Most of Mozilla Corporation’s revenues come from royalties earned through Firefox web browser search partnerships and distribution deals. Back in 2008 Mozilla Firefox controlled over 26% of the browser market. Today, due to the market dominance of Google Chrome and Safari, Mozilla has less than 5% in market share. In 2021, Mozilla Corporation generated $441 million in royalties, which represented almost 89% of its income.
Business Model Element
Analysis
Implications
Examples
Value Proposition
Mozilla’s value proposition centers around promoting an open and accessible internet for all. For users, Mozilla offers the Firefox web browser, which prioritizes privacy, security, and user control. Firefox is known for its open-source nature and support for web standards. It empowers users to have a safe and customizable web experience. Mozilla also champions internet health, advocating for an internet that respects users’ rights, fosters innovation, and promotes competition. The organization develops tools and resources to protect users from online threats and data tracking. Overall, Mozilla’s value proposition is to provide users with a browser that respects their privacy and enables them to shape their online experience while advocating for a healthier internet ecosystem.
Promotes an open and accessible internet for all. Offers the Firefox web browser known for privacy, security, and user control. Supports open-source principles and web standards. Advocates for internet health and user rights. Develops tools to protect users from online threats and data tracking. Appeals to users seeking a browser that respects their privacy and empowers them to control their online experience. Advocates for a healthier internet ecosystem.
– Mozilla’s value proposition aligns with user concerns about online privacy and security. – Open-source principles foster community involvement and transparency. – Advocacy for internet health builds trust and credibility among users. – Development of protective tools enhances the browser’s functionality and appeal.
Customer Segments
Mozilla serves two primary customer segments: individual internet users and developers. Individual users include people seeking a privacy-focused and user-centric web browsing experience. Developers comprise web developers and tech enthusiasts who contribute to Mozilla’s open-source projects, including the Firefox browser. Mozilla provides resources and tools to support both segments, including Firefox for users and developer tools for web developers. Additionally, Mozilla collaborates with organizations and institutions that share its mission for an open web.
Serves two main customer segments: 1. Individual Internet Users: People seeking a privacy-focused and user-centric web browsing experience. 2. Developers: Web developers and tech enthusiasts contributing to Mozilla’s open-source projects. Provides resources and tools for users and developers. Collaborates with like-minded organizations and institutions. Supports both individual users and those contributing to Mozilla’s mission.
– Catering to both individual users and developers diversifies Mozilla’s user base and contributions. – Providing resources and tools tailored to each segment’s needs enhances user satisfaction. – Collaboration with like-minded organizations amplifies the impact of Mozilla’s mission.
Distribution Strategy
Mozilla’s distribution strategy is digital and open-source. The Firefox web browser is available for download on Mozilla’s website and various app stores for mobile devices. Mozilla’s open-source nature allows third-party developers and organizations to build their browsers based on Firefox’s source code. This approach fosters innovation and community involvement. Mozilla also relies on partnerships with search engines for search revenue generated through Firefox’s search bar. Additionally, Mozilla uses outreach and education to promote its mission and browser adoption.
Relies on a digital and open-source distribution strategy. Offers Firefox for download on its website and app stores. Allows third-party developers to build browsers based on Firefox’s open-source code. Partners with search engines for search revenue. Promotes its mission and browser adoption through outreach and education. Supports innovation and community involvement through open-source principles.
– Digital distribution simplifies access to Firefox, eliminating the need for physical distribution channels. – Open-source approach fosters innovation, community contributions, and browser diversity. – Search engine partnerships provide a source of revenue to support Mozilla’s mission.
Revenue Streams
Mozilla generates most of its revenue through search engine partnerships. The default search engine in the Firefox browser generates revenue based on user searches. Mozilla also earns income through sponsored content and advertisements displayed on its websites and products, including the Firefox New Tab page. A portion of Mozilla’s revenue is reinvested into its mission-driven initiatives and open-source projects. Additionally, Mozilla may receive grants, donations, and contributions from individuals, foundations, and organizations that support its mission of an open web.
Relies on revenue streams from: 1. Search engine partnerships based on user searches in Firefox. 2. Sponsored content and advertisements on its websites and products. 3. Grants, donations, and contributions from individuals, foundations, and organizations supporting its mission. Reinvests a portion of revenue into mission-driven initiatives and open-source projects. Diversifies income sources through search partnerships, advertising, and contributions. Supports its mission through financial sustainability.
– Search engine partnerships provide a stable source of revenue to support Mozilla’s initiatives. – Sponsored content and advertisements offer additional income opportunities. – Contributions and grants contribute to the financial sustainability of Mozilla’s mission.
Marketing Strategy
Mozilla’s marketing strategy includes community engagement, educational initiatives, and advocacy for an open web. The organization engages with its community of users, developers, and volunteers to promote its mission and browser adoption. Educational initiatives involve creating resources and campaigns that raise awareness about online privacy, security, and digital literacy. Mozilla advocates for an open web by participating in public policy discussions and taking legal action when necessary to protect users’ rights. Additionally, Mozilla uses social media and online channels to communicate with its audience and share updates about its products and initiatives.
Utilizes community engagement, educational initiatives, and advocacy for marketing. Engages with its community of users, developers, and volunteers to promote its mission and browser adoption. Creates resources and campaigns to raise awareness about online privacy, security, and digital literacy. Advocates for an open web through participation in public policy discussions and legal action when necessary. Utilizes social media and online channels for communication and updates.
– Community engagement fosters loyalty, involvement, and advocacy among Mozilla’s user and developer communities. – Educational initiatives enhance user awareness and trust in Mozilla’s products. – Advocacy for an open web aligns with Mozilla’s mission and values, attracting like-minded supporters.
Organization Structure
Mozilla operates with specialized teams dedicated to product development, engineering, marketing, advocacy, policy, finance, and community support. Product development and engineering teams focus on improving the Firefox browser and open-source projects. Marketing and advocacy teams promote Mozilla’s products and mission. Policy and legal teams work on public policy issues and protecting user rights. Finance teams manage the organization’s finances and sustainability. Community support teams engage with users and volunteers. Mozilla’s structure reflects its commitment to open-source principles, community involvement, and a mission-driven approach.
Employs specialized teams for product development, engineering, marketing, advocacy, policy, finance, and community support. Enhances the Firefox browser and open-source projects through product development and engineering. Promotes products and mission through marketing and advocacy efforts. Addresses public policy issues and user rights protection through policy and legal teams. Ensures financial sustainability through finance teams. Engages with users and volunteers through community support teams. Embraces open-source principles, community involvement, and mission-driven initiatives.
– Specialized teams contribute to product improvement, user satisfaction, and advocacy. – Advocacy and policy teams reinforce Mozilla’s commitment to user rights and open internet principles. – Community support enhances user engagement and involvement.
Competitive Advantage
Mozilla’s competitive advantage lies in its commitment to user privacy, open-source principles, and advocacy for an open web. The Firefox browser’s focus on privacy and security resonates with users concerned about online tracking and data collection. Mozilla’s open-source nature fosters collaboration, innovation, and community involvement, resulting in a robust and customizable browser. Advocating for an open web reinforces Mozilla’s credibility and attracts supporters who value an internet that respects users’ rights. Additionally, Mozilla’s nonprofit status distinguishes it from for-profit competitors and highlights its mission-driven approach.
Derives a competitive advantage from: – Focus on user privacy and security, addressing concerns about online tracking. – Embracing open-source principles, fostering innovation, and community involvement. – Advocacy for an open web aligns with user values and attracts like-minded supporters. – Nonprofit status highlights a mission-driven approach distinct from for-profit competitors. – Development of tools and resources that protect users from online threats.
– Privacy and security features appeal to users concerned about online tracking and data privacy. – Open-source principles attract a community of contributors and promote browser customization. – Advocacy efforts enhance Mozilla’s reputation and credibility in the tech industry. – Nonprofit status and mission-driven approach resonate with users who prioritize ethical internet practices.
In an interview, with Lef Fridman, Brendan Eich, co-founder of Firefox, explained the context, which led to the development of Firefox:
Netscape got acquired by AOL which as I say was a reasonably happy ending for a lot of people because Netscape otherwise was going to go out of business because Microsoft was just killing its market.
There was no way to charge for a browser Windows came with IE (Internet Explorer).
Let’s remember, that back then, in the mid-90s, browsing had become a commercial killer application. One of the first applications, showcased the potential of the Internet, at the commercial level.
In that context, Netscape, started by James H. Clark andMarc Andreessen, had put together the team, which had worked previously on Mosaic, the Internet browser, which was dominating the market in the mid-90s.
The newly formed team at Netscape had built a successful browser, so much so, that Netscape took over market shares from Mosaic, thus becoming, the market leader.
Yet, this also awakened Microsoft, which had primarily invested most of its resources to build the Information Superhighway (which would turn out to be a fad) and instead had grasped the importance of browsing, when Netscape had already taken over, in 1995.
Thus, Microsoft, to speed up the process, of gaining traction on top of the browser market, built its own browser, Internet Explorer, which, got started by licensing the code of Mosaic (losing popularity in the browser market).
While the first version of Internet Explorer, could not compete with Netscape, in the upcoming releases, Microsoft’s browser improved substantially.
Thus, posing a survival threat to Netscape, which would be eventually bought by AOL, in 1998, for $4.2 billion.
This money would be a substantial exit for James H. Clark andMarc Andreessen. Marc Andreessen, in particular, has become the most prominent venture capitalist, with a16z.
Brendan Eich recounts the story of the early days of Firefox, Mozilla’s browser.
Indeed, as AOL had acquired Netscape, since Mozilla had started as an experimental project, within Netscape, prior to the acquisition, it witnessed a change in attitude toward the project, as Netscape became part of AOL:
IE4 was pretty good and Netscape 4 wasn’t that good, it took a while to get better but the next game executive said let’s do
an open source escape pod…
…So we did Mozilla in 1998 and it looked like it was going to initially just give the world of open source browser but it’s really hard to get people to work on this sort of hairball that had been hacked up over by that point four years.
It also couldn’t have the crypto module for secure sockets so-called or now transport layer security that was an electronic munition.
We were not allowed to release that in the full 1024-bit key strength.
And yet people one of whom i happened to meet previously at SGI when i went on a sales support engineering trip – Tim Hudson in Brisbane, Australia and
Eric Andrew Young did what became open SSL.
It was called SSL EAY after Eric’s initials.
And Tim and Eric took their open SSL outside of the purview of the NSA and the department of commerce and they stuck it into Mozilla’s code. and that was perhaps the best hack that was done in the first few months after we open sourced the browser…
…We didn’t know what AOL will do to us turns out they didn’t interfere with us for a long time but Netscape wasn’t the best steward of Mozilla we were operating Mozilla as a pirate ship without a legal entity so most of us worked for Netscape under a separate organization and initially the first engineering
manager – Tom Paquin of Netscape was the Mozilla founding manager but he left pretty quickly and he left me as the acting manager which is more like method acting in my case and I did that was my first management stint but the
someone who’d written the licenses- Mitchell Baker – She was a lawyer at Netscape she was involved in the open source license decision making and the actual writing and construction of those licenses that was Mitchell’s job Netscape public license and the truly open Mozilla public license and there were two because Netscape needed because of some uncovered code needed some special rights but that went away over time.
…in 2001 Mitchell called me up and said I’m no longer employed…”
Mitchell, together with a core development team helped shape the early days of Firefox:
Mozilla corporate structure
Mozilla Foundation was established in 2003 as California not-for-profit corporation. At the same time, the foundation has a wholly-owned for-profit corporation, Mozilla Corporation.
The Mozilla Corporation serves the non-profit foundation, and it comprises subsidiaries present in Canada, Europe, China, and other international branches.
Mozilla monetization strategy
The majority of Mozilla Corporation’s revenue is from royalties earned through Firefox web browser search partnerships and distribution deals. Precisely about 88% of Mozilla revenues came through royalties received by search engines to be featured on its Mozilla Firefox browser.
In 2017, Google closed a deal with Mozilla to be the primary search engine, by putting an end to a previous deal with Yahoo. As reported by Bloomberg, Firefox’s default search engine will be Google in the U.S., Canada, Hong Kong, and Taiwan.
Previous to the Yahoo deal Googe was already the default search engine for Firefox until Yahoo promised over $300 million a year of royalties to Mozilla, which made it go with it. That might have caught me by surprise Yahoo, which as pointed out on Bloomberg, by Charles Stewart, a spokesman for Verizon’s digital advertising business, Oath.
We are surprised that Mozilla has decided to take another path and we are in discussions with them regarding the terms of our agreement.
The anatomy of the Yahoo deal: did Yahoo make money from the deal with Mozilla?
Distribution is a critical component of the search market. Search engines like Google, Yahoo, and Bing’s success depend on their ability to be featured on several devices on the web. The key middleman between a search engine and its user is a browser. While back in 2008 Google managed to launch its own browser, Google Chrome, Yahoo instead had to secure its distribution primarily via third-party browsers.
As reported on Yahoo financials for 2016:
For the year ended December 31, 2015, revenue and TAC increased $350 million and $660 million, respectively, or 8 percent and 303 percent, compared to 2014.
As pointed out in the same report:
The increase in revenue for the year ended December 31, 2015 was primarily attributable to an increase in search and display revenue resulting from an increase in revenue from distribution partners, including Mozilla Corporation (“Mozilla”)
What were the additional revenues Yahoo recorded thanks to its Mozilla deal?
This increase resulted from higher search volume on desktop due primarily to the Mozilla Agreement, which contributed $394 million
If we stick to the number given by Yahoo financials, it seems to be $394 million in 2015.
What cost does Yahoo have to bear for that distribution and traffic acquisition?
Cost of revenue—TAC for the year ended December 31, 2015 increased $660 million, or 303 percent, compared to 2014, primarily due to increased payments to distribution partners (including Mozilla which contributed $375 million)
If we stick to this number, the traffic from Mozilla was priced for Yahoo at $375 million. Therefore, Yahoo recorded at least $19 million from the traffic coming from Mozilla Firefox.
A quick glance at the browser market: Once the leader Mozilla is now
According to StatCounter back in 2008, Mozilla Firefox represented over 26% of the browser market. Nowadays this percentage has declined substantially due in part to the market dominance of Google Chrome and Safari.
The browser market has still critical and strategic importance for the search market. Indeed, in 2017 Google offered a few billion to be featured as a default search engine on Safari and it still does. Therefore, keeping an eye on how the browser market is evolving is critical to understanding who will be the dominant player in the search market.
Understanding the open-source driven business model
Open-source is a software licensing model, where the holder of the copyright gives the chance to anyone to study or perhaps reproduce the code. It’s important to understand the key difference between open-source-driven business models, and freemiums.
In an open-source the software has been often developed as an effort by a community of developers, coming together and all contributing to it. Thus the software isn’t proprietary or kept secret, but rather released openly.
On a freemium instead (think of the case of Slack) the software is developed internally, it’s proprietary and released with tight copyright. In that case, the company owning the software will monetize it in different ways (in some cases it can be ad-supported like Spotify), in other cases, it simply is sold as a premium version (Slack).
Thus the freemium gives the company that developed it full control over its distribution. In an open-source model, instead, there is usually a non-profit organization (a foundation) that holds the property of the open-source licensed software. The foundation can run through donations or perhaps royalties.
In some instances an adjacent corporation is created, that collects the royalties from the open-source (just like Mozilla Foundation and Corporation).
A further look into Mozilla’s revenues
Thus, when we look at Mozilla, while the browser is free, it enables monetization through deals with search engines to be featured as a default choice within its browser. And it now also makes money via a subscription service.
Royalties revenues
As the Mozilla foundation highlighted in its financial reports:
Mozilla provides a Firefox web browser, which is a free a open-source web browser initially developed by Mozilla Foundation and Corporation. Mozilla incorporates search engines of its customers as a default status or an optional status available in the Firefox web browser. Mozilla generally receives royalties at a certain percentage of revenues earned by its customers through their search engines incorporated in the Firefox browser.
Subscription revenues
Subscription revenues consist of income coming from a service called Pocket Premium, which is a premium subscription enabling advanced features (like full-text search on saved articles, removal of advertising, highlights, and more). In February 2020, Mozilla also launched its VPN.
Key Highlights
Monetization Strategy: Mozilla Corporation generates most of its revenue through royalties earned from search partnerships and distribution deals involving its Firefox web browser.
Royalties from Search Partnerships: These partnerships involve search engines paying Mozilla to be the default search engine in the Firefox browser.
Main Income Source: In 2021, royalties accounted for around 89% of Mozilla’s income.
Google’s Role: Google became Firefox’s primary search engine partner in 2017, replacing a previous deal with Yahoo.
Subscription Revenues: Mozilla also generates revenue through subscription services such as Pocket Premium and a VPN service launched in 2020.
Origin of Firefox: Firefox was developed as a response to changing dynamics in the browser market during the mid-90s. Netscape’s acquisition by AOL and Microsoft’s entry with Internet Explorer prompted the creation of Firefox.
Challenges and Innovations: Firefox’s development faced challenges such as incorporating secure socket technology and involving external contributors in open-source projects.
Mozilla Foundation and Corporation: Mozilla Foundation oversees the development of Firefox as a non-profit entity. Mozilla Corporation, a for-profit subsidiary, handles business and revenue aspects.
Importance of Search Engine Partnerships: Mozilla’s financial health heavily relies on partnerships with search engines, which pay to be featured as Firefox’s default search engine.
Browser Market Share: Firefox’s browser market share declined to less than 5% by 2021 due to the dominance of Google Chrome and Safari.
Subscription Services: Mozilla expanded its revenue streams through subscription services like Pocket Premium and a VPN service launched in 2020.
Diversification: Subscription services provide Mozilla with an additional revenue source beyond search partnerships and browser usage.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
