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Summary:

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 […]

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.

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  1. This idea of paid carriage for the browser makers is nothing new. Back in 1996, when Netscape was dominant (ancient history), they charged Yahoo, Infoseek, Excite, Lycos, and Magellan $5M each for a rotation of the traffic off of their Search button. That was when these 5 search engines were doing 20M queries/day collectively, not the billions of page views Google does now. The only search engine with a material source of non-browser traffic then was Yahoo. Guess which one survived.

  2. » Opera For Free, Thank You Google  InsideGoogle » part of the Blog News Channel Thursday, September 22, 2005

    [...] “Thanks to Om Malik for hounding the folks at Opera and finally getting them to admit that they’ve signed a search referral deal with Google, similar to what Mozilla/Firefox has — which has been enormously profitable for the no-longer-non-profit Mozilla.” “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 stuck “compensation dealsâ€? 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,â€? 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. “ [...]

  3. What “digging” did you have to do in order to find out what was common knowledge? See Ars Technica, or the Boston Globe. It was no secret that they inked a deal with Google (and eBay, and Dealtime, etc).

  4. Opera gratis? Merito di Google Thursday, September 22, 2005

    [...] Oggi si viene a sapere che Opera sarà scaricabile gratuitamente grazie a Google. Si, in pratica Google paga Opera per i search referrals derivanti dal box di ricerca presente all’interno del browser. [...]

  5. Is there a PC Doctor in the house? » Blog Archive » How search engines made Opera free Thursday, September 22, 2005

    [...] Wondering how come Opera Software can give away a browser for free? It’s all to do with revenue earned from searches , in particular Google (what a surprise), Amazon and eBay. [...]

  6. Opera Software Giving Away Browser for 10th Anniversary (8 Ways to Sunday) Thursday, September 22, 2005

    [...] 9/21/2005 @ 6:24 PM — With new version 8.5 Opera has gone all add-free, all the time. Premium support is still available for those willing to pay. The company says that a transition to freeware was made possible by search engine revenue. [...]

  7. Err, Opera has had the Google search for ages! It actually “invented” the (Google) search field which is now standard in Firefox and IE7.

  8. FelipeCN » Google fez Opera ficar de graça Thursday, September 22, 2005

    [...] Om Malik’s ,um blogger americano, diz que A Opera Software aceitou distribuir gratuitamente o Opera devido á acordos com sistemas de busca – e o serviço de busca padrão do Opera é o Google. Eles também tem acordos de visitantes-por-dinheiro como Bay e a Amazon. E como o Opera tem apenas 1% dos usuarios, eles não podem fazer dinheiro com a Mozilla. Este seria o motivo da distribuição: Mais usuarios, mais dinheiro, mais dinheiro, mas condições pra manter o Opera de graça, Opera de graça, mais usuarios…. [...]

  9. Raiméis » Google behing Opera decision Thursday, September 22, 2005

    [...] Some big[-ish] news from the browser world this week, Opera have made the decision to offer their browser for free. This is a huge move for Oslo based Opera who before this charged $39 for their browser (there was also a free version with annoying ads at the top). With 100,000 buyers per year the $3.9m was a big part of their $28m annual sales which makes this move so surprising. Some investigation from Om Malik has uncovered that Google is behind the move. Apparently Opera have signed a “referral-for-dollars” agreement with Google (amongst others). Mozilla have done the same and they earn about $30m per year from the deal!! I always thought it was ridiculous that Opera was charging for their browser, even more so with the emergence of Firefox. Opera’s a decent browser but in all honesty you get fuck all for the $39. Other browser news, the current browser war is heating up. Firefox has just had to plug another hole (and a fairly serious one at that) adding to the row over browser security. This one has really dented Mozilla’s claims that Firefox is more secure than IE Shit Six. [...]

  10. Make You Go Hmm: » Opera free because of Google tenancy, says Om Thursday, September 22, 2005

    [...] Interesting exploratory piece by Om Malik which probes why Opera became free. I’ve already seen one user who paid for Opera exclaim that he was annoyed to see that another piece of software he paid for was now free. Apparently Opera sold about 100,000 licenses at 39 bones each per year. That’s some scratch to be out, so Om Malik dug around and hounded the Opera PR team to find out why: I found out that the decision to give away the browser came after the company stuck “compensation dealsâ€? 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,â€? 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. [...]

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