Automattic’s Open Source Business Model
The software business Automattic is best known for their WordPress blogging software, which has fast become the blogging platform of choice for most bloggers. Automattic has created this leadership position in part by using an open source business model. Their software is developed as open source, meaning it is free (no license fee) and anyone can access the source code and use this as a basis for other derived software. They also have a free WordPress hosted blog service. Like many popular open source software projects, Automattic’s WordPress software has a large and active community who contribute by assisting with software development, testing releases, writing plug-ins, and writing user interface themes. Like the community itself, Automattic’s own staff of 30 or so team members are spread around the world, and operate as a virtual organization.
Automattic's team members are located around the world
While open source business models are no longer new, they are still unexpected when compared with the conventional ‘invest in software IP and then sell licenses to use’ model. Certainly it would now be very difficult for a competitor to take market share off Automattic in the blogging software market – the WordPress software is both free and high quality – why would you use anything else?
Currently Automattic makes its revenue from associated services – upgrades, VIP hosting, advertising, and enterprise services. Not a bad model in many ways – offer high quality products for free, grow a huge loyal community, and then over time generate revenue almost as a by-product of the massive community and profile that you have built. Not to mention the active community that contributes to your product generating productivity and loyalty when compared with proprietary models.
The www.unexpectedidea.com blog runs on the WordPress blogging platform from Automattic.
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After writing this post I have found out that Microsoft have very recently released a open source blogging tool ‘Oxite’ – see http://www.readwriteweb.com/archives/microsoft_releases_open_source_blog_platform.php.
It is interesting that Microsoft have chosen an open source approach – given that this is not their normal model. However, with the existing open source incumbents in the blogging software market, they likely realized that a license fee model would achieve little market penetration.