How can a software company like Automattic make money when they are giving away WordPress blogging software for free? WordPress founder Matt Mullenweg shared how WordPress makes money:

1. Web Hosting - WordPress offers web hosting services to big brands like WSJ’s All Things D, CNN, TechCrunch, Time.com and more. The pricing for WordPress VIP Hosting starts at $15,000 per month.

2. Google AdSense- Free blogs hosted on WordPress.com may sometimes carry Google AdSense ads and the ad revenue goes to WordPress. The Google ads will only appear if all the following three conditions are met:

1. The visitor is not using Firefox browser.
2. He has logged out of his WordPress account, if he has one.
3. The referring source is not a WordPress powered blog. So if you land on abc.wordpress.com from xyz.wordpress.com, you won’t see any Google Ads.

Even with all these conditions, the revenue generated from serving Google AdSense ads on WordPress.com hosted blog may still be significant as they do around a billion page views per month.

3. WordPress themes - The WordPress themes directory offers premium themes that cost anywhere between $50 and $100. These GPL compatible themes are developed by third-party WordPress developers and Automattic gets a commission per sale.

4. Premium Accounts - While anyone can host a blog on WordPress.com for free, they charge you a fixed fee if you want to buy additional storage space for your multimedia files or if you wish to use custom web domain instead of the default wordpress.com sub-domain. These are premium features.

There are unconfirmed reports that WordPress may soon allow users to add AdSense in their free blogs for a subscription fee.

5. Web Host Referrals - WordPress.org suggests of list of third-party web hosting companies where you may self-host your WordPress blog(s) for a fee. Now all these are referral links so Automattic gets a commission per sale.

In fact, this hosting referral system may be extremely profitable for Automattic because if you search for “WordPress Hosting” on Google (a very competitive keyword phrase), the first sponsored link on the Google results page is paid by WordPress itself and it says - “Top 5 WordPress Web Hosts - Chosen by the developers of the WordPress blogging software”.

6. WordPress Support - If you need help with WordPress (or WordPress MU) but the free support forums aren’t solving the purpose, consider subscribing to the Support Network of Automattic. The WordPress development team will help you solve problems related to your WordPress system and the response time can be as low as 6 hours. This service is primarily for Enterprise users who are willing to shell out a $2.5-5k per year for support.

7. Poll Daddy - I am not sure if Matt discussed this but Automattic also provides a paid version of Poll Daddy where you can have unlimited number of questions per survey and there’s no Poll Daddy branding in your polls or surveys.

8. Guided Transfers - If you wish to move your blog from WordPress.com to WordPress.org, Automattic offers a service called Guided Transfers to help you with the transfer. They charge a one-time $119 fee for the transfer.

9. VaultPress – Should you wish to automatically backup your WordPress blog to the cloud, the VaultPress service from Automattic can help. With packages starting at $15 per month, they will backup your WordPress blog in real-time and will also notify you of potential security issues.

10. VideoPress – The VideoPress plugin for WordPress lets you host videos and audio files on your own website. There are no limits on bandwidth or duration of videos, the videos are served without ads and it supports HD playback as well. Starts at $60 per year.

11. Automattic Kismet - You don’t often see spam in your blog posts because it all gets filtered by Automattic Kismet (Akismet for short), the excellent spam protection plug-in available for WordPress.

Now Akismet spam catching technology is free for non-commercial personal blogs but if you maintain a corporate blog or run a network of blogs, you are required to buy a commercial license of Akismet that starts at around $50 per month. Professional bloggers, or anyone who makes more than $500 per month in advertising revenue from a WordPress blog, is also required to pay $5 per month for the Akismet license.

What’s next - WordPress is expected to release premium WordPress plugin that could be another source of revenue for Automattic.