Discord is one of the most popular communication platforms around, but you might be wondering, how and why is Discord actually free? Let’s take a look at Discord’s business model and try to understand why and how they can provide millions of users with a free service.
Are chat applications such as Discord really free? What’s the catch?
Some of the most popular applications in the world are totally free to download, and most don’t even offer in-app purchases. Just take a look at Instagram, for example. Completely free to use, but you do see advertisements once in a while. Exactly the same for Facebook, TikTok, Snapchat, and even dating apps such as Tinder and Bumble. Discord is another of those communication platforms that are free to use, although it does have a couple of ways to make money from its users.
It’s not uncommon for chat applications to be totally free, and not expect anything in return from their users. Take a look at the chat applications Telegram or Signal, for example, which are self-funded and don’t run advertisements for their users as they often have different means of funding. For example, Telegram has experimented with its own cryptocurrency.
Before Whatsapp was acquired by Facebook, they did not run any kind of advertisement either. That wasn’t really an issue, however, as the chat app was then sold to the social media giant for a massive amount. It’s all about that market share – the more users on your platform, the more it’s going to be worth to someone.
In the case of Discord, there have been acquisition rumors with Microsoft for an amount of no less than ten billion dollars. Microsoft, the massive company that is active in the gaming market with Xbox as well as the digital communications market (Skype, MS Teams), would definitely benefit from having Discord in its portfolio, but more importantly, their hundreds of millions of active monthly users.
As you can see, companies like Discord can just operate at a loss, since a large market share means that they’re also going to have a high business valuation, making the money not really an issue.
However, Discord has additional methods of making money, which explains why it’s free.
P.S: Ever wondered why Discord is actually called Discord? Here’s how they came up with the Discord name!
Why and how is Discord free?
Aside from the reason for market share that we mentioned above, Discord also earns money through its paid subscriptions. They currently offer two tiers of paid services: Discord Nitro Classic (priced at five dollars per month), and Discord Nitro, which costs ten dollars per month. In short, these paid subscriptions offer additional perks such as more emojis, better personalization, higher video quality, exclusive icons, and the possibility to support servers with Server Boosts, giving them higher audio quality. We won’t go over the extensive differences and benefits of the subscription models, but you can check it out in our large comparison article about Nitro vs Nitro Classic.
With hundreds of millions of free users, there are also plenty of people who wish to support Discord and pay for the extra service. This is one of the ways that Discord makes money: a free service for all, but making a paid service available with extra perks as well.
Additionally, Discord may also partner with other companies. For example, Discord recently announced that they were partnering with Sony PlayStation to provide the app on their PlayStation consoles, mainly on PS4 and PS5. It’s unknown how much money was involved in this deal, although both companies announced that Sony has invested in a Discord funding round.
Are there ads in Discord?
At this time, there are no advertisements when you’re using Discord, aside from the occasional advertisements about their own Nitro and Nitro Classic paid tiers. In short, Discord doesn’t make money from display advertising like other applications such as Whatsapp or Instagram.
Summary
As you can see, Discord is a highly popular application, and that alone is more than enough to provide the company with a high valuation during investment rounds. Aside from the worth of their market share, Discord also partners with third-party companies in exchange for support or investments, and they also have two paid subscription tiers that provide them with plenty of recurring income. Unlike other popular apps and websites, Discord does not earn money with advertisements, keeping the program and interface free of clutter and marketing.
