The answer is close to $11 million. Let me explain…

Mozilla makes almost all of its money from Google (or more precisely, from search-related royalties). Basically, search engines (mostly Google) pay Mozilla a small royalty every time a user uses the search bar in the right-hand corner.

How much? In 2006, search royalties constituted $61.5 million of $66.8 million total revenue (from the 2006 Audited Financial Statement). Given that this is a 20% increase from the previous year, and considering the increasing percentage growth of Firefox adoption, it would not be unreasonable to project that figure to more than $75 million for this year.

That’s an enormous amount of revenue to come from one small element of Firefox’s functionality (as a percentage of total revenue). So you would expect it to be in Mozilla’s best interests to encourage everyone to use the search bar, right?

Well, the location bar that ships with Firefox 3 (the one that you type URLs into) is predictive - start typing terms which appear in the URL or title of a page you’ve visited before, and hey presto, Firefox finds the page for you. Great for users, but as we will see, perhaps not so good for Mozilla’s bottom line.

When you remember that a large fraction of search volume is for terms that would appear in the title or URL of a previously visited site, the source of the loss becomes apparent - as users start seeing better and faster results from the location bar than they do from the search bar, there will be a natural shift, and Mozilla’s search royalties diminish.

So if we now approximate the volume of search terms that would appear in the title or URL of a site likely to have been previously visited (let’s call them ’simple’ terms) as a proportion of all search volume, we can make a reasoned guess as to the amount of loss.

Unfortunately, this is a difficult calculation to make. We could look at the Zeitgeist or spend a few days on Trends, to notice that around 90% of all top search terms are simple terms (almost always the name of the site - myspace, bebo, wikipedia etc. or the name of a celebrity). However this is only the head attached to a very long tail so would make a poor source of data to extrapolate from. We could look at my own search history, of which 5% of terms are simple, but this would be an under-representation for two reasons: since as a sophisticated searcher I generally use longer queries with operators, and since simple terms would be used more often than non-simple terms but only appear once each in my search history.

With a frustrating lack of appropriate, accessible data, I had to make the compromise of aggregating the search histories of a few non-geek friends and asking questions as to the frequency of the simple search terms that I saw. My tentative conclusion was that 15% of all search volume was for simple terms (with an embarrassingly large margin of error). This tends to accord with my own search history and Google Trends observations, but remains only approximate - so if you can make a better guestimation, please let me know.

Applying this to our revenue projection, we could now say that the location bar functionality will cost Mozilla approximately $11 million per year.

The problems with this guess are that I used a very small survey sample of largely homogeneous users in a single language. Also, Firefox users would tend to use fewer simple terms than non-Firefox users, so that would require another adjustment. But it’s a reasonable guess for our purposes.

I should make it clear that this is only an opportunity cost. Clearly the increase in adoption rates with Firefox 3 will more than compensate for the drop in per-person search royalty revenue, rendering the software more profitable than previous iterations. However, I make this point to illustrate that Mozilla is forgoing a significant amount of revenue by opting to include this element of functionality.

While the number is large, ultimately I think this is a far-sighted, well-reasoned decision. The fact that Mozilla is willing to incur this degree of opportunity cost proves how highly they prioritise user experience.