How can a company like Automattic make money if they are giving away all their products (including WordPress) for free? Someone asked this question to WordPress founder Matt at WordCamp India and he surprised, at least some of us, by saying that Automattic is profitable. Here's how WordPress makes money according to the creator himself:
1. Blog Hosting - WordPress offers blog hosting services at $500 per month to big publishers like Om Malik, All Things D and CNN's Political Ticker among others. They use WordPress.com's server infrastructure to host your blog and therefore the performance will obviously be great but unlike other web hosting services, WordPress VIP Hosting doesn't accept everyone who applies so good luck.
2. Google AdSense - Free blogs hosted on WordPress.com may sometimes carry Google ads but these ads may only appear if all the following three conditions are met:
1. The visitor is not using Firefox browser.
2. He has logged out of his WordPress account, if he has one.
3. The referring source is not a WordPress powered blog. So a person reaching abc.wordpress.com from xyz.wordpress.com won't see any Google Ads.
Even with all these conditions, the revenue generated from serving Google AdSense ads on WordPress.com hosted blog may still be significant as do around a billion page views per month.
3. Automattic Kismet - You don't see Viagra spam in your blog posts because it all gets filtered automatically by Automattic Kismet (Akismet for short), the excellent spam protection plug-in available for WordPress.
Now Akismet spam catching technology is free for personal blogs but if you maintain a corporate blog or run a network of blogs, you are required to buy a commercial license of Akismet that starts at around $50 per month.
What may surprise you is that professional bloggers, or anyone who is making more than $500 per month in advertising revenue from a WordPress blog, also needs to pay a $5 per month fee for the Akismet license.
4. Premium Accounts - While anyone can host a blog on WordPress.com for free, they charge you a fee if you want to buy additional storage space for your multimedia files or want to use a custom web domain instead of the default wordpress.com sub-domain. These are premium features.
There's also (unconfirmed) talk that WordPress may soon allow users to add AdSense in their free blogs for a subscription fee.
5. Web Host Referrals - WordPress.org suggests of list of third-party web hosting companies where you may self-host your WordPress blog(s) for a fee. Now all these are referral links so Automattic gets a commission per sale.
In fact, this hosting referral system may be extremely profitable for Automattic because if you search for "WordPress Hosting" on Google (a very competitive keyword phrase), the first sponsored link on the Google results page is paid by WordPress itself and it says - "Top 5 WordPress Web Hosts - Chosen by the developers of the WordPress blogging software".
6. WordPress Support - If you need help with WordPress (or WordPress MU) but the free support forums aren't solving the purpose, consider subscribing to the Support Network of Automattic. The WordPress development team will help you solve problems related to your WordPress system and the response time can be as low as 6 hours. This service is primarily for Enterprise users who are willing to shell out a $2.5-5k per year for support.
7. Poll Daddy - I am not sure if Matt discussed this but Automattic also provides a paid version of Poll Daddy where you can have unlimited number of questions per survey and there's no Poll Daddy branding in your polls or surveys.