Wikitroubles

Many thought it impossible, but Wikipedia, a non-profit public information-sharing site that allows anyone to edit its content, has become a major Internet power.  It’s the world’s fifth-biggest website, with 400 million visitors every month.  In order to maintain itself, the online encyclopedia needs its user’s money and volunteer’s time.  Surprisingly, the former is the easier task.

When the founder of Wikipedia, Jimmy Wales, beseeched users to help pay for piling bills, the site reached its target of $16 million in just 50 days.  The majority of donations stem from either rich individuals or affluent companies who admire the site’s unrestricted access and equitable mantra.  The extraordinary increase in demand for a database of variant knowledge feeds customer appreciation.  That said, consumer surplus is considerably high. Though such large monetary sums are nice, Wales would much rather prefer funding to come from large numbers of happy, average-income users; a stable alternative representative of a content constituency of Wikifans.  Besides the fact that Wikipedia can fundraise with relative fluidity, not much capital is actually needed.  The site has just 78 full time staff and 370 servers, compared to a staggering 60,000 for Facebook and over 1 million for Google.  Also, it spends 44% of proceeds on technology, with administration costs just making up a quarter.  It doesn’t accept any advertising.

As for “raising time”, the task is much more tedious.  Month-on-month article growth in the English Wikipedia was as high as 5% in 2006 but has obstinately stayed at 1% for the past two years.  Even worse, Wikipedia fears that without immediate action, the number of active editors will decline below 80,000 by next year.  The scarcity of editors makes for an exiguous amount of content production.  Says Wikipedia’s chief global development officer, “90% of users outside of Wikipedia’s ‘core community’ aren’t even aware they can edit the encyclopedia”.  Users seem to ignore the plentiful invitations to get involved, limiting potential growth in total utility.

Wikipedia presents a unique economic conundrum.  In order for the “customers” of Wikipedia to get the most out of the site they know and love, they are going to have to become actively involved the back-breaking process of editing and revision.  Payment is augmentation.

(Information taken from “Free but not easy”, The Economist November 11^th 2011)