March 10, 2006 7:58 AM PST

Mozilla revenue speculation erupts

The Mozilla Corp., the commercial arm of the Mozilla Foundation, has said that despite the success of its online applications, it is focused on strong products, not big profits.

Responding to online speculation around the company's actual earnings, Christopher Blizzard, a Mozilla Corp. board member, said in a blog this week that money is just a "tool" that allows the organization to direct its own development and "make a great product."

"Money is one of the last things we worry about, and people shouldn't get hung up on the numbers, except to realize that it gives us options," he said.

Blizzard added that an earnings figure of $72 million quoted on some blogs was incorrect.

"I won't comment on the dollar amount, except to say that ($72 million) is not correct, though not off by an order of magnitude. I also won't comment on sources of that money, except to say that some of the assertions that I've seen in the comments are pretty far off, both in terms of numbers and sources," he said.

The Mozilla Foundation exists as a Californian not-for-profit organization and receives donations in a similar way to a nonprofit charity. This makes the issue of profit controversial. There has been intense speculation recently on exactly how much the Mozilla Corp., and the wider Mozilla Foundation, makes out of the open-source Firefox browser and how the money is spent.

On Monday, Jason Calacanis, chief executive of blogging network Weblogs, wrote in his blog that an unnamed source at BarCampLA told him that the Mozilla Corp. made $72 million last year and is on target to have 120 employees this year, although he admitted that he had been unable to confirm these figures.

Calacanis claimed that when a Firefox user does a Google search using the browser's search box, Mozilla receives about 80 percent of the ad revenue from any associated ad clicks.

The gossip was soon picked up by a number of blogs and news sites, including Digg, and attracted thousands of comments. The majority of people commenting on Digg were positive about the news, claiming that Mozilla deserved the money. Some people, however, questioned how the organization managed to spend that amount of money.

The Mozilla Foundation was unable to provide ZDNet UK more information on its revenue and how it spends its money on Thursday, but various Mozilla employees have commented on the figures in their respective blogs.

Mitchell Baker, chief executive of the Mozilla Corp., said in a blog Wednesday that the search feature in Firefox "generates revenue in the tens of millions of dollars."

She said the money generated from the search providers has been used to "build the capabilities of the Mozilla project."

"We've hired people. We've built a much more robust infrastructure. (This may not sound like a big deal, but the server load of what we're doing with update and extensions is significant)," she said.

The Mozilla Corp. has the equivalent of 40 full-time staff working for it, according to Baker, although she did not comment on the organization's expected growth.

More information, at least on its past revenue and spending habits, can be gleaned from the 990 Form, which U.S. not-for-profits above a certain size are obliged to file with Internal Revenue Service. The latest 990 Form that is available for the Mozilla Foundation is for the 2004 calendar year, the year Firefox hit 1.0.

Mozilla's 990 form for 2004, which was filed in November 2005, states that it made $5.8 million in 2004. Of that total, $4.9 million came from services it charged for, which included revenue from Google ads. Its expenses that year totaled $2.3 million, of which $1.5 million went to employee compensation. This works out as approximately $100,000 for each of the 14 employees it declared on the form. The foundation ended the year with net assets of $5.7 million, an increase of $3.5 million over the course of the year, according to its filing.

Baker wrote in her blog that saving some of the foundation's revenue is essential to ensure it is able to remain independent.

"We've got a 'reserve fund' now, which I view as extremely important. Having savings means that people are much more likely to believe us when we say we will turn down revenue if it doesn't benefit the user. We've always said this, and we've meant it," she said.

She added that in the near future Mozilla will be looking at how it can disperse funds within the open-source community.

"I've been told by some people that this is risky and that the thought of money distorts the community," she said. "But we do have money in the project now, and some of it should get spent on a projectwide basis unrelated to employment. I'm hoping we can do this in a way that reflects our community organization and distributed authority. I'm not sure what the mechanism is yet, but I know it needs to happen."

Mozilla's 990 Form is available free of charge--with registration--on sites such as GuideStar.org.

Ingrid Marson of ZDNet UK reported from London.

See more CNET content tagged:
Mozilla Corp., Mitchell Baker, speculation, organization, blog

4 comments

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Good Start to a Bad Day.
It's always nice to see an Open Source company get very secretive. I just hope that Mozilla maintains it's goals and doesn't let money become it's driving force.
Posted by System Tyrant (1453 comments )
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Micro$soft
Is all about $$.
Posted by paulsecic (298 comments )
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