Search deals generate 97% of Mozilla's income

Revenues for Firefox maker climbed 34% in 2009

Although Firefox's usage share has been stalled for the last year, Mozilla's revenues were up 34% in 2009, largely on the back of money paid the organization by Google and other search engines.

"Mozilla is the underdog," said Mitchell Baker, the chairman of the Mozilla Foundation, the non-profit group that controls the subsidiaries that crank out Firefox, the Thunderbird e-mail client and other software.

According to the audited financial statement ( download PDF ) Mozilla released today, the company's revenue for 2009 totaled $104.3 million, up 34% from 2008's $77.7 million, with the bulk of the year's income coming from Mozilla's deals with search providers.

Royalty payments, almost all of which come from search providers, accounted for $101.5 million, or 97%, of 2009's revenue, said Mozilla's financial statement. That percentage was about the same as the share of 2008's income attributed to search.

Unlike in years past, Mozilla did not disclose the amounts it received from the various search providers. In 2008, for example, about 88% of the search royalties came from Google , with the remainder from other agreements Mozilla has with Yahoo and Amazon.

"The majority of Mozilla revenue continues to be generated from the search functionality included in Mozilla's Firefox product from organizations such as Google, Yahoo, Yandex, Amazon, eBay and a handful of others," Baker said in another section of a post to the Mozilla Foundation site.

Mozilla did not respond to a request for a breakdown of its royalty revenue sources.

The agreement between Mozilla and Google sets the latter as Firefox's default search engine, and pays Mozilla for the click-throughs on ads placed on the ensuing search results pages.

Mozilla last renewed its search royalty contract with Google in August 2008. The three-year deal will expire in November 2011.

Two years ago, questions were raised about Mozilla's dependence on Google for most of its revenues, especially after Google launched its own Chrome browser just weeks after the pair announced they had signed another three-year contract. Previously, Baker had dismissed concerns, saying that Mozilla could do without Google's money if it had to.

Since then, however, Firefox's growth in usage share -- although not in absolute numbers of people running the browser -- has declined while Chrome's has climbed.

In the last 12 months, Firefox lost 1.25 percentage points, as measured by Web metrics firm Net Applications, a drop of 5% from the browser's October 2009 share. Meanwhile, Chrome gained 4.9 points in the same period, more than doubling its usage share.

Chrome still trails Firefox by a wide margin, however. Last month, Chrome accounted for 8.5% of all browsers used worldwide, while Firefox controlled a 22.8% share.

Elsewhere on the Mozilla site, the organization called its relationship with Google "healthy" and said it does not "vet our initiatives" with the search giant.

"To date, we have renewed our contract three times, in 2005, 2006 and 2008," stated an accompanying FAQ . "The current version extends through 2011. We believe that search providers will remain a solid generator of revenue for Mozilla for the foreseeable future."

Mozilla spent $40.2 million on software development last year, up 29% from the year before. Two-thirds of the organization's expenses were tagged as software development.

Baker acknowledged that Mozilla faces an uphill battle against much bigger competitors like Google and Microsoft , whose Internet Explorer remains the most popular browser by far.

"It's a big challenge to build our values into layers of the Internet where the commercial giants of our age are battling it out," Baker said.

Baker and Brendan Eich, the creator of JavaScript and currently the CTO of Mozilla, were the highest-paid executives in the organization. Each received $494,000 in compensation, bonuses and benefits in 2009.

Baker also pointed out that Mozilla still faces an audit from the U.S. Internal Revenue Service (IRS) that was opened last year. "We do not yet have a good feel for how long this process will take or the overall scope of what will be involved," she said.

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