Wikipedia founder, Jimmy Wales, recently made a plead-for-donations for his extremely successful website (hat tip to Victor Lombardi).
Dear Jimmy Wales, this looks really desperate and I think it's the wrong route you are going down! A great website, such as yours, should not have to rely on the mercy of donors. I would suggest you try to find a better business model, because donations are just not sustainable... Look at the lessons of long standing not-for-profit organizations: They are relying less and less on donations.
With your foundation you are hoping to raise $6 million through your annual campaign. With such a valuable and successful website, I think you would better focus on your core competencies rather than fund raising. You have the assets to build a successful business model and still fulfill your vision. 8 years of track record, 275 million monthly visits to your website, 11 million articles in 265 languages and your 150'000 volunteers merit more than the mercy of donors.
Please learn lessons from companies like Google. Based on advertising they have contributed just as much to trying to make knowledge universally accessible than Wikipedia. Ok, you don't want to use advertising, because your volunteers think that could compromise the content. Well, I think you have a much larger range of possible business models to explore than just one built on advertising based revenue streams. I think you should launch a plead-for-business-models rather than a plead-for-donations.
I don't want to give you any recommendations - you and your board are smart enough. However, if I were to find money to fulfill Wikipedia's vision I would look into other business models that are complementary to your overall not-for-profit goal. Examples:
- Licensing Wikipedia's technology to for-profit-companies
- Hosting other Wiki's (similar to what WordPress does for blogs)
- Membership fees like Amnesty International has
Personally, I don't really believe in donations. Some of the organizations that I find most astonishing and have achieved a huge social and economic impact are not at all donation-based (some take donations, but it's not at their core). Here I'm thinking of Grameen Bank, Grameen Phone, Kiva or WISE.
Any other suggestions for Wikipedia business models?
15 comments:
The reason for Wikipedia's success is in large part due to its non-commercial nature. If you compromise that, it would have the same effect as Google caught being "evil."
Wikipedia is totally dependent on contributions, either to articles or financially and that's the way it rolls.
Distracting itself with business models would also hurt its slim operating profile. Cost of sales is just the beginning of "monetising."
I thing the wikipedia model is good. It's OK.
I'm sorry but I don't agree with your analysis, Alex. You are missing one important point: donations to US-based and US-certified Non-Profits (charities) are tax-deductible in the US.
There is your business model, and that's why so many US-based charities actually pledge for donations every year -- and they do raise the cash.
Sure, it's something you'd never try in Europe or Switzerland -- tax-laws are just so unforgiving over here; and its so no fun at all to run a big-scale charity in Europe. Maybe it's time for Europe to make that one little move? -- There'd be another business model hidden behind it: the business model of the government thinking they are the right people to redistribute wealth -- maybe the wealthy ones are actually more up to that job?
Happy New Year
What you suggest would be the death of Wikipedia. The response to Jimmy Wales appeal shows it can tap a vast untapped pool of idealistic support and enthusiasm. Wikipedia's model is less that of a business and more like a political party or movement. It is essential that its support is grass roots not big money or iut will die in all but name.
Jimmy Wales and Wikipedia have now raised their 6.2 mio $US. However, I still think it's the wrong route...
I knew that my post would be quite controversial and that is exactly why I wrote it. Personally, I think too many people think not-for-profit equals "good" and for profit equals "evil". Yet, at the end of my blogpost I give examples that prove the contrary...
Donations are just as controversial, if not more. They are opaque. Imagine somebody donated over a 1 mio $US to Wikipedia. Wouldn't that person "compromise" the independence of Wikipedia just as much as advertising? In fact, if the below blogpost were true (which I really don't hope) that would prove my case:
http://www.theregister.co.uk/2008/03/18/jimmy_wales_and_roger_mcnamee/
I am not so sure that a different business model would kill Wikipedia as long as the editorial part stays independent (which would obviously be an important requirement). The key is to fulfill the vision AND finance its sustainability.
Peter: I agree that donations are more attractive in the US than elsewhere in the world. However, I believe that business models based on donations are much less viable than business models based on generating money from value creation. Personally, I would rather be able to calculate and forecast my revenue streams than fund raise...
I have also experienced that donation-based models waste money much more than models deriving revenues from creating value...
Let's see if anybody can propose a more interesting business model for Wikipedia than fund raising?
Alex is correct in his assessment. Wikipedia is more than a hobby, and its not a charity. Its a business with extensive usage and reliance - it needs a model that will sustain it.
The problem with donations is that they are optional, but the $6M expenses are not. In addition the notion that there is independence because of donations versus non-independence due to ownership or revenue is flawed. Just look at Craigslist. Also consider if one benefactor chipped in not $6M but $20M - what of independence then?
Seeking a model is the right question.
I agree with Colin that Craigs list is a great example for wikipedia. It makes money from job postings and everything else is free. I have personally never heard of anyone catching craigs list i being "evil"
If wikipedia makes money in something relating to the process, rather then the product. This would further underline the editorial Independence.
They could have commercial partnerships with companies working with similar processes. Such as:
Commercial wiki hosting
Wiki implementation consultancies
Speakers dealing with wikinomics
Dear Alexender,
As a strategist I genuinely think that donations in such a case as Wikipedia are a revenue model.
Obviously the revenue stream cannot be really controlled or easily forecasted. But let's be honest here: it's not worse than any click-based business model such as Google or Craig Lists: it's essentially a matter of combining a strong added value and enough visibility. Well I do believe that Amazon here is doing quite well.
And in time of crisis and distrust in the general financial framework, it's quite obvious that markets and companies will avidly seek new reasons to exist, above the pure sales > revenue process.
In such a world, donation-based activities such as Wikipedia, if only a few of them, have a strong legitimacy. If I go just a little bit further such business models are just an extension of open-source businesses: the community have the benefit of a tremendous service at the expense of a) nothing, b) a little time to actually create/update articles, c) financial donations.
And that's strictly the revenue model of Linux: very few are actually paying for the community, but it doesn't prevent you from sending $5 if you feel so (you don't have to be a $10,000 contributor).
The last point on "being evil or not", is not so naive. In a business such as knowledge management and diffusion, it's quite a core competency to be disconnected from any commercial pressure. The lack of "infomercials" in Wikipedia, when companies such as Coca-Cola are financing text books for children to learn reading and writing, is a strong and exclusive market position.
Hope that this will give you an alternative view on this BM. ; )
@Philippe: being a strategist you must agree with me that it is the responsibility of leaders to create a good & solid foundation under any enterprise. Especially in this case where many volunteers provide labour/knowledge for free: they trust Wikipedia and anything is allowed to maintain that trust!
So broadening the income could/should be a goal by itself, to preserve long term succes...
I like Alex' idea of hosting/licensing wikisoftware as a side line...especially companies with a sustainability objective would go for a solution like this.
So money can be made without compromising the original objective and goals of Wikipedia.
Wikipedia's goal is to bring knowledge to the planet, free of charge and free of advertising. Even if it aims to remain "slim" in its operational costs, eventually as it grows to cater to more languages & people and hosts more knowledge, across the globe, the lightweight approach to operational cost will not suffice. There will be higher maintenance overheads and to make it sustainable, I would agree that a first step towards finding a more strong & reliable source of revenue needs to be taken. The ideal case is surely when a commercial sister line provides this, it would surely not hurt. So I agree with Alex.
buying stuff - craigs list, and lending money - Kiva, are different use cases than wikipedia. A business model is more than a slide show of boxes and arrows - wake up!
Well, I agree with what's being said here to some extent. A great blog to read on the subject of Wikipedia, although relatively new, is WikiLog, and they've got quite a good write-up on what Wikimedia have done with their pledge and what the future is.
At the end of the day a service is being provided..
I don't think it would hurt to at least consider some business models?
There has to be a happy medium?
A lot of non businesses these days act as businesses i.e. charities and educational institutions anyway.
-- Lee
The reason for Wikipedia's success is in large part due to its non-commercial nature. If you compromise that, it would have the same effect as Google caught being "evil."
Wikipedia is totally dependent on contributions, either to articles or financially and that's the way it rolls.
This is a classic example of the tragedy of the commons. Personally, I'd be prepared to make an annual donation because I use it so regularly.
On this topic, I am keen to know about more business model options for social enterprises for a group of social entrepreneurs in Sydney Australia, so if anyone has further examples please let me know.
Kind regards, Sharon McGann
Post a Comment