How will OpenID providers make money?

Paul Lomax, who I met last week at Geek Dinner, was at the Future of Web Apps conference and has done a good write up of some of the talks.

His post on OpenID caught my eye and in particular he noted that The Times newspaper had reported on the various announcements about the launch of OpenID services but had described it terms of competition.

As I noted on his blog, I think the Times is right in choosing to describe the scramble as competition, since I shall only need one OpenID provider. Ultimately, winning customers to your OpenID service should be far stickier than many other types of offering on the web. Microsoft saw this long ago with their passport service but lost out, I believe, because many companies were fearful of playing with Microsoft.

What OpenID providers can do with those customers when they get them is less clear. They will clearly have lots of data about the services that you are using, which they may be able to exploit (worth checking what the T&Cs say).

I don't think OpenID providers will have much opportunity to extract "access" charges from services that their customers connect to, as some business models have sought to do. Nor do I think they have any particular advantages in trying to sell their customers other services.

It's possible these businesses may be funded by advertising because it's often the case that you need to be logged into your openid provider when accessing services, or it certainly seems to be the case with Livejournal who have operated OpenId services for some time. Hence, I need to keep going back to the livejournal site.

But I still wonder what the business model is.


posted by John Wilson @ 8:33 PM Permanent Link newsvine reddit


At 10:05 AM, Anonymous Paul Lomax said...

Why does there have to be a business model? You can run an openID server for the cost of a pickled egg. :-)

Seriously though, maybe it's a loss leader - as bread and milk is for supermarkets.

For example claimID also allows you to create a profile page - your identity on the web. Which they'll hope you'll link to. Which should give them good page rank. And then maybe they can stick ads on their site.

Or there's FreeYourID which offers an open ID service with a personal domain name and email address thrown in for just over ten bucks a year. Free for the next 90 days.

I was going to say that OpenID will become a commodity - but since a commodity is something that competes only on price, maybe it isn't...

At 10:29 PM, Blogger John Wilson said...

Paul, I think that may be what happens - it is just a loss leader rather than a business in its' own right, leaving aside the services offered by altruistic folk.


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