Why is WordPress.com squeezing its free users?

Automattic seems to be stuck between its blogging past and its web-hosting future.

Website with Wordpress logo and globe

Update, April 6: Automattic published a blog post the day after I wrote this article in which it increased storage for free users from 500 MB to 1 GB and stated that it will not be limiting “visits” or traffic on WordPress.com sites. I’ve updated the relevant pieces of the article below to reflect those changes.

This week, WordPress.com released new pricing for its blogging and web-building solution – and, unfortunately, sparked outcry from community members who felt the new structure unfairly squeezed free users into upgrading to the $15/month plan.

The most prominent post was a teardown of the new pricing model that became popular on Hacker News and prompted a public response from WordPress.com CEO Dave Martin.

As a for-profit company, WordPress.com is of course free to change their prices as they see fit. However, I think the company’s challenges around their new pricing structure highlight a bigger concern. The company’s business model has not aged well, and it’s now stuck between two worlds: is it a free content distribution platform like Facebook and Medium, or is it a website builder like Squarespace and Wix?

This matters not just for Automattic, the company that owns WordPress.com, but also for the community as a whole. A huge portion of the WordPress open-source ecosystem is funded by Automattic (via employees who are “sponsored” to do community work as well as direct donations to the WordPress Foundation), which means financial problems for WordPress.com would have ripple effects throughout the entire open-source world.

With that as our context, let’s see if we can figure out where WordPress.com is headed with their new pricing changes.

Squeezing free users by reducing storage

The most telling change in WordPress.com pricing is that the company has reduced the amount of storage it provides to free users to one-sixth of its previous offering, from 3 GB to 500 MB one-third of its previous offering, from 3 GB to 1 GB (see the note at the top of this article – Automattic increased storage from 500 MB to 1 GB the day after we published this post). There’s also talk of limiting free sites to a certain number of “visits,” which is reminiscent of WP Engine’s web-hosting business model. (The day after publication, Automattic said it would not follow through with its idea of limiting “visits” on WordPress.com sites.)

To me, this says that the company has decided to deprioritize its free users and move away from its attempts to monetize those users directly. They view free users as loss leaders and want them to eventually upgrade to the $15/month plan. By contrast, Google offers 15 GB of free storage to its Gmail/Drive users for free, and Substack, Medium, Facebook and Twitter effectively offer infinite free storage for someone who wants to post interesting things online. These other companies do not view free users as loss leaders; they have business models that specifically encourage people to use their service for free so that they can build a network (Facebook, Twitter) or increase the number of touch points with their brand (Google) or eventually take a commission off writers’ future revenue (Substack, Medium).

We take a similar approach with WP Wallet and MasterWP. We love our free users because they share our brands with others, they may directly purchase our courses or themes (or even become clients), and lots of companies happily pay us to advertise to them. A small percentage of agency owners and power users will upgrade to WP Wallet PRO, but even without that possibility it would still make sense for us to cultivate our free audience.

WordPress.com does not appear to see itself as a peer of those big companies that seek to build a large free audience. By limiting storage, it is effectively telling people that it would like them to pay up once their blogs reach a certain size. This makes sense from a certain perspective – storage and traffic are the things that cost money, whereas the textual posts themselves have minimal marginal costs – but it also cuts off a variety of ways that WordPress.com could monetize free users without charging them directly.

WordPress.com remains a blogging company, but it is moving away from being a company that monetizes social-media eyeballs or provides free services as a way to increase brand engagement.

So, is WordPress.com a website builder instead?

If WordPress.com isn’t competing with Facebook or Substack, perhaps it is positioning itself as a do-it-yourself website builder against companies like Wix and Squarespace. The push toward full-site editing and Gutenberg blocks certainly seems to be moving WordPress in this direction, and this is how we use open-source WordPress as custom web developers.

The nice thing about the Squarespace business model (and the web-hosting model in general) is that your users generally run businesses, so it’s a no-brainer for them to pay a few bucks a month to have a nice website. Squarespace does not have a free plan, and Wix’s free plan is very limited and something I’ve only seen used a few times by very small, zero-budget organizations.

I’m sure WordPress.com already has many customers who use their Pro accounts as alternatives to Squarespace, and you certainly could run a very successful SaaS company with this business model. There are a lot of low-tech users who’d pay $15/month for an easy way to build a site – though I think there’s an open question as to exactly how WordPress.com would provide a better user experience than what Squarespace and Wix already deliver. (Interestingly, Elementor launched a competitor to WordPress.com and Squarespace last month as well, presumably on the belief that they can sufficiently differentiate themselves with a better page builder.) I’ve personally chosen to focus on the high-code market, but focusing on the low-code and DIY market is a sensible business model, especially if you believe you have a “secret sauce” that can help you beat the incumbents.

However, this business model seems to be at odds with WordPress’s long-time fan base (bloggers like the person who wrote the takedown of the new pricing) and the WordPress mission statement, which is to “democratize publishing.” To me, that means something like “make it easy for anyone to write something on the internet with zero barrier to entry.” A business model that only works if people upgrade to the Pro plan doesn’t seem to incentivize the democratization of publishing. Instead, companies like Twitter and Medium, which allow people unlimited reach for free, are much more in line with the WordPress mission statement. A business model like that of Squarespace doesn’t really democratize anything; it just provides a useful service to people who want to pay for the convenience of having a quick, good-looking, no-code web site.

Automattic is also already in the higher-end web hosting business, with its enterprise-level WordPress VIP offering and its investment in WP Engine, which now also includes Flywheel. Clearly they’re hungry for a larger share of the low-end DIY hosting market. But still, it strikes me as odd that they’d shift away from the “publishing” angle (where they own the two flagship brands, WordPress and Tumblr) and instead wade into a crowded pool of DIY page-builder companies where Squarespace is a behemoth and customers are fickle and price-sensitive. I’m sure there’s someone running the numbers who believes this approach will score the investors a higher multiple, but it seems like a move that is incongruent with the mission statement and the strengths of the existing brand.

I hope Automattic succeeds in a way that enhances the WordPress brand and gives them tons of money to funnel back into the open-source community. I also understand that they’re under pressure to pivot as the web evolves and they seek to boost their $7.5 billion valuation. But I’m skeptical that everyone becoming (or being acquired by) a web host is really the way to build a vibrant community and democratize publishing – instead, it seems like we are laundering the ideals behind open source and free expression into a sales pitch for a few dollars worth of bandwidth and data transfer.

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Rob is the CEO of HDC and the Publisher of MasterWP.

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