Saving the future and solving the ‘Free Rider Problem’

Funding the WordPress open-source project doesn't have to generate drama. Here's a clear, simple, proven approach to ensuring WordPress is a financial success.

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A few weeks back, I launched a series of posts on funding the future of WordPress – spurred largely by WordPress co-founder and Automattic founder Matt Mullenweg’s unseemly Twitter diatribe about companies that don’t contribute enough back to the open-source project.

I don’t think Mullenweg’s tweetstorm was particularly strategic, but it has certainly spurred a lot of conversation about contributing to open source, funding WordPress, and the “Free Rider Problem” – an obscure economics concept that Mullenweg cites frequently when discussing what he views as the challenge of getting more people to contribute. I encourage you to check out my conversation with MasterWP Digital Producer Allie Nimmons on Toxic Scorekeeping, as well as Brian Coords’ interview with Joe Casabona where they touch on some of the same topics. Our friends over at The WP Minute shared their thoughts, and WordPress Executive Director Josepha Haden Chomphosy released a post and a podcast exploring the issue. Lots of action!

We’re probably almost belaboring the point now, but I’m going to take one more swing at this idea because I think it’s the hinge point for the whole future of WordPress – many possible futures diverge from the decisions we make today, so we should spend a lot of time and effort making the best decision we can.

With that in mind, let’s dive into a thought experiment where we solve The Free Rider Problem, once and for all.

GIF of Dr. Brown drawing the space-time continuum on a chalkboard in Back To The Future
Dr. Emmett Brown hopes WordPress can avoid accidentally traveling to Alternate 1985.

Fundraising for WordPress, with actual money

In a previous article, I touched on the point that WordPress should be able to receive money in lieu of people contributing only their time. Asking only for time creates a mismatch between what the organization “wants” and what people can give, and thus creates huge economic inefficiencies that have been well documented since the day Five for the Future was announced in 2014. As my colleague Allie Nimmons has discussed, this also creates a problem where some activities are arbitrarily valued more than others – so not everyone’s time “counts” toward the goal. More recently, Lesley Sim of Newsletter Glue shared one of my favorite ideas – writing actual job descriptions for the things we need people to volunteer for:

When I have spoken to WordPress leadership about the idea of actually receiving and sending money to people, the main reason not to do it is that it is complicated from a tax and business entity standpoint. It is unclear how much The WordPress Foundation (a non-profit) could be involved without jeopardizing its non-profit status. I’ve heard the same thing about paying for speakers’ travel to WordCamp, which the WordCamp US organizers are unable to do directly. (For our part, we are just giving people money and it is working well, but I understand the trepidation here.)

I think Vue.js, one of my favorite non-WordPress open-source projects, is a great example here. You can easily give money to the Vue.js project via credit card. You can send money to an individual contributor or to the general organization, in which case the leaders will distribute the resources as efficiently as they can. While I am sure it would be possible to quibble about some details here, this proves to me that it is possible for a large open-source project to accept money and to pay contributors. There is no reason why WordPress could not replicate this idea, and I see no reason why the current paradigm (not accepting money, only accepting time) is better.

So, let’s imagine we combine Lesley’s idea of creating job descriptions with the Vue.js innovation of being able to receive money. This would allow us to:

  • Define approximately how many paid contributors we need (perhaps 500 full-timers or 1,000 part-timers) and roughly what they should work on
  • Accept money at the organization level (e.g. Automattic or some other entity receives “donations” from outsiders and then pays people to contribute according to the established job descriptions)
  • Allow companies to “pledge” their employees just as they do today, and put a reasonable dollar amount on the value of that pledge, and assign that person to one of the established job descriptions
  • Allow pure hobbyists to continue to contribute without pay and without a job description, just as they do now

When you add all this up, you can actually quantify what success looks like. You’d know that you want 500 people, for example, and that you need about $90,000 per person per year to pay them a good salary as a contributor. You could even give the group of paid contributors a fun name, like The WP 500. And you’d arrive at an actual number – perhaps $40 million a year – that you can use as a fundraising goal.

The ‘game of chicken’ solution: A threshold auction

Although the Free-Rider Problem is often presented as insoluble, many solutions have in fact been proposed. The most common is taxation – a government entity forces people to pay money to fund public goods like roads, clean air, and the proverbial asteroid prevention system. There is no method for WordPress to collect taxes by force, so that’s out. The second is converting the public good to a club good – like a toll road or the ExpressionEngine CMS, which used to charge $299 for a license. Again, this is not compatible with the WordPress mission.

The third and most promising option is called a threshold auction, as described in the short book The Free-Rider Problem by Alay Mehta. If you have ever participated in a Kickstarter campaign, you’ve experienced a threshold auction. The basic idea is that someone sets an amount of money needed to create or maintain a public good. If the threshold is met, the public good gets created or maintained. If not, nothing happens and everyone loses out on the potential utility they could have received from that public good. In less flattering terms, other economists (such as Richard Tuck and Anthony de Jasay, who have longer books that cover the same ideas) refer to this situation as “playing chicken” or “holding for ransom.” Despite the negative connotations associated with those phrases, this system effectively forces free-riders to stop riding for free, and incentivizes everyone to pay for the public good at a level that is equivalent to the utility they receive from it. (And, of course, there are negative connotations to collecting taxes and tolls, too!)

Here’s how the threshold auction could work for WordPress.

Hold onto your butts!

First, we’d establish a threshold – for example, a minimum amount of money we need to support all paid WordPress contributors for the year. For our purposes, I will ballpark this at $40 million – about $90,000 in costs per person times 500 full-time people. (You could divide this up differently – for example, 1,000 part-time workers – and keep the same basic structure.) This is roughly 3x to 4x what Automattic is spending on sponsored contributors right now, based on my back-of-the-envelope calculations (they say they are putting 4,096 hours a week toward contributions right now).

Then, we’d set a deadline for our game of chicken. We’d say: In the next month, everyone who benefits from WordPress needs to commit an amount equivalent to the value they receive, either in actual cash, which could be allocated to individual contributors by Automattic or another entity, or in the form of paying employees whose time is dedicated to WordPress open-source work. If the total contributed is equal to or greater than $40 million, everyone will continue to maintain and improve WordPress for the next year. But if the $40 million threshold is not reached, Matt Mullenweg will freeze WordPress.org, and no work will take place on the WordPress open-source project this year.

This is one of the benefits of having a benevolent dictator for life – Matt Mullenweg can truly, unilaterally enforce that rule if the threshold auction fails to raise enough money.

After the initial shock and panic, the threshold auction would cause everyone to behave in a way that reflects the actual economic value they receive from WordPress.

The first $20 million or so would be a no-brainer. Automattic already puts $10 million or so per year into sponsored contributors by my estimate, so they’d just commit that to the auction. Same for Yoast, Bluehost, GoDaddy, and other large existing contributors – that maybe accounts for another few million. Large WordPress-centric companies like 10up, WP Engine and Awesome Motive would pitch in. Many small agencies would put in whatever they can, and perhaps commit a percentage of profit from each future project to next year’s pledge. Sellers of club goods would also be incentivized to ask their customers to make small cash contributions, which would create a pledge drive similar to what Wikipedia and PBS do each year. Let’s imagine this initial rush of “voluntary” contributions gets us up to $30 million.

The final $10 million is where the auction starts to get free-riders off the fence. Let’s imagine that GoDaddy initially pitched in $1 million to the auction. But with a few days left, we are still $10 million away from our goal, and we are at risk of WordPress not being updated for a full year.

Now, we are in a glorious game of chicken. GoDaddy looks at the auction and says, “oh wow, if WordPress became stagnant or insecure, it would cost us a lot to fix those problems or shift our customers to other content management systems. We should contribute more to ensure this thing hits its threshold.” Then, GoDaddy does an internal calculation and determines what their switching costs would be – and that number informs their next contribution to the auction. This gets us to a place where everyone is forced to make an honest assessment of the value they receive from WordPress. It also leaves far less room for Matt Mullenweg to say that GoDaddy doesn’t contribute “enough,” since the very nature of the auction incentivizes a rational choice based on the private, internal calculations that GoDaddy makes about the value it receives from WordPress.

Of course, GoDaddy would also know that Automattic has more to lose if WordPress isn’t funded. So they may put in $5 million, but hold out on the rest because they know that Mullenweg and Automattic will be harmed if WordPress is not funded. Automattic then has to decide whether to call GoDaddy’s bluff. Perhaps they put in another $2 million, leaving the final $3 million gap for GoDaddy to fill.

You may notice that this exact game of chicken is already happening – but Mullenweg always loses [hence the tweetstorms] because everyone knows he has the most to lose if WordPress languishes! This is one of the reasons Mullenweg often finds himself between a rock and a hard place – WordPress (the open-source software) and Automattic (the for-profit company) are so intertwined, there’s pretty much no scenario where it would be rational for Mullenweg and Automattic to allow WordPress to fail. If everyone else knows this and chooses not to play ball, Automattic is left holding the bag (but they also still get tons of value from WordPress.)

The solution for this situation – which I’ll call The Mullenweg Paradox – is a threshold auction with a threshold high enough that Automattic couldn’t realistically fund it all. With the correct threshold, the auction system creates a real problem for free riders if they don’t contribute enough – and it gives Mullenweg fundraising leverage he does not have today.

While this would be a stressful process, it also forces everyone to accurately assess the value of WordPress and put their money where their mouth is. And in the end, WordPress provides so much value to so many people that the threshold auction would almost certainly be fully funded. (And if the auction fails, we will have learned that we overestimated the value of WordPress after all.)

How the auction clarifies Automattic’s role

In addition to incentivizing free riders to pay, the auction also has the positive effect of reducing the direct reliance on Automattic to fund the WordPress project. It’s great to have financial support, but what is not great is the way it makes Automattic’s financial success difficult to disentangle from the financial health of the WordPress open-source project.

When Mullenweg argues that GoDaddy is “parasitic,” part of that is because GoDaddy is competing effectively with Automattic, taking some Automattic customers away, and then failing to contribute back to the community as much as Automattic does (at least by Mullenweg’s calculation). While this is indeed bad for Automattic, there’s nothing that makes competition inherently bad or wrong. To turn Mullenweg’s point around, let’s say you went out for ice cream this weekend. Ice Cream Shop A sells cones for $8 and gives 10% back to a local foundation you love. Ice Cream Shop B sells cones for $4 and gives 1% back. There are all sorts of reasons you might rationally choose Ice Cream Shop B – maybe the line is shorter, maybe you just don’t have the extra $4, maybe you are with a big group and the difference would really be $40 since you’re buying 10 cones. Maybe you just like the taste of Shop B’s ice cream better. I’d hope the owner of Shop A wouldn’t ruin your summer afternoon by chasing you down the street screaming that you’re a parasite for choosing Shop B.

Kevin from The Office drops his ice cream in the saddest GIF ever

Mullenweg believes that Automattic’s contribution to WordPress should be a selling point when customers consider who to work with, and I agree – I consider this frequently, though certainly not on every transaction. However, this does not absolve Automattic from needing a successful business model – it is a for-profit business and we are still in capitalism, despite our Star Trek utopia goals. The hosting and premium-plugin game is changing, and I am not at all convinced that Automattic has the smartest approach win in the new landscape.

So, the auction and The WP 500 actually strengthen the WordPress open-source project by making it less reliant on Automattic, and detaching Automattic’s business success from the success of the open-source project. Mullenweg can still dislike GoDaddy, but he would need to make a different argument that is more directly about competition, and less about indirectly funding WordPress.

Too intense?

If this proposition makes you queazy, you can water it down a bit by setting two thresholds – one for basic upkeep ($10 million) and another for future product improvements ($40 million). This way, you run a lower risk of WordPress going completely dark for a year. However, the more aggressive the game of chicken, the more likely you are to convert free-riders into paying contributors.

Also note that the auction comes nowhere close to turning our theoretically total utility ($67 billion) into money. This is, in part, because it is impossible to communicate with everyone who receives utility from WordPress to get them to participate, and also because some of these participants would simply choose to allow WordPress to go dark. So, because WordPress already exists as a public good, some subset of users will accept “free riding” by allowing their websites to sit without future updates. (This is the same thing happening when people don’t renew premium plugins.) These people picked WordPress in part because it is free, they already have a sufficient product, and they don’t care (or aren’t aware of the opportunity) to contribute more. That’s OK, especially because the WordPress mission is to help people build websites and “democratize publishing.” We don’t need to convert all the utility into money, we just need enough money distributed in a transparent way that no participant can credibly claim another participant is a free rider who is threatening the ecosystem, as Mullenweg claims of GoDaddy. In this system, the free riders don’t matter, because the system is fully funded.

Funding the future of open-source

Imagine a world where a successful auction funds The WP 500 for the next year. We now have a transparent organization with a huge budget that works more like a union or a cooperative than a shadowy for-profit corporation – this is way better than the status quo. It would allow us to experiment with ideas that exist at the intersection of capitalism and socialism, something that would appeal to everyone who values open-source software. We could pay contributors, we could have a clear and predictable roadmap and budget, and next year, we could come back and do it all again, bigger and better each time. Matt Mullenweg isn’t asked to give up any ownership – in fact, his position as king of WordPress is what makes the threshold auction possible in the first place, since he can unilaterally enforce the consequences of an auction failure. And Mullenweg can stop stressing about free riders, because he’s implemented the most economically efficient system ever to fund the most important open-source project in the world. Instead of languishing in the shadow of competition from corporate behemoths, he’d be the leader of the most innovative project on the web.


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Rob Howard is an editor at MasterWP and the CEO of Howard Development & Consulting, the company behind WP Wallet.

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