How Does WordPress Make Money? Automattic Business Model
Suppose, there’s a company which provides free seeds for you to grow crops and the make profits. The same company, however, charges for the add-ons like water, fertilizers, pesticides, etc.
Sounds like a smart freemium business model?
The company knows the basic necessities for farming. It builds your trust by giving seeds for free and capitalizes on your other farming needs.
This is how WordPress makes money.
What Is WordPress?
WordPress is a content management system that powers millions of websites over the internet. It is a brand created by Matt Mullenweg and is used by two publishing platforms wordpress.org and wordpress.com.
But before moving on to discuss how WordPress makes money, it is important to discuss how the two platforms differ from each other and who owns them.
WordPress.com vs. WordPress.org
WordPress.org is a free open source website publishing platform which is created by the community for the community and is operated by the WordPress Foundation. The software script requires you to have a certain technical knowledge and a web-host to install and run it. It is fully customisable and is often referred to as the self-hosted WordPress. The software is licenced under the GPL which gives the users more ownership over everything they do on the platform(the website and the content). The open source WordPress powers more than 29% of the web.
WordPress.com is the hosted version of the open-source WordPress software, owned by Automattic, which lets bloggers with the limited technical knowledge to blog without any hassle. In simple words, WordPress.com is a pre-hosted publishing platform like Blogger and Tumblr where bloggers focus only on publishing content and not on hosting and other technicalities like Cpanel and installing and customizing the software.
What is Automattic And The WordPress Foundation?
Even though WordPress.org and WordPress.com were created by the same person, both of the platforms are owned by different organizations.
The WordPress trademark and the wordpress.org domain is owned by the WordPress Foundation, a charitable organisation founded by Matt Mullenweg. The organisation is focused on providing a free and open source software to the community.
WordPress.com, however, is one of the products offered by Automattic, a different company started by Matt Mullenweg in 2005, which has the exclusive privilege to utilize the WordPress name and logo in its products. Besides WordPress.com, the company also deals in several other WordPress related products and services like Jetpack, Gravatar, WooCommerce, Polldaddy, etc.
But why does Automattic have the exclusive privilege to use the WordPress name and logo?
Automattic was started almost two years after the creation of the open source software but was the first to register the WordPress trademark. Nevertheless, to ensure the long-term sustainability of the not-for-profit project, the company donated the trademark to the WordPress Foundation but held the privilege to use it as it was beneficial for the company to earn profits in the long run.
Keep this in mind – whenever you mention the word WordPress, you refer to WordPress.org.
How Does WordPress Foundation Make Money?
WordPress is a platform operated by the community. That is, no one gets paid to contribute to the platform. Still, there are hundreds of contributors to the platform who regularly invest and contribute to the betterment of the platform.
Why do they do it?
Because they sell products and service related to WordPress and want the community to grow to its full potential to increase their profits.
Since the WordPress Foundation is a charitable organisation, the only source of its revenue is through donations. These donations are given by WordPress users, companies like Bluehost, Yoast, Sucuri, Automattic etc. dealing with WordPress products and services, and anyone who uses WordPress to earn money or who wants the community to grow.
How Does Automattic Make Money?
Automattic, though a different company from the original “Wordpress”, is a company very closely related to it. It earns most of its revenue from WordPress related products and services; WordPress.com being its top revenue earning service.
To make things easier, let us divide the revenue sources into two categories:
Revenue from WordPress.com
WordPress.com is a freemium publishing platform, similar to Blogger and Tumblr, created for the not-so-techy-bloggers. The platform is dependent on the open source WordPress but the users are not required to get into the technicalities of installation. They focus only on the content aspect of blogging and the rest is handled by the company.
The company offers 4 different plans (including a free plan) to the users to serve to their needs. These are: free, personal, premium, business.
The free plan provided by the company has many limitations like a wordpress.com subdomain, limited storage, basic customization, and inability to monetize the website. These limitations, however, are removed once the user purchases a premium plan. There are 3 different premium plans designed to let users have more control over their website.
WordPress.com provides VIP hosting and support solutions to big brands like Facebook, CNN, Time, etc. where it handles almost all of the technical part. The VIP hosting plan starts at $15,000 per month.
The free version of the wordpress.com comes with a clause that the company has the right to host its advertisements on the users’ websites and takes all the revenue generated from it. That is, the free plan users only help the company make more money.
The users are free to change the look of their blogs by using different themes. The theme directory offers many free as well as premium themes provided by the company as well as the third parties. The company earns profits or commission on every purchase of these themes through its platform.
Revenue from Other Sources
Besides WordPress.com, Automattic also deals in products and services which are linked to wordpress.org.
Freemium and Premium Plugins
Jetpack, Vaultpress, WooCommerce, Akismet, Polldaddy, and numerous other freemium and premium plugins are developed and operated by Automattic. Almost all of these plugins are related to and are dependent on WordPress.
Automattic also earns money through affiliate marketing. It links to the WordPress hosting providers on its website and earns commissions whenever a referred person makes a purchase on those websites.
The company also facilitate wordpress.com to self-hosted wordpress.org transfer by providing a service called guided transfers. They charge a one time fee of C$169.00 per blog for the same.
WordAds is a WordPress based advertisement network available to every WordPress website. The network provides ads from Google AdSense, Facebook Audience Network, Amazon a9, AOL Marketplace, Yahoo, Criteo, Quantcast, and many other ad buyers and works on a revenue-sharing contract with the publishers.
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