Automattic Profits From WordPress

This post is the third in the series that started by posing the question: How is Automattic Going to Make Money?. It follows on from my most popular post so far: Making Money From WordPress.com.

In this post, we’ll be looking at how Automattic profits from WordPress, the free/open source software project that lives at WordPress.org. We’ll consider WordPress Multi-User (WPMU) as a subproject of WordPress, just as it is a subsite of WordPress.org.

To find sources of revenue for Automattic from WordPress, we’ll crawl around the relevant web sites. We won’t start from any particular framework for “making money from open source” or “open source business models.” If you want to read up on the more general stuff, just Google either of the phrases in quotes and you won’t lack for material.

So, the obvious place to start is WordPress.org. Remember, that site won’t host your blog. There are many thousands of sites that will. Many of them have Fantastico scripts to install popular software, including WordPress.

There is a WordPress hosting page that recommends a select few of these hosts. The page explicitly identifies itself as a money-maker.

If you do decide to go with one of the hosts below and click through from this page, some will donate a portion of your fee back—so you can have a great host and support WordPress at the same time.

It’s not clear to me how much money this generates, or whether the money goes to Automattic or in some sense goes directly to the WordPress project. It could be argued that it doesn’t make a lot of difference: funds that WordPress “makes for itself” are funds that would probably otherwise be supplied by Automattic. I could make a similar point about Amazon affiliate revenues earned by links from the WordPress books page, but I doubt that there’s a lot of money involved there.

Now let’s look at Automattic’s site. We see there a Services page, which points to the Automattic Support Network, aimed at enterprises and other clients willing to pay thousands of dollars annually for support.

This is a classic open source business model: give away the software, charge for the services. It’s worth noting, though, that the Services page points not only to Automattic’s offering, but to a directory of WordPress Consultants, most offering design and development services. (Automattic does not currently list itself as offering such services.) This is an example of Automattic opting to help the WordPress ecosystem thrive.

A variation on give away the software, charge for the services has already been covered in this series of posts. WordPress.com offers WordPress as a service. It’s a freemium service: give away the software as a service, charge for the extras.

Automattic invests heavily in WordPress, the free/open source software project. Perhaps the most straightforward evidence for that statement is the About WordPress page, which lists the developers: several of them work at Automattic. Automattic profits from this investment, but it does not do so directly. The WordPress software powers WordPress.com, from which Automattic makes money. The more WordPress is used, the more opportunity there is for Automattic to make money from support services.

The next post in this series will cover Automattic’s other products. The next big news from WordPress will be the release of 2.5, expected any day now.