Interesting, the return that freedom can bring. $72M, according to Jason Calacanis. While Mozilla claims the number is inaccurate, it also says it's "not far off."
How is Mozilla (Corp.) making that money?
Mozilla makes much of its money through the Google search box that ships on the popular Firefox Web browser. Each time a user clicks on a sponsored link in those search results, the company receives approximately 80 percent of that revenue, says Calacanis.In other words, it's not banking on its code, but rather on its data. (Tim must be very proud. :-)"They also have Amazon in the search box, and other services that I'm sure kick them back some affiliate fees," he added.
This is actually a fundamental tenet of all successful open source businesses: you must be able to apply an accelerator effect to your software. The way to make it pay best is to find some way to distribute and sell more software/services/whatever-you-want-to-call-it than it takes in people costs to actually develop and sell it. This is true of all software, of course, but it's particularly true/critical of open source software, where you don't have the benefit of a bloated license sale. You must have volume of distribution, and not merely large median dollar amounts on low distribution.
This high price, low distribution works in proprietary software (or "worked"), but it fails in open source, where conversion rates of paid versus free-riders will always be relatively low.
So, Mozilla has found a way to make A LOT of money off very small transactions. Can this model be borrowed by other, less Web 2.0-y open source companies? Perhaps there's a way for SugarCRM to monetize the value its customers get from the sales leads it captures? Or Alfresco to monetize the value of the documents and content it stores and distributes? Not sure - it seems pretty speculative to me. But then, who would have thought a company could make ~$72M just by letting people search from a toolbar? (I think I've clicked through on two ads in my life....)
Just one thing: Christopher Blizzard (Mozilla Corporation board member) seems to have forgotten that as a corporation, his raison d'etre is to make money. As much of it as he can. He says:
Money is one of the last things we worry about and people shouldn't get hung up on the numbers.Nice sentiment, if it weren't illegal in the US (see Dodge vs. Ford (1919), in which the Michigan Supreme Court told Henry Ford he wasn't allowed to turn a for-profit entity into a charity to employ more people, sell cars more cheaply, etc. if doing so would hurt profits). This is Christopher's fiduciary duty.
Posted by Matt Asay on March 9, 2006 09:08 AM
