Reporter’s Notebook: Finally after much speculation, including some by yours truly, Mozilla has
come clean and disclosed how much money it makes. Depending on how you slice
the numbers, Mozilla, which offers its flagship browser for free, may well be
making — wait for it — 29 cents per download.
Allow me to explain.
Mitchell Baker, the chair of the Mozilla Foundation, recently reported Mozilla’s total revenue number. It was a staggering $52.9 million for the 2005 calendar year.
The official
tally is some $19 million shy of the $72 millions suggested in early 2006, but it sure does sound like a lot
of money for a company that makes a free product.
When you dig into the number as reported to the IRS and break it down
on a click-and-download basis, the number takes on very different dimensions.
Baker’s official report notes that total revenue, including that for the
Mozilla Foundation and Mozilla Corp., was $52.9 million.
In publicly available forms of Mozilla’s IRS filings, Mozilla discloses
its Foundation revenue as $29.8 million. IRS filings for the Mozilla
Corp. are not publicly available.
So let’s take a close look at the Mozilla Foundation’s numbers, shall we?
According to the IRS filing, Mozilla Foundation pulled in $493,867 in direct
public support, which would include “contributions, gifts, grants and similar
amounts” for the 2005 calendar year.
During the same period, the Mozilla Foundation reported program service
revenue of $28,802,507. Mitchell’s comments indicate that the bulk of that
revenue comes from search-engine partnerships. Let’s just go ahead and call it Google.
Google pays Mozilla an amount for each user that performs a Google search from
Firefox. Exactly how much Google pays, we don’t know for sure but I’d wager
that it’s somewhere in the range of 1 cent to 5 cents per click.
So doing some simple math, if Google paid the Mozilla Foundation only 1 cent
per click, that means that Firefox users performed at least 2,880,250,700
Google searches.
If Google paid out as much as 5 cents per click, then the number of Firefox
Google searches falls to 576,050,140.
Putting that into the bigger Google context, the Firefox click numbers that
I’m guesstimating aren’t as crazy as you might think.
Considering that
Google may have served as many as 2 billion searches per month in 2005
(Comscore for example reported that Google served up some 2.05 billion
searches in the month of November 2005), the total number of clicks that
Google may have paid for from Firefox isn’t too hard to fathom.
Mozilla Foundation’s revenue per download
At the end of October 2005, Mozilla Firefox hit the 100 million download
milestone. We don’t
know for certain that the figure represents 100 million unique users or even
separate installations. But for calculation’s sake for the calendar year of
2005, let’s assume that 100 million downloads is a good number for the whole
year.
So just for the Mozilla Foundation that would mean that each download was
worth approximately 29 cents in 2005.
If Mozilla had gone the same route as its competitor Opera and sold its
browser to users, Mozilla’s revenues may well have been more if you’re just
looking at straight numbers.
Until September 2005, Opera sold its non ad-supported browser for
$39 a year. If Mozilla had sold Firefox for $39 and if they had 100 million
sales (or downloads) that would have pulled in a massive $3.9 billion in
revenue.
Obviously you can’t do just straight math here, since Opera hasn’t come
close to the success, downloads or users that Mozilla has, part of that
success is likely due to the fact the Mozilla is free.
There is certainly minor fudge factoring in my guesstimates, but one thing is for sure. Mozilla’s success, much like Google’s, is all about volume. The 2004 revenue figure for Mozilla was a
paltry $5.8 million, but that was well before the 100 million download
milestone.
The lesson learned here from Mozilla is a simple lesson of loss-leader
economics. A loss leader is a concept (sales or economic) that means you
give something away for free at a loss (in Mozilla’s case for free) with the
expectation that it will lead to revenue.
Though you don’t often think of a company’s flagship product as a loss
leader, Mozilla proves that it can work. And in so doing Mozilla has
enriched both itself and the Web browser community at large.
Sean Michael Kerner is a senior editor for internetnews.com.
