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Automattic enters the low-end website market

Automattic this week announced that its “premium website building service” (which was in beta in fall 2020) is now officially accepting customer applications for “websites starting at $4,900 USD.”

The announcement describes a turnkey service with a personal touch:

“You’ll work with a dedicated engagement manager throughout the entire project, ensuring that your vision is carried through from start to finish — freeing you to focus on the other critical parts of your business.”

As you may imagine, reactions in the WordPress community were mixed.

This Twitter thread contains some of the more common, deeper concerns in the form of early hot takes: “It looks like they’re about to compete with the agencies and devs that have made WordPress what it is over the years” (Chris Wiegman) and “This is the open source version of Amazon copying popular products and turning them into ‘Amazon Basics’ to take profits away from vendors.” (Morten Rand-Hendriksen).

Matt Medeiros also gave his hot-take which was highly critical. Matt Mullenweg responded in the YouTube comments.

Others in the space simply had questions about the service, and Matt Mullenweg’s answers to questions spanned the points people were asking about — from YouTube, to Twitter, and Post Status (see below). Matt admitted that “we don’t have a PR agency” at Automattic, and it might be possible (as an observation) that some of the difficulty here might be related to communication and messaging.

Still others in their initial takes didn’t see this as a large conflict or even as direct competition. Joe Casabona notes: “If you think you’re competing with Automattic for sub-$5,000 websites, you need to change your approach.” Joe concludes with this observation:

Automattic generally works within the constructs of their .com platform, and most of the moves… have focused on acquiring new users. This is another step in that direction. They see potential customers have a hard time getting their business up and running on .com, and lose those customers to Wix and Squarespace.

This point seems to be backed up by Matt Mullenweg himself in a Post Status Slack thread discussing the new service:

“The market for this is people who have more time than money, try to get started on .com, hit a wall and go to Wix or Squarespace / etc. will be referrals to external folks, and 100% certain this will drive more up-market consulting in the future that may be a better budget fit for folks in this room… but if they go to another platform altogether, there’s no opportunities for them in the ecosystem down the road.”

Birgit Pauli-Haack notes: “Most agencies don’t advertise around ‘WordPress’ and most customers don’t care about the CMS… We all market solutions, great designs, user experience, get-the-job-done kind of products and services. WordPress is just the means to an end.”

Focusing again more on conversations in Post Status that were not as public as ones on social media, Syed Balkhi shared his opinion about the larger ecosystems in play:

“Just to add another perspective to .com new services section… as Matt pointed out many other hosting companies offer this. GoDaddy, Bluehost, etc. This is a big pain point that we see from beginners who start with WordPress (whether .com or self-hosted) that they are unable to build what they had hoped for … and then eventually a portion of users give up and move on. Since Wix spends aggressively, it often ends up being a common alternative.”

“Once a user goes to Wix, they’re pitched with Services (Wix Partners). These partner / agencies pay Wix a referral fee. I was talking to one SMB web agency and they told me that Wix marketplace is their most lucrative lead source and they’ve built a multi-million dollar business around that.”

“As a WordPress company, we only win when WordPress wins. A user who stays with WordPress because of Bluehost web design services or the new .com service above, will eventually purchase premium themes, plugins, and even larger agency services when they can afford it. In my opinon Automattic launching this service will not negatively impact anyone and more likely it will positively impact the whole ecosystem.”

Chris Lema shares similar thoughts: “Competition is good because the more that people’s websites are powered by WordPress, the more the WordPress economy grows – for everyone, not just WordPress.com.”

Matt Mullenweg confirmed in Post Status conversations that this “very small experiment” is “not targeting or competing with WordPress VIP partners. As it’s “hard to imagine a VIP client spending less than six figures a year, … I would say it’s in a very different segment,” Matt said. Matt acknowledged that “the people building the site might also recommend the client purchase a premium theme or plugin where one is appropriate.”

Regarding the impact on smaller WordPress agencies and consulting companies, Matt seems to be taking a view that’s the opposite of many of the first reactions in the larger WordPress community:

“I would be extremely surprised if this impacts anyone’s consulting business, if you do have a current or potential client leave for it please let me know — it should be all new-to-WP users who wouldn’t have been successful getting started.”

In addition, Matt mentioned he would “love to refer more work to agencies as well … what has made it tough in the past was people moving the referred clients off of .com 😕 Hope to figure out a better Shopify-like agency program this year.”

Matt estimates that Automattic captures less than 5% of the revenue in the total ecosystem which is “still smaller than the amount hosts like Godaddy and Bluehost make from WordPress clients.”

With similar programs at other hosting companies, what Automattic is doing here is nothing new. Questions could be asked about the messaging and details, and I think some in the community had some good questions. (For example, what is the general scope of the website build, and who exactly would be doing the building of the sites?)

I am not convinced, however, that this move by Automattic will negatively impact the WordPress freelancing scene. I say this as someone who has been freelancing with WordPress for over a decade and has done projects above and below $5k. Increasing competition within the market has been happening already, and Automattic really isn’t a bigger name than some hosting companies. Based on feedback from clients, customers, and people outside the WordPress circle, I agree with Matt’s take on Automattic’s position.

That being said, I can’t help but question if some of the information Matt was sharing couldn’t have been rolled out with the announcement to the community targetting freelancers specifically. I know of one person mentioned above that said “Matt doesn’t care” in the context of the WordPress community. I disagree with that. But I do hope to see more details through official channels and some details will depend on how big the “experiment” gets. I do encourage transparency so that in six months from now we can get some numbers on how many customers acquired and new sites built on WordPress.com.

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