I continue to see ecosystem plugins as big opportunities in WordPress.
An ecosystem plugin is an extension (i.e. plugin) of WordPress that:
- Introduces a suite of functionality for a specific audience (more than just a “feature”)
- Provides an integration layer (i.e. API) for additional functionality (e.g. via third-party extensions and integrations)
- Influences and shapes its own ecosystem over time through aligned economic incentives with each participant
A few things I’m curious about and still exploring:
- Origin – When does a plugin become an ecosystem plugin? Many, for instance, start as features without direct extension capability.
- Lifecycle – What are the stages of an ecosystem plugin? How do we assess health within the lifecycle?
- Market Support – How many mature ecosystem plugins can the WordPress economy support?
What I’m intrigued about most right now, though, is how you effectively monetize an ecosystem plugin.
My hypothesis is that ecosystem plugins within WordPress are undervalued and underdeveloped as value-based businesses and, accordingly, are far from achieving their economic potential.
I’d argue that WooCommerce, for instance, with as much financial success as the business has enjoyed, is still short of the economic potential it is capable of as an ecosystem plugin.
Ecosystem plugins in WordPress are possible because of the size and shape of the WordPress ecosystem. There isn’t anything quite like it and once you embrace the benefits and tradeoffs of decentralization you can set yourself up for significant growth as you work towards ubiquity within your addressable market.
The key to growth in the WordPress ecosystem is figuring out distribution and for most ecosystem plugins the clearest path to doing so is through strategic partnerships (I offered guidance on partnerships at WordCamp Europe).
To support that growth, though, you need financial resources. And that’s where I see an opportunity to improve how ecosystem plugins are monetized.
Considering today’s WordPress product business landscape, a few problems stand out to me as worth considering:
- Confusion about what’s being sold – What do users think they’re buying? What do most product businesses think they’re really selling? Places like GPLVault existing are symptoms, to me, of confusion on the part of business owners about the nature of what they’re selling. In a GPL environment, selling “code” doesn’t work and while many folks accept this intellectually, it feels like our business practices haven’t caught up. A clear test of this, in my mind, is does the business model work if you include a link, right on the “buy” page, to download the plugin for free?
- WooCommerce’ current onboarding flow is a good example of a GPL-friendly model in practice. Clicking “Start a new store” guides you through options and gives you the option, among others, to download WooCommerce directly.
- Misaligned incentives with free riders – Free riders, the most obvious of which are hosting providers, are an essential part of the WordPress ecosystem and for most ecosystem plugins are the missing ingredient for distribution. You can’t just get distribution, though, your business incentives need to be aligned and in today’s landscape I don’t see a lot of folks doing this well – yet.
Here’s my current guidance for successfully monetizing an ecosystem plugin:
- Minimize barrier to ubiquity – Create a great product with a free version that provides value for the majority of your addressable market. I suggest you target 80%.
- Focus on indirect monetization for the majority – Monetize the ecosystem itself, rather than the core plugin. Explore, for instance, offering advertising and/or referral relationships to extensions, integrations, and service providers within your ecosystem.
- Prioritize distribution through hosting partners – Grow the reach of the ecosystem plugin by solving problems and creating value for hosting providers.
- Offer monetization for a subset of users – Offer a “Pro” version that serves as an anchor and supports the needs of a subset of users. For most, I suggest the ideal is to target monetizing around 5% of your addressable market. Going for more and you risk slowing your growth and hurting indirect monetization.
For an ecosystem plugin in WordPress, I see three key revenue streams:
- Software-as-a-Service – Provide a self-hosted updates and support license or guide users to hosting partners for a hosted version, where updates and support are provided through the hosting partner.
- For most ecosystem plugins, I suggest the “Pro” version should start at $50-100/month and users “get it free” or as an upsell through a hosting partner.
- Specialized Support – Provide a “high end” support option for folks who want to work with the plugin authors directly (typically, this is positioned as an “enterprise” offering).
- I recommend that this typically start at $1,000+ per month (at least in the B2B space) and serve primarily as an anchor and upsell for hosting partners.
- Core Sponsorship – Accept sponsorship and volunteers for the “core” of the plugin, following a similar model used by WordPress core.
- Work with the businesses who have the most to benefit from the success of your ecosystem plugin and create engagements that are clear mutual wins.
We’re in the early days of ecosystem plugins in WordPress and my hope and focus is to see them become much stronger businesses that make WordPress better and the Open Web stronger.
Improving monetization is a key first step. Have questions, suggestions, or ideas? These concepts are a work in progress and I’d love to hear from you.
Thanks to Joshua Wold for the illustration (he’s available for hire!) and to Joshua Wold (again), Anna Maria Radu, Spencer Forman, Adam Weeks, Ran Regev, Matt Geri, Bob Dunn, Luke Carbis, and Kelley Muro for early feedback.