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Today, we will discuss the business model of Mozilla to know how does Mozilla make money. The major portion of the revenue that Mozilla Corporation earns, comes from the Firefox browser search partnerships and other deals.
As per the stats, Mozilla Firefox has control over 26% of the browser market back in 2008. But on today’s date, most of the market is dominated by Google Chrome and Safari browser; which has left Mozilla to have less than 5% of the market share.
Understand How Does Mozilla Make Money
The company was founded in 2003 in California as Mozilla Foundation. Initially, it was a not-for-profit organization. But at the same time, the company also had Mozilla Corporation, a for-profit corporation. This for-profit corporation serves the not-for-profit foundation and the subsidiaries present in China, Europe, Canada, and other branches in other countries.
Mozilla Monetization Strategy
The major portion of the revenue comes from the royalties that are earned via partnerships and distribution deals. Mozilla earns 94% of the revenue from partnerships and other deals.
There are deals for featuring the search engines on the browser. Mozilla used to have this deal with Yahoo, but it ended in 2017 and a new deal was closed between Google and Mozilla. Google used the deal to be the primary search engine. And according to the reports, in the US, Canada, Taiwan, and Hong Kong, the default search engine will be Google.
Even before Yahoo, Google was the default search engine for Firefox. But Yahoo promised a royalty of $300 million a year to Mozilla, and the deal was set. Since Google caught the deal again, it is clear that the perfect execution of business strategies made Google successful in the business market.
Though it’s not known exactly how much Google offered Mozilla to get the deal back; but it’s obvious that the amount was quite something compared to Yahoo’s deal. For the philanthropic activities of the Mozilla Foundation, the funds come from public support (individual donors and foundations) and the royalties earned via Mozilla Corporation.
The Anatomy of Yahoo deal
Distribution is a complex and important component of the search market. The success of the search engines depends on their ability to get featured on the web. The middleman between the search engines and the users is the web browser. In 2008, Google launched their own browser Google Chrome and Yahoo still had to go for the third-party browsers.
According to the Yahoo financial documents for the year 2016, till December 31, 2015, the revenue increased to $350 million and the TAC increased to $660 million. And the percentages of this increment are 8% and 303% respectively. And this report is based on comparing with the stats for the year 2014.
The report also mentions that till December 31, 2015, the revenue increased basically due to the increase in search. In fact, the revenue in distribution deals had also increased.
Additional revenues of Yahoo for the Mozilla deal
The deal between Yahoo and Mozilla made Yahoo gain a fat revenue. The increase in revenue is caused by the higher search volume on desktops, and it’s primarily due to the deal. The approximate amount that Yahoo received in the year 2015 was $394 million. This number is given by Yahoo financials.
Cost Yahoo had to bear during the deal
During the deal, Yahoo had an increment in cost of revenue, which was $660 million or 303% compared to 2014. Mozilla had contributed $375 million to it. And if we stick to this data, Yahoo received traffic from Mozilla which had cost $375 million. Which led Yahoo to record around $19 million from the traffic that came through the Mozilla Firefox browser.
As a leading browser, how does Mozilla make money?
As per the stats, Mozilla represented over 26% of the browser market back in 2008. In today’s date, the percentile has dropped but Mozilla is still one of the top dominant players in the market. Currently, the market has many high-end substitutes, for example, Google Chrome, Opera, Safari, etc. But Mozilla Firefox still has strategic importance in the search market.
Back in 2017, Google had offered Safari a few billion dollars to be featured as their default search engine. So, there is quite a competition.
The open-source driven business model of Mozilla
The open-source model is a software licensing model. Here the holder or the owner of the copyright lets anyone study, edit, reproduce or use the code. But there are differences between open-source models and freemiums.
In the case of open-source, the software has been developed with the efforts of a group of developers. They come together and contribute their efforts to develop open-source software. That’s why it doesn’t have any proprietorship, and it’s released publicly.
And for the freemiums, the software gets developed internally and it comes with proprietorship. These are released with intact copyright. Later on, the company owning this software decides if it would be ad-supported or to be sold as a premium service.
So, the company gets full control of the freemiums and their distribution. But, in an open-source model, a foundation, or a non-profit organization has the hold of the property of the licensed software. These non-profit organizations are basically run with donations and royalty.
I hope now it’s easy for you to understand how does Mozilla make money. But there is another little point to note: it’s between the adjacent corporation. There is a chance that the adjacent corporation is collecting royalties and donations from the open-source business model. You can take Mozilla Corporation and Mozilla Foundation as good instances of this.
Firefox is a web browser developed by Mozilla Corporation.
No, it is still out there.
Firefox recommends the Google search engine.