If you're on Facebook or Instagram during this pandemic, there are two things that everyone is probably familiar with already—Facebook Live and Zoom calls. The latter has quickly become one of our most popular ways to stay in touch, especially as social distancing measures begin to take hold around the world.
But how exactly does Zoom make its money? And where does all your personal data go when you use it? Here's what we know about Zoom and how they generate their income.
First off, let's talk about the basics: Where does Zoom get its money from? Like other app developers, these days, much of it comes from selling advertising space for apps through companies like Google and Facebook. However, unlike those platforms, which have been criticized for mishandling user data, Zoom doesn't share any information with third parties. This means no cookies, tracking software, etc. It's just you talking to someone over video chat.
"The vast majority of [revenue] comes directly from consumer usage," Sean Poulton, Senior Vice President at Zoom told us via email. "For example, some organizations will pay per person who joins the meeting (e.g., if you want 100 people present but only 20 show up, you'll need to pay more). Other organizations may charge based on duration of the call."
As such, both individuals and businesses can choose whether they'd prefer to subscribe to an ad-supported or premium plan. If you're interested in joining a paid service, here's everything you should know before signing up.
In addition to direct payment services, Zoom offers several optional subscriptions that provide additional features without paying extra. These include Zoom Pay Per Person, Zoom Events & Webinars, Zoom Rooms, Zoom Unlimited, Zoom Unified Communications Platform, and Zoom Contacts Centers.
Zoomblynx breaks down each of these plans below:
Zoom Pay Per Person allows participants to join meetings for free but requires them to watch a 30-second advertisement every time they enter. To opt out, however, participants must be logged into their accounts after entering the meeting.
Zoom Events & Webinars is similar to Zoom Pay Per Person, except instead of watching advertisements, viewers can stream webinars hosted by various partners. Pricing starts at $29/month depending on the number of attendees.
Zoom Rooms lets business owners host online meetings. They offer three different tiers: Standard ($19.99), Plus ($24.95) and Enterprise ($34.95). All options allow for unlimited rooms, recording capabilities, and HD streaming.
All customers can access a dedicated customer success team who can help troubleshoot technical issues. In addition, enterprise clients gain access to advanced security tools and support for larger scale deployments.
Zoom Unlimited provides businesses with a unified communications platform. For example, employees can send emails, schedule meetings, and manage calendars within the same interface. Prices start at $5/user/mo.
Similar to the Unlimited option, Zoom Unified Communications gives enterprises a way to integrate voice, video, messaging, and collaboration functions into one system. Subscribers can set up teams of five users starting at $10.50/user/mo.
Finally, Zoom Contacts Centers are used for contact centers. Customers can establish virtual branches anywhere in the world and process orders and inquiries. Prices range between $9-$14/hr.
While not technically part of the main product line, Zoom also launched Business Cloud Connect last November. This feature enables small businesses to connect remotely with vendors across numerous industries.
Now that you've got the lowdown on where Zoom gets its cash, how do you actually request payments from subscribers? Well, unfortunately, you won't find a button labeled something along the lines of "Request Money From Us." Instead, you'll need to log into your account settings.
To check your current balance, head back to the homepage. Then select Settings followed by Account Details. You'll see a section titled Payments next to Billing Information. Click View My Balance under this menu and fill out the details needed to submit a reimbursement request.
Here's a breakdown of all the necessary fields:
Billing Address shows your physical address so Zoom knows where to mail items.
Email address is self explanatory. Make sure your primary email isn't Gmail though because sometimes it messes with refunds.
Payment Method indicates the method you would like to use to pay. Options include PayPal, credit card, debit card, Apple Pay, Amazon Pay, Bitcoin, Cash App, Wire Transfer, Chase Quickpay, Bank transfer, and Check.
Refund Policy outlines the refund policies in place. Currently, Zoom states, "We currently don't accept refunds. We reserve the right to cancel sessions due to insufficient registrations, inclement weather, natural disasters, acts of terrorism or government regulation." So yeah...don't complain too loudly if you end up cancelling a session.
Lastly, once you click Submit Request, you will need to wait 48 hours for approval. Afterward, the funds will automatically appear in your account. You can then withdraw the money using whatever methods available to you.
Note: Due to COVID-related travel restrictions, Zoom charges higher fees than usual for international transactions.
Unfortunately, while you might think you can simply reach out to anyone working at Xoom to ask for a refund, that doesn't seem to be the case. As mentioned earlier, Xoom reserves the right to deny refunds for certain reasons. Some common ones include lack of registration, cancellations caused by bad weather, terrorist attacks, etc.
Xoom recommends reaching out to Customer Success Managers to discuss potential problems. But even if you do speak with representatives, you still aren't guaranteed anything.
According to Poulton, "Customers can file claims anytime, including months later, but many cases are denied. While we try to resolve issues promptly, please understand that refunds require authorization and processing times vary among regions."
That said, while it's unlikely that you'll ever receive a full return on your investment, Xoom clearly states that it will attempt to reimburse expenses incurred for cancelled events. Unfortunately, however, the company seems to leave room for interpretation regarding refunds for unused services.
Another major question surrounding Xoom deals often relates to privacy concerns. Since Zoom collects a lot of sensitive information, concerned consumers worry that their banking credentials could eventually wind up in the wrong hands. Fortunately, according to Poulton, most banks recognize that Zoom poses unique challenges and thus haven't threatened to cut ties with the company.
However, since Xoom handles large amounts of financial data, they partner with leading providers including American Express, Capital One 360, Citibank N.A., Discover Financial Services, First Republic National Bank, HSBC Holdings plc, MasterCard International Incorporated, Mercury Payment Systems, Noble 1 Credit Card Company LLC, Synchrony Domestic Banking Corp., Visa U.S.A., Wells Fargo Advisors, Western Union Co., WorldCom Technologies Corporation, Zions Bancorp, and Zynga.
In March 2021 we saw the world change dramatically as COVID-19 spread around the globe. In response, people began working remotely for their jobs or studying online for college courses. For businesses, this meant that they needed new ways to communicate with one another, so many turned to video conferencing software like Zoom Video.
The company has become quite successful since its inception in 2011 by providing easy access to meetings via web browser on any device, including desktop computers, laptops, tablets, smartphones, smart TVs, game consoles, and more. It is currently used by over 200 million users worldwide across 190 countries. The app was initially developed by three Stanford University students who were looking for an alternative way to host lectures when the university moved classes online due to the pandemic. They named the platform Zoom after an old school bully name call because "it sounded impressive." However, only two years later, it had acquired $1 billion valuation.
Since then, Zoom has been able to expand exponentially through partnerships with major companies like Facebook, Google, Amazon, Microsoft, Salesforce, Adobe, among others. This growth can be attributed to the fact that Zoom offers services such as live streaming, audio/video calls, screen sharing, file transfer, messaging, etc., all at no cost to end users. All you need is your internet connection and a webcam.
As per Zoom’s S-3 filing (filed Dec. 11, 2019), which details its quarterly financial results, the company made about $928 million in Q4 2020. So how exactly do these numbers work out? What are Zoom earnings based off? How does Zoom make money? These questions and more will be answered below.
Zoom earns most of its income from meeting subscriptions called Zoom Meetings. Unlike other platforms, Zoom doesn't charge extra fees to use paid versions of apps. Instead, users pay monthly subscription fee for the service. Users get unlimited usage for each month but there is a restriction on total number of sessions available during the billing cycle. Most users choose to subscribe to premium plans starting at $14.99 per user per month ($0.0079 per session) while some subscribers opt for annual plans costing up to $199 annually ($12.50 per user per year).
Its primary business strategy revolves around recurring revenues instead of transaction-driven ones. Therefore, according to analysts, Zoom should see significant increase in its profits once coronavirus outbreak ends. As per CNBC report, Zomeworks has forecasted nearly 20 percent jump in its yearly earning.
However, unlike other tech giants, Zoom doesn't disclose exact figures related to its net worth. According to Bloomberg calculations, in early 2021, Zoom's market cap reached $100 billion, making it the second largest U.S.-listed stock after Apple Inc.
Zoom's biggest competitor, Cisco Systems, earned $8.2 billion in FY 2019. While Zoom may not have disclosed specific metrics regarding its profitability, analysts predict that the company could generate between $7 billion and $10 billion in fiscal 2022. That means it would require approximately 9x - 12x improvement in terms of conversion rate compared to current level to achieve those goals.
According to Business Insider, in 2021, Zoom generated $6.5 billion of revenue with an estimated loss of $2.2 billion. Its overall losses increased considerably in 2020 compared to previous years. Although investors expect positive news to come soon, however, they believe that the company needs to improve its marketing strategies and focus on improving customer experience before being profitable.
On Feb. 13, 2021, Zoom announced that it received Series D round funding totaling $11 billion led by Softbank Group Corp. After this announcement, Zoom's shares skyrocketed more than 50%. But what happens if the lockdown continues? Can Zoom continue operating without government assistance? Experts say yes.
"One thing that I think is important to note here is that Zoom is really well positioned even though they're losing money," said Greg Bronson, CEO of consulting firm Deloitte Digital. "They've got great fundamentals...I don't know if anyone thought that this moment would happen where everyone was going back into offices and wanting to collaborate virtually on things."
Unlike other platforms, Zoom doesn't provide a complete version of its product for free. You won't find basic features like screen sharing and recording capabilities under the free plan. To unlock them, you'll need to purchase additional credits at different prices.
For example, you can buy 100 minutes of videoconference time for $20 each or 1000 minutes of conference calling credit for $80 each. Also, you might want to consider subscribing to one of the above mentioned packages depending upon your requirements. If you are unsure whether Zoom suits your needs, check out our list of reasons why Zoom is better than Skype.
What good is paying for something that's completely free anyway? When you sign up to Zoom, you agree to accept ads displayed on your computer. However, you can turn off ad display option anytime. Since advertising brings in majority of Zoom's revenue, it's safe to assume that users aren't aware of this feature.
Also, in case you didn't notice, you cannot download Zoom's native mobile application either. There's no official Android or iOS app store for downloading third party applications. But luckily, there are plenty of websites that offer installation files for popular devices.
To save yourself some trouble, go to the App Store or Play Store directly on your phone and search for Zoom. Then tap Install and wait until the process completes successfully. Once installed, just launch the app and log in.
Even if you decide to join Zoom's free trial period, it still displays ads on your chats. During my testing, several banners appeared within seconds of joining a group chat. Ads show up frequently, regardless of whether you joined a group or not. Even if you leave a group chat, you'll still remain exposed to unwanted interruptions.
These banner advertisements typically appear inside chat windows. Sometimes, they take form of popups too. Regardless of the type of advertisement, it always shows up right below messages sent by participants. And sometimes, they overlap content.
If you are bothered by this interruption, scroll down to bottom part of the window and click Hide Advertisements. However, keep in mind that this hides both ads and chats. You can simply disable ads individually by clicking Turn Off. Or alternatively, try toggling Show Banner Ads On / Show Popup Ads Off button located near the top right corner of the chat window.
Another method to avoid seeing annoying ads is to install an ad blocker extension on Chrome or Firefox browsers. Here are some reputable extensions you can try:
But wait! Isn't it illegal to hide ads? Yes, technically speaking, hiding ads isn't against the law. However, doing so may affect the ability of website owners to receive crucial payments for hosting ads. Plus, blocking ads hinders smooth functioning of entire digital economy. Ultimately, advertisers rely on showing their ads to consumers on certain sites to maximize potential clicks and conversions.
So, let's put all the pieces together now. We already discussed how Zoom generates revenue from subscriptions. Now let us examine how free users make money. By default, Zoom allows users to view ads placed on various parts of the application. Some of the places include message boxes, sidebars, chat bubbles, notifications, etc. The ads are mostly served randomly to prevent repeated exposure to same ones.
But hey, you can stop exposing yourself to unnecessary distractions entirely! Just disable the following settings:
Go to Settings " Personalization and Security " Privacy Controls " Chat Bubbles
Click Disable Chat Bubble Advertising Option
Disable Show Notifications Boxes
Turn off Share Your Screen Feature
Finally, close the application altogether.
With all these factors considered, it seems unlikely that Zoom will ever be profitable. Based on historical data, Zoom lost around $200 million in 2020 alone. Last year, it reported a whopping $2.2 billion loss. Despite a slight dip in first quarter of 2021, experts predict that it will lose millions again this year.
The video conferencing giant Zoom has been in the news again after its founder sent out an email to employees about his political beliefs, which many people interpreted as racist. And while the company is taking measures to address such concerns, this incident shows that there are still questions around how companies make money when they use these types of apps.
With more than 500 million monthly active user sessions on Zoom each month according to Business Insider, you can understand why so many businesses have turned to it to host their virtual events or work meetings. But what exactly do those millions of users see every time they log into the app? Is it adverts, sponsored content like deals, or paid subscriptions? If yes, who gets charged? Does anyone else get any kind of cut? Let’s take a look at how Zoom makes money.
Zoom primarily makes money from Zoom Meetings, the core offering it sells using a freemium model. This means that unlike with other platforms where developers charge fees based on usage (like Apple Music), Zoom doesn't collect any direct fee per session. Instead, the platform earns revenue by charging business customers for access to features like live HD streaming, screen sharing, recording capabilities, etc., depending on the type of event being held. The average number of attendees for most business meetings range between 10 and 1000 participants, but some even reach up to 5000 attendees. For smaller groups, Zoom charges $99/month for 100 minutes per person, plus additional dollars if they want extra services like recorded chats, breakout rooms, webinars, etc. However, larger organizations might be paying hundreds of thousands of dollars per year just for hosting one call.
In addition, Zoom also generates revenue through five subscription-based offerings: Zoom Phone ($19.99 per month), Zoom Events & Webinar ($29.95 per month), Zoom Rooms ($49.95 per month), ZoomUnited ($39.95 per month) and Zoom Contact Center ($179.89 per month). These options allow corporate clients to host professional conferences, online classes, product launches, training sessions, virtual team meetups, etc. While all prices listed above come down to local taxes, they give us a good idea of how much money Zoom brings in annually.
This doesn't mean that Zoom isn't making money off individual users though. In fact, the majority of its income comes from advertising and recurring subscriptions. According to CNBC, nearly 80 percent of Zoom's annual revenue came from premium subscriberships during Q2 2020. With more than 50% of its total daily traffic coming from mobile devices alone, advertisers have been eager to join the party too. So far, Zoom has announced partnerships with brands like Coca Cola, Johnson&Johnson, Nike, Microsoft, Google, Facebook, and others. That said, we haven't seen many public figures talking about how much money the big players like Amazon, Netflix, Spotify, YouTube, Hulu, Twitter, TikTok, and Instagram bring in either.
As of now, Zoom is keeping mum about the exact breakdown of how much money it takes in via different sources. When asked about it, a spokesperson told us that "Zoom monetizes our products across multiple models including subscription pricing, advertising, device licensing, data collection, and more."
It seems clear that the bulk of Zoom's profit margins come from providing premium services to large corporations. It would seem unfair to expect individuals to cough up hundreds of dollars for calls without getting anything back. After all, there's no way someone could afford a Zoom account unless they were doing something pretty important with it.
According to Zoom's website, everyone involved in a Zoom meeting shares responsibility over the costs. Since both parties need to download the app before starting a session, they're responsible for purchasing a license for themselves. As mentioned earlier, this depends on whether your organization needs only basic functions or advanced ones.
However, it's not always easy to determine how much a conference will actually cost beforehand. Most times, organizers don't know how many attendees they'll end up having until shortly before the actual event starts. Some may wonder how hard it'd be to scale up if there ends up being more than expected. On top of that, since most vendors require payment upfront, sometimes it's difficult to negotiate rates.
When planning ahead, remember that you should consider the whole picture. Not just the price per person, but also add on things like technology support, marketing expenses, travel, food, lodging, office space rental, insurance, venue hire, equipment rentals, audio and visual setup, catering, refreshments, printing, postage, and even miscellaneous items like paper towels, toiletries, dry cleaning, and first aid kits. You should also factor in overtime hours spent setting everything up, troubleshooting issues, managing volunteers, and running security checks.
If you've already reserved a room somewhere, ask the vendor if they provide discounts for early payments. Or maybe offer to split the bill amongst yourselves if there are enough seats available in the room. Hosting a huge Zoom meeting can be quite stressful, especially when you're dealing with lots of strangers. Being nice goes a long way towards making sure everyone enjoys the experience.
Depending on the service provider, you can request refunds within 48 hours of signing up. Keep in mind that cancellation policies differ among providers. Before booking, read them carefully to find out how much notice you need to cancel in order to avoid penalties or lose your deposit altogether. Also check the refund policy of the location you intend to book. Many venues won't accept cancellations made less than 24 hours prior to arrival.
For example, Veneto Hotels Group offers guests full reimbursement upon notification. They specify that “any communication received less than 7 days before the day of arrival must be confirmed by e-mail (or fax) no later than midnight on the day preceding the scheduled date of arrival. Failure to comply with this requirement shall constitute grounds for immediate termination of reservation and forfeiture of any deposits previously given.”
So, how much do they really rake in? We reached out to several major hotel chains and hospitality industry leaders to figure out how much money they typically keep from a single group. Here's what we found.
Overall, most hotels receive anywhere from 15%-30% of the reservation amount. That said, some high-end establishments claim to retain up to 70%. Obviously, higher ticketed reservations tend to bring in bigger profits. Of course, that percentage varies greatly among locations and years, but it gives an indication of the general ballpark.
Of course, Airbnb and VRBO users usually aren't billed directly, but instead share the revenue with homeowners. To find out what percentage of the overall earnings go to Airbnb, we contacted the company itself. Its response was that “Airbnb collects 6-12%, and then splits that equally between hosts and ourselves.”
On top of that, Airbnb claims that it covers a fractional reserve system. Meaning, it keeps a small balance aside specifically for emergencies like natural disasters, protests, or other unforeseen circumstances. Then, whenever necessary, it loans out that sum to hosts. So, in essence, Airbnb keeps 3-6% of every booking.
While Airbnb's percentages vary from country to country, similar arrangements exist elsewhere. For instance, Booking.com reportedly retains 20% of reservation amounts. Other sites like TripAdvisor and Ciao! also hold onto a certain chunk of revenues, although it's harder to nail down specific numbers due to proprietary agreements.
One thing's for sure though: hosts who rely solely on guest reviews are likely missing out on significant financial benefits.
Yes. There's nothing wrong with admitting it. Unless you're holding a casual family reunion, chances are your next Zoom meeting probably involves paying for it. Whether it's a simple coffee catchup or an elaborate presentation, you'll definitely incur fees at least once.
But does that mean you should ditch the platform entirely? No, of course not. Just because you have to pay for it doesn't necessarily mean you shouldn't try it out. Remember, there are plenty of alternatives, from Skype to Rocket Conferencing, that let you connect with friends and colleagues worldwide at little to no cost. Plus, Zoom is constantly improving its service to ensure smoother experiences for its users.
That said, here are some ways you can help lower your own costs. First, set expectations accordingly. Don't plan to show a movie trailer or play games together if you're going to a board meeting. Second, decide if you'll prefer to record the entire thing or stream it live. Those with slower internet speeds are best served by watching remotely rather than listening to speakers. Thirdly, think about how you'll communicate with your co-workers. Do you need separate phone lines? Will you send emails or messages to clarify points? What about sending documents digitally? Lastly, if possible, create a Slack channel specifically for the purpose of discussing logistics.
Other tips include finding open Wi-Fi networks wherever you are, scheduling breaks for yourself, and bringing snacks or drinks.
And finally, if you're struggling to stay motivated while working remotely, you might want to try meditation or mindfulness techniques.
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