrouded in mystery for sometimes it can mean eternity and sometimes a moment, as the white rabbit rightly said. But looking back, Telegram was entirely funded by till June 2021 mainly (that is for 7 long years). Forbes estimates that it takes $45 million dollars each month to keep the light on — that’s huge, which translates to roughly $540 million dollars a year. That is an insanely big amount.
Alice: How long is forever? White Rabbit: Sometimes, just one second. ~ Alice in Wonderland
In mid 2021, Telegram piloted sponsored ads in channels with significant subscribers (above 10k if my memory serves me right). Under the testing phase, many people pointed fingers that Telegram broke it’s promise, it is misleading its users and so on - all that marketing bs. Here is what you need to know about the sponsored ads on Telegram and how they are privacy focused. A year later, it was a successful program and generated more revenue than the expectation. In my opinion, it might have covered the operating costs or might have made a little profit itself, after all they have to pay the debts they raise — but, but, it’s just my speculation.
A year later, Telegram Premium was launched. Now people started asking, if Durov is the richest person in the Emirates, couldn’t he continue to fund the development of Telegram like he did earlier? After all, its the same thing. Here is when people went wrong, for a few reasons which I will try to explain in my best capacity. If you have any more questions, please hit up golimitless@substack.com or contact me here: Twitter | Telegram.
High net-worth: Having a high net-worth doesn’t reflect the liquidity of the entity. In basic sense, if I own $20 million in assets, it doesn’t mean I have that amount in my bank account. It just means that when I sell or liquidate the assets I have, it will be worth $20 million, more or less. So selling everything you have for the app won’t make any sense because the expense will outgrow the growth. More explained in the next point.
Growth graph: Telegram started with a few thousand users and quickly grew to ~ 800 million users. In such scenario, it is important that Telegram generates revenue to fund its own growth & development. More users and increased features result in an increase in the costs - server hardware is expensive, you know among other things. It proves to be expensive to double the bandwidth for everyone despite knowing majority won’t be using them. Say, sending files up to 4 GiB. Only the daily users would use it, and not all of them though. Users who keep Telegram as their secondary driver won’t care much about it.
Structural difference: Telegram is a cloud based messenger. It has to store all the data every single user sends in a private chat, groups & channels — they aren’t stored on device (except for Secret Chat, which are end-to-end encrypted) but instead stored on cloud - in a very secure & encrypted fashion. Comparing this to WhatsApp or Signal is not correct because they store the messages on their server until it has been delivered, for maximum of 30 days (with exception for WhatsApp Channels).
Spam Reduction: Surprisingly, pay-walling systems can decrease bots and spam. The use of paid subscription can also help with testing features from actual users. Moreover, their signal can be used to measure demographics and statistics while ranking the channels and groups, more premium users signifying a higher ranking as is now.
To solve these issues and start revenue stream so that Telegram becomes financially self sufficient, a subscription was required. Moreover, Telegram would have delayed the ads or subscription if its plan of Telegram Open Network was successful. Telegram invested a huge amount of money into the TON project and it was successful as it achieved all the goals that they listed out. But the Securities & Exchange Commission, United States and its court didn’t want it to happen because they feel threatened by the competition. As the project was scrapped after development, Telegram had to return the money to the investors of the ICO with appreciation that dented its finances. You can read more about the scrapping of the project.
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