Profit models, part 2 - Wordpress

Before starting up Varnish Software I went through a number of open source companies
looking at how they are able to generate revenue. I thought I'd share what I've found. My last post described Mozilla Firefox and how they generate revenue through Google.

This next one is also my favorite. Wordpress surfaced in 2003. At the time the blogosphere was dominated by Movable Type, blog software from Six Apart. Movable Type was free for personal use. After some success they started restricting their users more and more, pushing their paid version of the software. At the same time Wordpress was free software and its use exploded, leaving Movable Type in the dust.

Six Apart responded to the success of Wordpress by relicensing Moveable Type under a free licence. But it was a bit too late. As Google Trends shows, Wordpress overtook Moveable Type in 2004 and is approximately ten times bigger today. Furthermore, I have never seen a proprietary project switch to a free project and actually have success, but that is content for another post.

So how does Wordpress generate its revenue? If you were to start a blog, would you go through all the fuzz with installing Linux, MySQL, Apache and the blog software and messing with backup, hosting and all the other stuff? Well, if you a practicing or a recovering sysadmin (like me) you might, otherwise you'll just head over to wordpress.com and register an account. You might even sign up to their premium service, giving you extra support and features. If you don't, Wordpress will show a few ads on your blog, generating the few pennies necessary the run the service.

This is it. Wordpress gives away the software running their platform. Users and developers download it, test it and improve it. They also blog, write and talk about it, helping build the Wordpress brand and thereby paving the way for the wordpress.com service. This last part is really the key. The marketing power of thousands of enthusiastic users is worth humongous amounts of money.

How is this relevant for Varnish Software? Would you consider buying Varnish Cache from Varnish Software as a hosted service? I think I would. Would you? 

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Topics: wordpress2blogger

07/05/2010, 11:04 by Per Buer

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