Now add the cost of providing support (it's a paid product now!), payment handling on their end (in a privacy-preserving way, which excludes most common payment methods), and top it off with the immense damage to the network effect by excluding all the users that can't or simply don't want to pay $1/year...
Donations seem like the much better option here.
You don't need to provide support, even much more expensive consumer services live without a proper one, so being explicit about the fact that you only pay for infrastructure could suffice
Not sure why payment privacy has to be so strict for everyone
The network effect damage is real, but maybe it could be limited with donations :)
Just ignoring customer complaints and selling the service "as-is" is usually not an option.
Besides, even now they're not ignoring all the complaints, the do fix bugs?
Maybe to be more specific, how much did it cost WhatsApp when they had $1 price and a tiny team? How does it compare to the cost of SMS?
FB acquired them next year and if my memory is correct there were 19 in the team then.