Wikipedia Business Model

Wikipedia was launched in January 2001 by Jimmy Wales and Larry Sanger who set up a US non-profit called the Wikimedia Foundation.Wikipedia is one of the most frequently used web resources. Vast sums are needed to maintain a huge repository of continuously growing content, which is cross-indexed, searchable and instantly available. The Wiki has approximately 450 paid employees and contractors who ensure the wheels keep turning, and it has massive bandwidth and hosting service costs.

The Wiki concept is simple: crowdsourcing on a global scale. Britannica and similar encyclopedias ask domain experts to write encyclopedia entries. The Wiki allows anyone to anonymously start an entry, which can be edited by anyone (an individual is not supposed to edit his/her own entry) to add, delete or modify.Wikipedia was launched in January 2001 by Jimmy Wales and Larry Sanger who set up a US non-profit called the Wikimedia Foundation. The idea proved wildly successful. The Wiki has now expanded into 327 language Wikis. It has approximately 56 million entries and gets over 18 billion page views per month with over 5 billion unique visitors. There are three edits per second (not all new entries) and 20,000 new entries per day. Essentially everyone with an internet connection visits Wikipedia at least once a month.

The non-profit status means that donations are tax-deductible for US tax purposes, and in quite a few other countries, too. Rupee donations to the Indian chapter are not deductible though the Indian foundation says it is trying to get the relevant clearances. Much of the funding comes in dribs and drabs from small donations made by millions of users.The cash flow statement for 2020-2021 states the foundation holds over $86 million in cash, another $117 million parked in short-term investments and over $20 million in long-term investments. Against this, it has around $9 million in current liabilities. This means, roughly $202 million in free cash.

In the expenses allocations, around 43 per cent of costs is allocated to direct website support; 32 per cent is community support (training and tools development for contributors, and also legal costs); 13 per cent is administrative costs; and 12 per cent is towards the fund-raising effort. The foundation releases its annual plan and has quite a few projects apart from Wikipedia itself.Wikipedia’s own guidelines say that Wikipedia entries cannot be cited as reliable in other Wikipedia entries. Studies suggest Wiki entries are around 80-85 per cent accurate, while the Britannica’s accuracy is reckoned above 95 per cent.The crowd sourcing does seem to work on the whole however  85 per cent is a reasonable benchmark. Wikipedia itself recommends users need to study attached citations to judge an entry for reliability.