There are a lot of articles coming out around the release of Mozilla's 2006 financial audit and a common storyline seems to be something like "Google bankrolls Mozilla" or "Mozilla dependent on Google dollars".
Unfortunately, the reality is a bit more nuanced than that. Talking with folks and reading blog comments, I've learned over the last couple of days that's it's not very clear even to many of you all who are Mozilla contributors. So, I thought I'd make a quick post and try to make things a bit less opaque, as well as to raise what I think are the more interesting and important questions around Mozilla finances.
(If you don't care about the brief history behind Firefox search, just skip the next two paragraphs.)
We originally built search into the browser not because there was revenue associated with it. We did it because the web had changed from the mid-90's when people browsed for information to a web around the turn of the century where people searched for information. We selected Google as the default search for Mozilla and later Firefox, again, not because there was revenue associated with it, but because we believed it was the best search service for most people using our browser.
Along the way we built a great browser and a large enough group of people using it that the various search companies started seeing significant search traffic from Firefox. That was the basis for the financial arrangements we made with several of those search companies. Google, being our default, obviously gets the lion's share of usage and so we get the majority of our search-related revenue from Google.
But it's not quite right to say that we're dependent on Google money. We're not dependent on Google money. We're dependent on search money. Actually, even that's not quite right. We're dependent on the continued success of the advertising model that's currently driving the search industry.
Google's got AdWords, Microsoft has AdCenter, Yahoo's is Yahoo Search Marketing (formerly Overture,) and Ask has Ask Sponsored Listings. These products are how money is made on search today. They're all competing to provide the best possible contextual ad placement and to put the largest number of eyeballs on those ads.
So these companies, Google, Yahoo, Ask, and Microsoft (and I'm sure others outside of the US like Baidu, Yandex, and Naver) are all vying to be your primary search service because when you search using their service they can show you advertising related to your search terms. Those contextual ads are worth a lot of money today because they're highly effective. For example, Google made 2.7 billion dollars on search results advertising in 2006.
It's that larger revenue model that Mozilla is dependent on, not the particular search services that Mozilla includes in Firefox. All of the major search services are making money on that model and they are all happy to pay Mozilla for traffic that feeds into that model. So, I'm personally not really concerned about which search service is the default in Firefox (and therefore which particular company makes up the majority of Mozilla's revenue). Firefox should provide people with the best possible search services regardless of revenue. What I am worried about is the next revolution in advertising and whether or not search will continue to be lucrative five years out.
So, the question for me is not what would Mozilla do if Google stopped paying for Firefox traffic. The question for me is what happens if none of the search services pay for traffic because that entire model doesn't work any more.
Mozilla has used search-related revenue to grow from about 10 full-time employees and a few million users back in 2004 to more than 100 employees supporting over 120 million Firefox users today, and as Mitchell noted, our cash reserves allow us some freedom to operate independently of concerns around immediate revenue sources. But if the entire search model changes, if for whatever reason the advertising dollars leave search, we'd have to find some new source of revenue to continue our mission and to support the hundreds of millions of Firefox users.
So, rather than focusing on the next few years, I think we need to be thinking and talking about the next 5 to 10 years which will almost undoubtedly see the end of many of today's internet revenue models and the birth of new ones. If search contextual ads is no longer a successful model, then which, if any, new models will fit inside the browser as usefully (to people using the browser) as search does today? And, what can Mozilla do outside of the browser that will both forward our public benefit mission and generate revenue?
There was a time when we had no choice but to be focused on the immediate and near term. Our growth and our successes at opening up the Web have afforded us a bit more room to think about where we want to be five years out, or ten years out. A part of that thinking will need to about the future of our revenue model(s) and that will depend in part on where the Web goes in the next few years.
That's where the real interesting discussions will be, not with people on slashdot or digg fretting unnecessarily over Firefox and Google money.
Photo by Flickr user Captain Chickenpants and used under a Creative Commons license.