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How Other Open Source Projects Raise Money

How other open source projects make money
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How Other Open Source Projects Raise Money
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Episode Transcript:

Here at Press The Issue we live for examining the most complicated questions and problems that face the WordPress community, and that includes how money flows or sometimes does not flow through it. In this episode, Brian and Rob go deep into discussing funding the future of open source.

Rob Howard:
Hey Brian, how’s it going?

Brian Coords:
Good, how are you doing today?

Rob Howard:
Very good. So we’ve been talking a lot about funding, the future of WordPress, there’s a ton of different ideas that are swirling around that central concept. But today we really want to focus on actually just looking at some examples of how open source projects are funded outside of WordPress. There’s a ton of well known interesting ones, and we’ve picked out a few and we’re going to basically just dive into different funding models, how they contrast with WordPress, how they could be used by WordPress and hopefully just spur some ideas and brainstorm a bit about different and additional ways to fund our favorite open source projects.

Brian Coords:
And you’ve brought forward a few really good examples of some projects, they’re pretty much household names, they all have ways in which they’re similar to WordPress, ways in which they’re different, so we’re just going to go through a few of those. And the first example, which I think is probably the biggest name, is Wikipedia, and Wikipedia is very similar in that there’s a nonprofit, there’s some for-profit stuff in there, and there’s a very passionate contributor base to Wikipedia, which is very similar to WordPress. So for you, can you give us an overview? How does Wikipedia generate money and then how do they use that money to push the project forward?

Rob Howard:
Yeah, so Wikipedia, as we know it, is a nonprofit, it’s run by the Wikimedia Foundation, and that is just a simple charitable 501(c)(3) nonprofit, which essentially any charity you donate to has that nonprofit status. In addition to the Wikimedia Foundation, the owner of Wikipedia also owns Fandom, which actually used to be called Wikia. So anytime you Google a deep cut about a movie or a video game or something, you often will end up on a Fandom site, and that’s actually a paid for profit thing, they run ads, there may be a premium option at some point for the users. So they’re making money off of Fandom, it is a parallel idea to Wikipedia, so that’s one source of revenue that basically keeps the lights on at the very least. And then Wikipedia also runs pledge drives and basically says, “Hey, we’re a nonprofit, please donate to us”.

Rob Howard:
This is very analogous to PBS running telethons or pledge drives to say, “Hey, we’re public, we’re funded by you, we need your support, you’re going to get a tote bag if you support us”, whatever that is. So the parallels, as you mentioned, are number one, they have a big contributor base that essentially is producing open source information. The way Wikipedia is licensed, it’s all basically free for the world to use and redistribute under very basic terms. You maybe have to reference that you found it on Wikipedia or something, but effectively it’s open source knowledge. So where we do open source code or open source publishing in WordPress, they do open source information and obviously they’ve rapidly overshadowed every other encyclopedia or information source in the world, because they do a nice job with it. So in parallel to WordPress, they are directly asking for help, and we see that with Fight For the Future.

Rob Howard:
And I think the contrast is they accept money, so that is a thing that WordPress really doesn’t do very well right now, that I think would be a pretty low hanging fruit for them to do better or for us as a community to help WordPress do better. So Wikipedia is basically asking for donations, and then they’re taking those donations, they’re using it to fund their servers, they’re using it to fund their employees. They have a lot of contributors, the contributor environment is quite passionate and there can be drama in it but I also think that there seems to be much more coherent mission among the Wikipedia contributors. And I don’t think people are saying, “I’m going to go fork Wikipedia, because I’m mad about it”, but we are seeing that a little bit in the WordPress world.

Rob Howard:
So Wikipedia probably is the most straightforward example of an open source project that is getting funded by money from donors, and then they also, similar to wordpress.com, have a for profit twist on the same idea where they’re making money directly, effectively as a software, as a service or ad sales type of thing. So the next example, which I think again, is another household name and takes a different twist on it is Mozilla, which runs Firefox. So why don’t you talk a bit about how Mozilla makes money and we can talk about how that maybe parallels with the world of WordPress. And again, Mozilla… Open source, nonprofit, but they make money in a very different way.

Brian Coords:
So Mozilla is mostly known for the browser Firefox, which at one point I think was a quarter of the market share of browsers and is not anywhere near that now. But the way that Mozilla generally makes money is when you use their browser, you have an option to have a default search engine, and that default search engine in the United States is Google. In Russia, China, they have other companies, but basically those companies cut a big check, I think the estimates are somewhere near 400, 500 million dollars a year from each of them to be that first search engine. Because obviously the minute you type a search into your Firefox browser, Google has the rest of the relationship to monetize off of you. So for them, they’re basically taking direct contributions from large companies, and so instead of that one-to-one contributor… Make those individual donations, they’re just going after the big chunk of money from Google, the big chunk of money from having Baidu or whatever these other search engines are.

Brian Coords:
And so in some ways we could say that Mozilla is similar to WordPress because they do have some for profit products, I think they own Pocket, which I think is still around. They have some other stuff, but at the end of the day, they’re not in that same boat of hitting up every individual user for contributions, they’re not really doing that. They take this big chunk of money, they have a staff of dedicated developers, they have people who work for them, developer advocates that are all just paid by Mozilla, and they push it forward. So in some ways there’s some similarities, but I see maybe Mozilla as almost the furthest from the WordPress model. Does that make sense to you or does that resonate with you?

Rob Howard:
Yeah, and I mean really what they’re doing is they’re selling product placement, and you could even see this as something that Netflix does to make money. But I think that a lot of people in the WordPress community probably would cringe a little bit at doing as direct of a product placement as Mozilla does in that search and location bar. However, I think that there probably is an opportunity there. Because if you think about, for example, when I download WordPress I’m getting presented with several different web hosts where I could go set up my account and run WordPress.

Rob Howard:
We are not totally aware of how the decision is made on who to put there, it seems like companies that have Goodwill and make contributions from their employees seem to get priority there, but it’s not as far as I know ever been really publicly stated, if it has we’ll put it in the notes somewhere. But that seems like an opportunity to do product placement, and as much as there’s drawbacks to that in some ways… Also, if somebody’s going to pay WordPress a hundred billion dollars a year to be their number one recommended web host, and we can then go use that to pay contributors or to fund the project in other ways, that seems like a win or at least a win that we should think about pursuing.

Rob Howard:
But then you come back with this question of like, “Well, where does the money go?”, and that’s one of the challenges in that with Mozilla, they are employing people under their nonprofit, those people are then tasked with doing web development. That is really not happening with the WordPress nonprofit, what’s happening is the WordPress nonprofit holds a trademark, it participates in funding of some events and stuff like that. But really all the developers either are working for free or are working for separate for profit companies, Automatic being the most prominent, but also our company, Yoast, Bluehost, GoDaddy, et cetera, Google. So really there is no way currently for someone to pay wordpress.org and have that money go directly to a developer as far as I know. If it’s possible, then it’s certainly not easy or publicly stated, so there’s this weird almost labyrinth that the money has to go through.

Rob Howard:
And I think the contrast we see is that when you pay Mozilla, the employees of Mozilla are going to go build something with that money. When you pay Wikipedia, they’re going to go fund Wikipedia’s operations directly with that money. And you can debate the virtues of nonprofits and the tax position of nonprofits, some people don’t think that that’s fair that some companies get different tax treatment than others, but when it comes down to it, they’re running transparent nonprofits that pay developers, and that’s really not happening yet in the WordPress community. What we’re seeing is the nonprofit is almost like a holding company in some ways, and then we present open source software, which it is, but then we pay developers via for profit companies, so there’s a weird labyrinth there.

Brian Coords:
And I wanted to pick up on that idea of paying to be the sponsored name, because I can definitely understand any hesitation for that, that makes sense. Allowing some company to pay to be on the list of hosts sounds a little rough, especially like you said, because we don’t really have a place to put that money in a way that we would all feel really good about. On the other hand, we do see that a company like Google does do this by just paying contributors, so they’re contributing financially to the project, they’re just doing it with their own employees. So we are seeing large companies putting money into WordPress, so that’s already happening. And then the other piece is when somebody goes to spin up a new WordPress website, they can go to wordpress.org, that’s definitely one option, but due to the way the trademark’s been shared, the other place they might land is wordpress.com.

Brian Coords:
And so they’re already… It’s not happening physically on wordpress.org, it’s happening one layer back when you type in WordPress into your search engine, but because there’s only one company that’s allowed to use the trademark WordPress, they really do get that same benefit of being the default hosting company for WordPress. If you want WordPress hosting, there’s one default because they’re the only ones, literally called wordpress.com. And so these are things where you go, “Well, they are already happening, they’re not happening in the same way, but they’re already there”. Automatic is already getting that benefit, and to be fair they’re also hosting wordpress.org and keeping those servers running. So it’s not like they’re just taking advantage of it, for sure. They’re contributing back to the.org site, but those things do definitely exist, so that’s where these conversations get a little bit tricky.

Rob Howard:
And I think when you’re balancing this, it’s like, “Well, which conflict of interest do I prefer? Do I want a conflict of interest where Google pays us to be the premiere web host, or do I want a conflict of interest where Google sends employees into the contributor ecosystem who then behave as theoretically dispassionate participants, but in fact they’re being paid by Google”. And it’s not that there’s this evil emperor telling people to do the wrong thing, but it’s like, “Well ultimately you do what the company paying you instructs you to do”, and I don’t think that there’s anything directly shady happening, but also there’s a saying of, “It’s hard to see the truth if your paycheck relies on you not seeing the truth”. And there’s all these things about… There’s a reason that you’re not supposed to be getting paid in a secret way when you’re a government official, when you’re in a position of power, that’s why conflict of interest exists as a concept.

Rob Howard:
So again, I don’t want to make that seem like people are doing things in a way that is shady, but at the same time, all of these things are a conflict of interest if you really think about it. So the question is, “Why is it better to have a big company paying an employee than to just have a big company providing money, and then have a transparent company delineating or divvying up that money in a way that is the most efficient”. And I think this comes back to something I’ve said in a couple of articles and the idea that you can only contribute via your personal time is just an extremely inefficient way to receive help. So some people might be able to give time, some people might be able to give money, some people might be able to do other things. So I think part of this conversation is let’s broaden the options for contributing.

Rob Howard:
If you’re only saying, “Hey, you can contribute to these nine areas and that counts, but then everything else doesn’t count”, then that’s not really going to help people, that doesn’t help people help WordPress. That seems to me like an unnecessary constraint and possibly causes an incorrect accounting of who’s contributing what, because some things just aren’t included in that list of things you can contribute. Whereas money solves that problem because if you give money that money can just be rooted to the most efficient place, and instead of saying, “Okay, so Google has X number of employees on the performance team, so now the performance team is basically going to do what Google thinks is best”. That’s just a different type of conflict of interest than putting them on the homepage for money.

Monet Davenport:
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Brian Coords:
There’s a few other examples that I think are all very similar, where they get around this by basically being very upfront when things are sponsored. I think one good example we could talk about is Vue, but I know Laravel does a similar thing, where if you go to WordPress and then you want to learn, there’s a lot of free open source content from the documentation to the learn team that’s creating these video courses. If you go to Vue’s homepage, the first thing you’ll see is a nice video that gets you used to Vue, and then it’s a link to, “Here’s just a private company that sponsored this, and they make courses and you can pay them for Vue courses, and they’re very high quality because they’re a private company”.

Brian Coords:
And it’s very clear that there’s private companies that are running these things and sponsoring these things in a way that exists in WordPress, but is pretended as if it doesn’t exist. And so when you look at Vue, how do you see their ability to be very popular in the open source world, but also very clearly an opinionated… A lot of private interests in that group. Do you see the similarities or differences between Vue and WordPress?

Rob Howard:
Yeah, I mean, I think from a code standpoint, they largely are similar in their philosophies and what they’re building. And I think, again, there’s this acceptance within the Vue.js world that, “Hey, we have sponsors paying for stuff, here they are, we want you to be a sponsor, here’s where you can type in your credit card number to be a sponsor”. So they make it just very easy, I could go on the Vue.js site and be a sponsor in the next hour if I wanted to. And they have a couple thousand dollars a month, you could individually send $10 to one individual contributor who’s listed on their homepage. So, that is just a very different approach, and I think again, the approach of accepting money, it just makes everything more efficient. But of course the flip side of that is then once you accept that money, you have to have a mechanism for accounting for it in a way that the community can accept as fair.

Rob Howard:
So I think that probably is maybe the hardest part psychologically is saying, “Okay, if somebody gives me a million dollars to help with WordPress, now I have to show that I’m using it in a way that is legit and fair”, and actually there’s quite a bit of work associated with that, but that’s what Vue is doing. To some degree, all the companies we’ve talked about at least can accept donations at some level, Mozilla doesn’t get most of their revenue from that, but I think it’s possible to donate to them. So then there’s this question of, “Okay, once I get that money in hand, how do I show people that I’m doing the right thing with it?”. And part of that is literally showing the IRS that you’re doing the right thing with that, but the other part is just the community trusting you and building a transparent system.

Rob Howard:
And I think that’s really one of the hardest parts as well, but I like what Vue does, I think we could essentially copy what Vue does almost directly for WordPress and you wouldn’t even have to change anything about how people are contributing their time, but it would be an additive thing where, “Hey, we’re adding in this other option where you can just contribute money, and then we’ll distribute that money to people who are already contributing”. And I think the other thing you mentioned is just a level of comfort with being sponsored, so right now what we’re doing is we’re almost keeping the sponsors at an arms length by saying, “Oh, well you’re not sponsoring WordPress, you’re sponsoring a person who volunteers to work on WordPress”. But I think that there’s just so many very obvious problems with the way that language is being used, and we’ve seen this talked about by many people other than us.

Rob Howard:
“Are you a volunteer, are you not a volunteer? Are you a volunteer today, but you were an employee yesterday and you’re going to be a volunteer again tomorrow”, and there’s a lot of weird stuff around that. And to me, if you’re being paid to do something, you are not a volunteer, a volunteer is somebody who shows up for free to help out for a non-profit for a good cause. But I think the desire to make it feel like a volunteer organization has just clouded what’s really happening, which is that companies are paying for work to be done. So if we got more comfortable with just saying, “Hey”… Like you said, “This video is sponsored by whoever makes the videos and then you should go buy their products because they support us”. Everyone else does that, I don’t really think that there’s anything inherently wrong or nasty about doing that, I don’t think that would pollute the product. I think it would actually create a somewhat more clear understanding of what’s happening in the ecosystem, if that makes sense.

Brian Coords:
Yeah, and I think it’s especially useful the way Vue does it with these pieces that aren’t the core development of the software too. Does WordPress need to handle training videos… Vue just lets a private company do that and there’s a nice visible sponsorship relationship. WordPress has this idea that we need to control it, we need to make the videos, we need to do all these things and everything trickles out from there, and it just makes so much more work that needs to be accomplished. But then the last quick example, I think are the ones we see the most in this, where I think MySQL is a good example, but I also think Ghost is a good example where it’s basically, “We are a for profit company, we’re giving you some open source stuff for free, but when you want it easy or you want it powerful, you’re just going to pay us and we’re not going to pretend that it’s not that”.

Brian Coords:
So if I go to Ghost, I can get it for free, but if I want to pay them for an easier experience, I can, if I go to MySQL, I can get it for free, but if I want to use it in this enterprise scale, I can just pay them directly, and it’s clear that that’s how the open source is being sponsored. With WordPress, like I said, I think we sort of have that with wordpress.com, but we don’t. And I would almost be more in favor if we just said, “This is it, it’s wordpress.com”, if maybe I felt better about the product. But do you think there’s ever a thought where they’re going to go further in that direction and just say, “Fine, we are the sponsorship company and we’re not going to open this up as much as we used to because we think we could just run it better ourselves”, like a Ghost, like a MySQL.

Rob Howard:
I mean, honestly I don’t think that I would have a strong objection to that, it’s fun to contribute, but also I don’t think that Ghost and MySQL are doing the wrong thing or a bad thing by being more… What’s the word, I guess compartmentalized, in the sense that, “Hey, we have developers who are building this and we’re licensing it as open source”. And I think one of the big distinctions is I think these two ideas of open source licensing and volunteer contribution get mixed together in WordPress, but they’re actually two separate things. You can have employees building a product that then gets licensed under the general public license and becomes open source. So that is what Ghost has done, they’re not saying, “Hey, this is volunteer built”, they’re not saying, “This is a grassroots organization”, but they are saying, “You can take it and it’s under GPL and you can go use it as you want”.

Rob Howard:
So that is distinct from being a volunteer led or volunteer built organization. I think in theory, you could have a volunteer organization that’s not distributing open source software, but usually those things go hand in hand, because the volunteers want it to be free for everybody. That being said, I think Oracle has acquired MySQL, so now that is open source software that is sold by a big for profit company, and Ghost obviously started that way. That doesn’t seem like a situation that harms society to me, where I think there’s an argument that lots of things being totally closed source is not great. I think that a company making open source software and then selling add-ons to, it seems reasonable to me as a business model. And it’s really not that different from the business model that WordPress plug-in companies use, they’re making a free plugin and then they’re upselling you to a paid plugin.

Rob Howard:
That’s not really that much different than MySQL upselling you to the enterprise server after you have started using MySQL and enjoying it. So I think that one of the parallels that I think we’ve discovered here is that a lot of this stuff is already happening in WordPress, but it is either not clear that it’s happening or it’s almost being called something different because it may be unfashionable to be too commercialized. However, one of the challenges that has arisen is that we’re asking for more contributors, we’re asking companies to contribute more, but then there’s no clear accounting of how much money is going into the project and where it’s going, and how it’s being spent. So I think that’s a challenge that WordPress faces because of the way it’s structured right now, that Mozilla doesn’t face and Oracle doesn’t face.

Rob Howard:
And that’s obviously a sticky situation and that’s nothing you can solve in a couple hours of thinking about it, but certainly something that I think we could work more on and figure out a way to establish that level of trust, that then supports the people saying, “Okay, well yeah, WordPress is actually sponsored by Google, WordPress is actually sponsored by Blue host”… Or whatever, “That money then goes to developers and here’s what we do with it”. That just doesn’t exist right now because there’s no transparent path from A to B.

Brian Coords:
Yeah, and I think of the bigger context of this conversation is mainly… How efficient are these processes and we could make them a thousand times more efficient if a private company took over WordPress. They could push out this stuff in a couple months if they really wanted to, I don’t think anybody wants that to happen really, but that’s the scale of complete efficiency of centralized proprietary systems to WordPress on the far end. And where on the scale do we want WordPress to be? Where are places where we could say, “We’re already a little further down this way, let’s just formalize it and make it more transparent”.

Brian Coords:
And the biggest threat really is people start to feel like, “Man, WordPress isn’t efficient and it really is slowing down, and it’s really not going to hit any meaningful goals in the next five years. Maybe I will take my contributions to a project that I think is going to be a more reliable bet in the future”. And whether people stop contributing financially or in terms of manpower, at the end of the day, the goal here is we want the project to move forward faster and what’s the most efficient way, but not so efficient that we give up what’s central to the WordPress community.

Rob Howard:
Yeah, keeping the openness, the democratization while also recognizing that customers are making a decision based on the feature set and the quality of the software. And as we talked about a couple weeks ago, just being open source isn’t good enough. We’re seeing the closed source competitors sneak up on certain WordPress features like E-commerce, full site editing, stuff like that. And we want to set up a system where we can empower our WordPress developers to do really great work in a way that is timely and fun, and is a win-win for everybody. And part of that means potentially expanding how people can contribute, whether people can contribute money or other things other than time, what contributing means and how wide of a net we want to cast around that, and just getting a more positive vibe around everything. And I think it is clear that other companies are doing that and it would be cool if we borrowed ideas from them and experimented with new things, and just see what works for the community and also for the big companies that are involved, because we want everybody to win.

Brian Coords:
I think that’s a good place to end this. We may not solve all of WordPress’s problems in a short podcast, but I think it’s worth getting these conversations moving and getting more people involved in these conversations.

Rob Howard:
Absolutely. All right, well it’s great talking to you as always, and I will see you next time.

Monet Davenport:
Thank you for listening to this episode. Press The Issue is a production of MasterWP, produced by Allie Nimmons, hosted, edited, and musically supervised by Monet Davenport, and mixed and mastered by Teron Bullock. Please visit masterwp.com/presstheissue to find more episodes. Subscribe to our newsletter for more WordPress news at masterwp.com.