End of Innocence for Mozilla?

Opinion: Perhaps the foundation is crossing a line from which it can never retreat by forming a for-profit business.

The danger of the Mozilla Foundation forming a for-profit business, Mozilla Corp., is that the result may be as nasty and political as your average nonprofit and as money-grubbing as your typical software company. Nothing wrong with that, except that its a wide departure from the egalitarian notion of "free" software that has carried Mozilla this far. And with that departure, I am feeling a touch of loss.

On the other hand, software is a business, not a charitable undertaking, and tax laws make it very difficult for a not-for-profit to compete with for-profits, which is, after all, what Mozilla is really all about.

I was not impressed by the "whys" for the move explained by Daniel Glazman on his blog. He cites the amount of revenue the foundation receives as one reason for the change in legal structure. He also mentions difficulties in hiring for the nonprofit, and as a positive the ability of a for-profit to create new revenue streams.

/zimages/4/28571.gifClick here to read more about Mozilla Corp.

Bill Gates teaches us that a foundation can be very large. The Mozilla Foundation is in no danger of reaching the Gates Foundations $28.8 billion endowment. The real reason for the change isnt the amount of revenue but its source. There are some revenue streams, such as selling commercial products, which nonprofits often must avoid. There are also some activities, especially political ones, which cannot be funded with tax-deductible donations.

For these reasons and others, its common for nonprofits to also have for-profit subsidiaries to conduct taxable business or lobbying activities.

As for hiring, nonprofits seem quite able to attract applicants, except for people whove wised up to how many nonprofits operate (low pay, bad management, lots of internal politics). Despite this, there are some very large and successful nonprofits.

The best reason for adding a for-profit to the Mozilla mix is that it would be pretty hard, over time, to do big business without one. Whether Mozilla should be such a big business, I am not so sure.

Like many, Im concerned that needing so much organization means Mozilla is straying from its mission of developing free software and giving it away, using donations and volunteer time as its chief resources.

It might be better for Mozilla Foundation to build products up to a certain level and then sell them to a for-profit startup that will maintain the public license and giveaway distribution model. Mozilla could use the revenue to move on to other projects as its children "left home" for lives of their own.

The problem is that while that might work for an operating system (with significant services revenue possible) a browser and e-mail client might not generate enough of a revenue stream to be interesting to investors. It was a good idea while it lasted.

/zimages/4/28571.gifMozilla is just one example of a trend of open-source projects morphing into open-source businesses. Click here to read more.

I am also concerned, but only a little, about whether a nonprofit, even with a for-profit subsidiary, should be able to compete with for-profit businesses. The Mozilla Foundation structure provides a subsidy for development of commercial products, explaining the need for a for-profit business as well. "Is it fair to Microsoft?" is not a question likely to find much sympathy, but the nonprofit sector was not created to compete with profit-making, tax-paying entities. Maybe all of Mozillas work should be for-profit?

Maybe it shouldnt bother me that Mozilla will be in league with the money changers, like I said, software is a business. But, I cant help feeling that the foundation is crossing a line from which it can never retreat, taking with it a bit of the romance of software by the people, for the people.

Contributing editor David Coursey has spent two decades writing about hardware, software and communications for business customers. He can be reached at david_coursey@ziffdavis.com.

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