A couple of months ago, I had a chance to interview Jon von Tetzchner, chief executive officer and co-founder of Oslo-based Opera Software, for Business 2.0 Titans of Tech series. What attracted me the most about his company was that it had customers paying for something – aka browser – which others like Microsoft and Mozilla were giving away for free. In the interview he explained, “About 100,000 choose to pay for Opera each year, paying about $39 per copy. So that’s one revenue stream.” That works out to about $3.9 million – not a lot, but still a lot for a company with just over $28 million in sales. So this week, when the company announced that it will start giving away its browser for free, I was amazed that they were willing to give away that revenues. There had to be a catch.
Well, little digging around, and hounding the Opera PR team, I found out that the decision to give away the browser came after the company struck “compensation deals” with some of the search engines. Apparently, the premier tenant for browser’s built-in search window, is Google. “The current most important deal now is with Google,” company spokesperson Eskil Siversten wrote in an email. The company indicated that it has similar referral-for-dollars agreements with the likes of eBay and Amazon. Given that Opera is about one percent of the total browser market, it cannot be making as much money as Mozilla folks.
Mozilla Foundation, the folks behind Firefox, brings in about $30 million a year, according to Tribe-founder Mark Pincus. Even deals with Amazon.com bring in big money for Mozilla. (I wonder how much Apple gets paid by Google for Safari tenancy?) This clearly is turning out to be quite a niche for browser makers.
Related reading: Titans of Tech Interview with Jon von Tetzchner.