The concept of selling software is "completely dead", said Matt Mullenweg, the founding developer of international blogging software firm WordPress, speaking at the WordCamp conference, held in Cape Town last weekend.
"Even Microsoft is getting out of selling software," Mullenweg said. "What made them tons of money in the past, and is still doing so, will not do it for them in the future."
He said traditional business models were based on scarcity - having something that everybody else wants - but this would have to change to deal with the economics of abundance.
"The advent of the Internet means a lot of incremental value is being created all the time. The joke is that if we were selling WordPress we would have to continuously encourage people to buy upgrades with new features in order to get them to spend money," he said.
The new scarcity
WordPress is largely developed through open source methods, using the voluntary time of people who develop features and applications for it. The software is given free to the community.
"The new scarcity is time, and that means simple software that does more," Mullenweg said.
Open source software was already dominating two of the four big areas of software development, he explained, namely Web applications and servers. In time, it would begin to dominate the other two areas of design and the desktop.
"All of this will take a long time. It doesn't happen overnight."
According to Mullenweg, WordPress was one of the few start-ups that made money early in its life, despite the fact that it gave its core software away for free.
He said WordPress makes its money in upgrades, advertising, VIP hosting and Aksimet licences.
Upgrades include a range of "a la carte" features and this makes the free software more usable, he added. "What it leads to is more blog users and an incremental increase in page impressions."
He added: "I have always been a bit skeptical about advertising, but we needed something that scaled as no business ever died by making money."
Mullenweg said ads are only found on WordPress if one comes directly to it via a search engine, such as Google, or the entry had to be directed from a permanent WordPress site, or if one was not using Mozilla Firefox as the browser.
VIP hosting is a service that WordPress stumbled on when some high-profile bloggers wanted to use it, but had specific needs and required some custom solutions.
"We have put in very strict rules for someone to have one of these VIP hosting services. Essentially, you have to apply in order to allow us to let you give us money," Mullenweg said.
Aksimet is Mullenweg's anti-spam service and it is free for private users, while commercial organisations have to pay a licence fee.
"It is run a bit on an honour system, but I feel most companies do not mind paying for it as they understand other companies must earn as well."
Free advice
Mullenweg says open source developers should "beware of the siren song of services", explaining that data is portable and one never knows how popular a service will be and for how long.
Developers vote with their wallets, he said. If WordPress had become a commercial solution it would never have gained the popularity it did without the involvement of people who helped develop it for free.
Mullenweg also encouraged developers to vote with their time. "We don't need more bandwidth or servers, we need more people with time who can become part of the community."
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