WordPress.org became the most popular CMS and blogging platform in which the Foundation owns the trademark, and revenues come from donations. The Foundation holds a public-benefit-corporation who manages the revenues coming from WordPress events and conferences. Automaticc – the business arm – monetizes premium tools built on top of WordPress.com (a premium platform) through freemiums.
Business Model Element
Analysis
Implications
Examples
Value Proposition
WordPress’s value proposition centers on empowering individuals and businesses to create and manage websites easily and efficiently. It offers a user-friendly and customizable platform for website development, allowing users to publish content, showcase products, or establish an online presence without extensive technical expertise. WordPress provides access to a vast library of themes, plugins, and tools for design, functionality, and optimization. Its open-source nature fosters innovation and encourages a collaborative community of developers and users. WordPress supports a wide range of website types, from personal blogs to e-commerce sites, making it accessible and adaptable to various needs.
Empowers users to create and manage websites with ease. Offers a user-friendly and customizable website development platform. Provides access to a vast library of themes, plugins, and tools for design and functionality. Encourages innovation through an open-source community. Supports diverse website types, from personal blogs to e-commerce sites. Appeals to individuals and businesses seeking an accessible and versatile website solution. Simplifies website creation and management for users without extensive technical knowledge. Fosters a collaborative community for continuous improvement and development.
– WordPress’s value proposition aligns with the growing demand for online presence and content creation. – Its user-friendly approach lowers the entry barrier for website development. – A wide selection of themes and plugins allows users to tailor their websites to specific needs. – The open-source nature encourages contributions and keeps the platform up to date.
Customer Segments
WordPress targets a diverse range of customer segments, including individuals, bloggers, small businesses, larger enterprises, and developers. Individual users and bloggers often use WordPress to create personal websites, blogs, or portfolios. Small businesses leverage the platform for cost-effective website solutions. Larger enterprises employ WordPress for scalable and customizable web solutions. Developers, both independent and agency-based, utilize WordPress for client projects and custom web development. The platform caters to beginners seeking simplicity and experts desiring flexibility.
Targets individuals, bloggers, small businesses, larger enterprises, and developers. Appeals to individual users for personal websites and blogs. Serves small businesses with cost-effective website solutions. Meets the needs of larger enterprises for scalable and customizable web solutions. Attracts developers for client projects and custom web development. Caters to a broad spectrum of users, from beginners to experts. Provides a versatile platform adaptable to various website purposes.
– Addressing a broad range of customer segments ensures a wide user base and market reach. – Customizability makes WordPress suitable for various types of businesses and projects. – Developers find WordPress valuable for its flexibility and extensibility.
Distribution Strategy
WordPress’s distribution strategy is digital and decentralized. Users can access and use the WordPress platform in two main ways: WordPress.com and WordPress.org. WordPress.com is a managed hosting platform where users can create and host websites with WordPress without managing the technical aspects of hosting. WordPress.org, on the other hand, offers the open-source software for download, enabling users to self-host their WordPress sites. This decentralized approach allows for a global user base and a community-driven ecosystem. Additionally, WordPress benefits from partnerships with web hosting providers and the availability of its software on various web hosting platforms.
Relies on a digital and decentralized distribution strategy through WordPress.com and WordPress.org. WordPress.com offers managed hosting for users who want to create websites without dealing with technical hosting aspects. WordPress.org provides open-source software for self-hosting WordPress sites. Enables a global user base and fosters a community-driven ecosystem. Benefits from partnerships with web hosting providers and availability on various hosting platforms.
– A decentralized approach provides users with options for different hosting preferences. – WordPress’s open-source nature encourages innovation and collaboration. – Partnerships with hosting providers expand the platform’s reach and accessibility.
Revenue Streams
WordPress generates revenue through various streams, primarily focusing on WordPress.com. Its revenue streams include subscription plans, domain name registration, and advertising. WordPress.com offers premium subscription plans with additional features and customization options. Users can also register domain names through WordPress.com. Advertising, including display ads and sponsored content, provides an additional source of revenue. WordPress.org itself does not generate direct revenue, but it indirectly contributes to the ecosystem by driving traffic and users to the WordPress.com platform.
Relies on revenue from: 1. Subscription plans on WordPress.com with additional features and customization options. 2. Domain name registration through WordPress.com. 3. Advertising, including display ads and sponsored content. Leverages WordPress.org’s role in driving traffic and users to WordPress.com, indirectly contributing to revenue. Ensures income through premium subscription plans and domain registrations. Diversifies revenue sources through advertising. Expands the user base on WordPress.com through the influence of WordPress.org.
– Subscription plans offer premium features and customization, enticing users to upgrade their accounts. – Domain name registration provides a convenient service for users seeking domain hosting. – Advertising adds a supplementary revenue stream to the platform.
Marketing Strategy
WordPress’s marketing strategy revolves around content marketing, community engagement, word-of-mouth, and partnerships. The platform produces educational content, blog posts, tutorials, and guides to showcase its capabilities and support users. Community engagement includes user forums, meetups, and conferences to foster collaboration and knowledge sharing. WordPress benefits from word-of-mouth marketing as satisfied users recommend the platform to others. Partnerships with web hosting providers and agencies extend its reach and influence in the web development industry.
Utilizes content marketing, community engagement, word-of-mouth, and partnerships for marketing. Produces educational content, blog posts, tutorials, and guides to showcase capabilities and support users. Engages the community through user forums, meetups, and conferences for collaboration and knowledge sharing. Benefits from word-of-mouth marketing as satisfied users recommend the platform. Forms partnerships with web hosting providers and agencies to expand reach and influence in the web development industry. Focuses on building awareness, educating users, and fostering collaboration within the WordPress community.
– Educational content establishes WordPress as a valuable resource and attracts new users. – Community engagement fosters collaboration and knowledge sharing, strengthening the ecosystem. – Word-of-mouth recommendations contribute to organic growth and user acquisition. – Partnerships with hosting providers and agencies enhance WordPress’s presence in the web development industry.
Organization Structure
WordPress operates with a decentralized organizational structure, reflecting its open-source nature. It relies on the contributions of a global community of developers, designers, translators, and volunteers who contribute to the platform’s development and improvement. The WordPress Foundation, a non-profit organization, oversees the project’s legal and financial aspects, including trademark and licensing issues. Automattic, a for-profit company, manages WordPress.com and provides commercial products and services that complement the WordPress ecosystem. The decentralized structure allows for innovation and community-driven development while maintaining legal and financial stability.
Employs a decentralized structure based on contributions from a global community of developers, designers, translators, and volunteers. The WordPress Foundation oversees legal and financial aspects, including trademark and licensing. Automattic manages WordPress.com and offers complementary commercial products and services. Ensures innovation and community-driven development while maintaining legal and financial stability. Relies on a combination of non-profit and for-profit entities to support the ecosystem.
– A decentralized structure fosters community contributions and innovation while maintaining governance and stability. – The WordPress Foundation ensures that legal and financial aspects are managed responsibly. – Automattic’s role in managing WordPress.com and offering commercial products complements the ecosystem.
Competitive Advantage
WordPress’s competitive advantage lies in its open-source nature, versatility, and global community. Being open source allows continuous development and customization, keeping the platform relevant and adaptable. Its wide range of themes, plugins, and tools provides versatility for various website types and purposes. The global community of developers and users offers support, resources, and a sense of belonging. Additionally, WordPress benefits from its extensive market share, making it a familiar choice for users and developers worldwide.
Derives a competitive advantage from: – Open-source nature, enabling continuous development and customization. – Versatility with a wide range of themes, plugins, and tools for various website types. – A global community providing support, resources, and a sense of belonging. – Extensive market share, making it a familiar and widely adopted platform. – A strong presence in the web development industry, influencing best practices and standards.
– WordPress’s open-source approach ensures that it stays up to date and adapts to evolving web trends. – A diverse range of themes and plugins caters to different user needs and preferences. – The global community fosters collaboration and provides valuable resources. – A strong market presence enhances user trust and adoption.
In 2003, Matt Mullenweg (at that time 19) after a summer camp, had taken photos he wanted to share online. There were already blogging platforms like Blogger (from Google), MovableType, and others. Matt thought why not developing a whole new blogging platform.
He picked b2, as it was the only open-sourced, yet almost abandoned project. Jut back then, what would later become his co-founder Mike Little, left a comment to the Mullenweg’s article talking about the blogging platform, which gave rise to the project that would bring to WordPress.
They forked the code (copied the source and started to develop independently on top of it) and started the development of what would later become WordPress, it was the beginning of 2003 and by May they were ready to launch WordPress:
Matt Mullenweg announced WordPress was ready Back in May 2003 in his blog (source ma.tt)
The initial growth of WordPress wasn’t without obstacles. Indeed, as WordPress was growing, it also had to deal with spam, and indeed Akismet (a software to prevent spamming on a blog) was among the first tools developed on top of WordPress (it was 2005), and on top of that Matt Mullenweg built its company, Automattic.
By 2005, Matt Mullenweg explained why he finally moved full time on WordPress:
It was just about a year ago I blogged about leaving Houston and driving across the country to join CNET. It ended up being one of the best moves of my life. Since moving to the Bay Area I’ve had incredible oppurtunities and met a whole tribe of amazing people. For what I’m passionate about, I really believe this is the best place in the world to be.
…I was wondering if I could focus on my passions full-time, to put more daytime hours into the community and projects that have changed my life already. I don’t need much, and working on WordPress full-time is my idea of heaven. I gave notice (they’ve been incredibly supportive).
I could say this was a hard decision, but the truth is I can’t imagine myself doing anything else.
By 2005, WordPress would grow even further, and it started to strike important partnerships.
As Matt Mullenweg left CNET and moved full time to WordPress, he also constituted Automattic, the company that would manage all the tools built on top of WordPress.
In 2006, WordPress was still a third player, as Google’s Blogger and Technorati were dominating.
Matt Mullenweg would “praise its third place” as he mentioned in his blog, back then:
“[A] study of the performance of twenty major American companies over four decades found that the ones putting more emphasis on market share than on profit ended up with lower returns on investment; of the six companies that defined their goal exclusively as market share, four eventually went out of business.”
By the end of 2006, Blogger would take over Technorati to become the most popular platform that year.
In the meantime, WordPress would also evolved substantially from 2003 to 2008:
In the meantime, by 2004, the first plugins (applications) started to be developed on top of WordPress, thus fostering the development community.
In 2005, the WordPress repository would be officially launched, and it snowballed. In a few years, thousands of plugins would be developed.
By 2009 WordPress would further take off until it became the most popular world CMS (content management system).
Source: w3techs
WordPress.org vs. WordPress.com
To understand how the whole WordPress business model is organized, both in terms of the development community and business ecosystem, it’s important to distinguish between WordPress.org, the open-source CMS – that became the most popular blogging platform on the internet; and WordPress.com, a set of hosting and software services, often packaged under a single subscriptionplan.
Therefore, WordPress.org is an open-source service managed by the WordPress Foundation.
While WordPress.com is the hosting service and the set of premium features built on top of WordPress.com, and it’s managed by the business arm that Matt Mullenweg created, Automattic.
In addition, the WordPress community has grown over the years through official events run by WordPress (known as WordCamp) and local meetups.
As WordCamp has grown into a large event non-profit organization, the WordPress Foundation has moved the management of the sponsorships for these events into a subsidiary, “WordPress Community Support.”
Therefore, to recap, this is how the whole WordPress business model works:
WordPress Foundation: which runs on top of donations.
WordPress.com is run by the business arm, Automaticc, which has a set of products, mostly based on subscription revenues or freemium offerings.
And WordCamps events are managed by the Foundation’s subsidiary WordPress Community Support, run as a Public-benefit corporation, which collects the revenues coming from events.
WordPress.org and the WordPress Foundation
The WordPress Foundation is a charitable organization that Matt Mullenweg founded, which mission, with its main open-source project, WordPress.org, is “to democratize publishing through Open Source.”
The WordPress.org foundation runs through donations. For instance, inf 2018, the revenues, as reported on the WordPress foundation website, “$13,296, with donations making up $11,178 of this amount.”
The WordPress trademark is owned by the Foundation.
WordPress.com family and the business arm, Automatic
The freemium offering of WordPress.com, built on top of WordPress.org, comprises a set of additional products that are part of the WordPress.com family (Akismet, Jetpack, WooCommerce, and others). The free product offers a fast setup of WordPress as a CMS. However, it doesn’t comprise plugins and premium themes. Most WordPress.com products run on a freemium offering.
Automattic was constituted back in 2005 when Matt Mullenweg moved full-time to WordPress. Automattic is the company behind products like:
WordPress.com.
WooCommerce.
Jetpack.
Simplenote.
Longreads.
VaultPress.
Akismet.
Gravatar.
Crowdsignal.
Cloudup.
Tumblr.
A distributed company that reported 1186 employees in 2020. In the last round, in 2019, as the company got a $300 million funding round in Series D from Salesforce Ventures (the investment arm of Salesforce), the company got valued at over $3 billion.
WordCamps, the WordPress Community Support as a Public-benefit corporation.
The WordCamp is the official WordPress set of events and conferences. They run both locally and globally. The WordCamp conferences put together the whole WordPress community made of developers and hundreds of companies that, through plugins and themes, have built successful businesses on top of WordPress CMS.
WordPress Community Support is organized as a public-benefit corporation (or a corporation that has a wider social scope).
The company collects sponsorship and ticket revenue. Therefore, WordPress decided to independently manage the trademark from the financials of the events organizations and WordCamps.
To have some context, the total revenue in 2018 for the WordPress Community Support was $4,631,214, comprised of the following:
Sponsorship Income: $3,796,677 (81.9% of total revenue)
The events expenses (WordCamp and local meetups) incurred by the WordPress Community Support benefit corporation. Source: WordPress Foundation Blog
The WordPress ecosystem: plugins and themes
An example of the flywheel that gave rise to the WordPress entrepreneurial ecosystem, at the foundation of the success of WordPress, also as an open-source project. Open-source projects that do not find an economic model might get abandoned over time. WordPress, instead, built a solid economic foundation to enable the growth of its community over the years.
As with any successful digital platform, WordPress grew as a result of the community and entrepreneurial ecosystem born on top of it.
To have a bit of context, in WordPress, a plugin is an application that, without coding, allows users to do any sort of thing (just like your iPhone apps enable you to enhance your smartphone in all sorts of ways).
The place where all the plugins are kept and published in the WordPress.org Repository (the equivalent of an AppStore in WordPress). And it was announced for the first time in 2005:
We are proud to announce wp-plugins.org, the WordPress Plugin repository. A need was felt for a set of common tools, and a common playground for developers creating plugins and themes to extend WordPress.
The WordPress repository has two key players:
Developers: who can develop, make visible, and manage the codes for their plugins.
Users: who can browse and download any sort of plugin, and in addition give feedback to them.
By September 2007, there would be 1,021 active plugins for a total of 1,597,994 downloads. The whole WordPress ecosystem was taking off!
In May 2020, there were over 56,550 plugins available on WordPress.org. Popular plugins, like Yoast SEO, counted by May 2020, almost 250 million downloads, with over five million active installations.
A company built on top of a WordPress plugin, which, in 2019, generated $12 million in revenues.
Thus, the whole success of WordPress came as it enabled an entire ecosystem of developers to build valuable tools for users, which made the platform scale with limited costs.
As a result, a whole entrepreneurial ecosystem formed.
Key takeaways
Born from the idea of its founder to build an open blogging platform based on a previous blogging open-source project (b2), WordPress’s founders forked it (it means they copied the source code of b2 and started to develop on top of it independently) and built WordPress.org.
WordPress.org is among the most popular blogging platforms, and it has been organized around a Foundation (that owns the trademark), which generates marginal revenues via donations ($13K in 2018). A Public-benefit corporation managing the revenues coming from the official WordPress events. And a business arm, Automaticc, founded by Matt Mullenweg in 2005, to maintain the software products built on top of WordPress.com.
WordPress grew rapidly as an open-source project, and it further took off as it enabled the development of an entrepreneurial ecosystem made of plugins and themes that have been one of the keys to the business success of WordPress over the years.
Its revenue generation varies based on the setup. The Foundation runs on donations; the Public-benefit corporation runs on collecting sponsorship and ticket revenues. And Automaticc, runs mostly by subscriptions and freemium products.
Key Highlights
Origin Story:
WordPress.org was founded in 2003 by Matt Mullenweg.
Matt wanted to share his photos online after a summer camp, leading to the idea of creating a new blogging platform.
WordPress was developed by forking the abandoned b2 project.
Early Growth:
WordPress was launched in May 2003.
Dealt with challenges such as spam, which led to the development of tools like Akismet in 2005.
Matt Mullenweg established Automattic as the company behind WordPress.
Partnerships and Evolution:
WordPress grew and formed partnerships, including being featured on Yahoo Hosting services.
It steadily evolved from 2003 to 2008, with plugins and a growing development community.
WordPress.org vs. WordPress.com:
WordPress.org is the open-source CMS managed by the WordPress Foundation.
WordPress.com offers hosting and premium features managed by Automattic.
WordCamp events and local meetups contribute to the WordPress community’s growth.
WordPress Foundation:
The WordPress Foundation is a charitable organization that supports the open-source project.
Revenues mainly come from donations and are used to promote and develop WordPress.
Automattic and Products:
Automattic, founded in 2005, is the company behind WordPress.com and related products.
Products like WooCommerce, Jetpack, Akismet, and more are part of the WordPress.com family.
Wikipedia is sustained by the Wikimedia Foundation, supported mostly by donations and contributions, which in 2021 amounted to over $153 million. Wikipedia is among the most popular websites on earth, and it is, as of these days, an open, non-profit project on which twelve other projects have been developed.
Most of Mozilla Corporation’s revenues come from royalties earned through Firefox web browser search partnerships and distribution deals. 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, representing almost 89% of its income.
GitHub provides web-based hosting for software development and version control using Git, which facilitates collaborative source code development among programmers. GitHub was founded by Chris Wanstrath, P. J. Hyett, Tom Preston-Werner, and Scott Chacon in 2008. Microsoft acquired the company for $7.5 billion in 2018, and it was integrated as part of Microsoft’s enterprise offering. On top of its free repository, GitHub also offers plans for teams and enterprise customers. And the GitHub marketplace also monetizes some of the apps developed on top of it.
While the term was coined by Andrew Lampitt, open-core is an evolution of open-source. Where a core part of the software/platform is offered for free, while on top of it are built premium features or add-ons, which get monetized by the corporation that developed the software/platform. An example of the GitLab open-core model is where the hosted service is free and open while the software is closed.
Slack follows a freemium model, where a free version is offered, and users can convert into paying customers if they want more usage or advanced functionalities. Slack combines the free model with a direct sales force to acquire enterprise customers with yearly recurring revenue of over 100K. Those customers were 575 in 2019, accounting for 40% of its revenues.
Grammarly leverages a freemium service, where free users are prompted to switch to a paid subscription. Grammarly makes money by selling premium plans starting at $11.66 to $29.95 per month. The company also makes money by selling human proofreading services to its paid users.
Dropbox generated over 90% of its revenue via its self-serve channels to convert users into paying customers through in-product prompts and notifications, time-limited free trials of paid subscription plans, email campaigns, and lifecycle marketing. Dropbox generated over $2.1 billion in revenue in 2021, with an average revenue per paying user of $133, based on 16.79 million paying users.
Zoom is a video communication platform whose mission is to “make video communications frictionless.” Using the viral growth from its freemium model, Zoom then uses its direct sales force to identify opportunities and channel those in B2B and enterprise accounts.
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.
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