Mozilla creates money-making subsidiary

The Mozilla Foundation, which distributes the open source Firefox Web browser, has created a corporate subsidiary to support its money-making activities and help widen the use of its products, it announced on Wednesday.

While the goals of the subsidiary, called Mozilla Corp., include generating revenue and profit, its primary interest is not in making money, the group said. Instead, its main objective is to sustain the development of Firefox and other products, and help the foundation promote its goal of driving open standards on the Web, it said.

“The Mozilla Corporation is not a typical commercial entity. Rather, it is dedicated to the public benefit goal at the heart of the Mozilla project, which is to keep the Internet open and available to everyone,” Mitchell Baker, a former Netscape attorney who becomes president of Mozilla Corp., said in a statement.

Mozilla products such as Firefox and its Thunderbird e-mail client will remain free and open source, the group said.

The Mozilla Foundation was formed about two years ago, primarily through $2 million in funding from the former America Online Inc. Its Firefox browser has garnered close to 10 percent of the browser market, according to analyst estimates, presenting a challenge to Microsoft Corp.’s dominant Internet Explorer software. Firefox has been dowloaded more than 75 million times, according to the Foundation.

The wide adoption has created “unintended but real” economic value from Firefox, the group said. Firefox generates most of its money through a tool that lets users search the Web with various search engines, and also search for products at Amazon Inc. and eBay Inc. Firefox takes a small share of revenue through contracts with those partners.

The corporation was created because, as a tax-paying entity, it is easier for it to manage such business contracts, said Tristan Nitot, a spokesman for Mozilla in Europe who served on an advisory committee for the reorganization. “This is not a drastic change,” he said. “It makes more sense to have a commercial entity doing this rather than a public foundation.” The corporation does not plan to do an initial public offering and its only shareholder will be Mozilla Foundation, Nitot said.

“It’s not the case that someone is taking Firefox and making a lot of money,” he said. “The revenue we have made is almost accidental, it was not initially expected but it happened, so we needed to evolve the legal structure and fiscal structure to reflect this.”

The Mozilla Foundation will remain “the nucleus” of the organization, responsible for overseeing projects, distributing source code and managing relationships between contributors. The corporation will focus on marketing, sponsorships and “a range of distribution-related activities.”

Most of the 40 or so people who worked for the Mozilla Foundation will become employees at the corporation; the foundation will be left with just three staff. The volunteers and commercial groups that contribute to the project will not see any change in the way Mozilla code is developed, according to the group.

The past experience at Netscape of some Mozilla Foundation members may have played a role in the reorganization.

“Most of us were with Netscape before. We have seen it desperate and ready to sell anything to make money,” Nitot said. “We didn’t want to go through that at Mozilla.”

Still, the group was not in any immediate danger of running out of funding, he said.

The corporation will be based in Mountain View, California, where the foundation is today.

There are no plans to introduce any new, paid services to make additional money for Mozilla, Nitot said.

Mozilla Foundation’s board will now include Baker, Mitch Kapor, Brian Behlendorf, Brendan Eich, and Joichi Ito. Red Hat Inc.’s Chris Blizzard is leaving the Foundation board to join the board of Mozilla Corp. The corporation’s board will also include Blizzard, Baker and Reid Hoffman, chief executive officer of LinkedIn Corp.

Frank Hecker will take over from Baker as director of policy for the Foundation. Eich, a co-founder and long-time technical leader of the Mozilla project, becomes chief technical officer of the corporation.

More information is at this web site.

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