How do Instant Messenger programs make money?

Such as ICQ, Yahoo, MSN, and AOL?

Don’t they have ads in part of the buddy list window?

MSN doesn’t at least…

The original creators of ICQ, Mirabilis, sold out to AOL for US$400 Million:

In 1997, the Israeli startup was sold to AOL for $407 million, what seemed to me to be an astounding sum, considering it was a product with no revenues

Perhaps someone else will come along and explain why its worth so much, and how the companies that run these IMs plan to make money, or at the very least gain value from it.

With AOL, it’s simple. Advertising is part of it, but it also has to do with customer recruitment and (more importantly) retention.

If you have a lot of buddies (and you’re not a computer expert), it’s easiest to stay on AOL and use their IM than to create another account (yes, you could install AIM, but most AOL users don’t realize that or think it’s too much of a bother).

Also, AOL can target AIM users who aren’t on AOL and try to get them to join.

Buying out ICQ was just a way to eliminate a competitor.

If Screen names become portable, AOL is in a lot of trouble.

Third party IM companies (such as Trillian) make money by charging for full versions of their products, often with additional functions (e.g. Trillian Pro 2.0).

In general many IM companies are also targeting the corporate market. At my old company we used Lotus Sametime Connect (integrated with Lotus Notes) across the UK business. Check out the Yahoo! Business Messenger ads all over for an example; some observers, such as Gartner, have speculated that companies not investigating the potential of IM at work may repeat the mistakes of late email adopters (a quick search on Gartner’s website shows that they’re certainly making money out of IM – have a look at the number of reports!).

Mind you, some speculate that the only sure way to make money is to hold a monopoly in the IM market, hence current problems with lack of interoperability. This article in The Register has some comments on Microsoft’s use of IM and plans for charging.

To add onto what Crusoe is saying, the company I work for recently started using Lotus Sametime and to my surprise AOL IM was bundled with it. I know AOL and Lotus were testing compatibility for “sharing” their instant messaging networks, which allows AOL to quickly get into the corporate market as well increase their presence among IM users.