Wikipedia Issue Equals Trouble for the Crowdsourcing Business Model?


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I was surprised to see a plea for donations from Wikipedia. The plea stated that if every user would donate only $5, Wikipedia could operate for a significant period with no additional donations needed. I was under the impression that crowd sourcing and open sourcing were the business models of the future, so how could Wikipedia need funding so desperately?

The lesson from Wikipedia’s financial crisis is that open source is a good business model for some, not all. If someone pitched you with a business plan to spend millions on bandwidth, programming, and servers but give everything away- would you invest?

The more disturbing issue is the psychological one: has getting digital products for free or near free on the internet changed our collective expectation of what is worthy of purchase? Deeper yet, what should be free and what should cost. Why will the consuming public pay for an iTunes download but not pay for the same song on YouTube? Why does the consuming public have no issue paying $10 to see a movie in a theater, but have no qualms about pirating it from the internet? Is it simply a matter of “it is worth what they MAKE you pay?”

In the past, common sense dictated that things that cost money to produce would not be free. The internet has blurred this line. Electrons, bandwidth, and storage are virtually free, so therefore, should the outputs of these be free? Using the old logic that people, intellect, equipment and time have been spent to create the output- no, they should not be free.

However, the new rules dictate that these costs are perceived to be free and therefore the output should be free. As Chris Anderson noted in his groundbreaking book, FREE: The Future of a Radical Price, any product or service that leverages a near-free cost structure should BE free. Anderson backed up his point by giving away the digital version of the book on However, he did charge for the hard-copy version. As a somewhat tragic corollary to radical price theory, human psychology has blurred the line between no cost and no value. Something free or no cost can still have value and cause people to pay for it. Today, many people feel that free equates to no value and therefore no need to pay as well. This lies at the root of the Wikipedia issue.

Clearly, Wikipedia has value and deserves payment in some form. By the same token, it is clear that the consuming audience does not value Wikipedia enough to pay for it. It is difficult to reconcile why an audience consuming valuable content on a regular basis would not pay? By the same token, they are not paying currently. I believe the answer lies in the new human psychology that deems payment optional or unnecessarily for electronic goods.

What do you believe this means for Wikipedia? Should Wikipedia shut down the site if funds cannot be raised? Would shutting the site down help people donate or simply shift them to another site?

Republished with author's permission from original post.

Jim Muehlhausen
Aside from his books "The 51 Fatal Business Errors and How to Avoid Them" and "Business Models for Dummies," Mr. Muehlhausen has been published in various publications including Inc., Entrepreneur, The Washington Post, MSNBC, The Small Business Report, The Indianapolis Business Journal, Undercar Digest, Digitrends, and NAICC Journal.


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