Wikipedia did not leave $100M on the table

October 29, 2006

Update: Wow, I’m now on digg. Sort of. That’s cool.
Update 2: Jason has responded to his critics, so of course I’ve written a new post in reply.

How timely. Just a day after recording a podcast in which advertising on Wikipedia was a major subject, Jason Calacanis claims that Wikipedia stands to gain US$100 Million just by allowing ads on the site. The post itself is comedy gold, begging Jimmy Wales, the founder of Wikipedia, to place advertising space on the encyclopedia. Apparently he’s walking away from a veritable treasure-chest by refusing: it even says so right in the title, “Wikipedia leaves $100M on the table”.

Why is this bizarre? Well, I suppose the problem starts with the author’s thinking that Wikipedia could actually make as much as $100M from placing a leaderboard on the site, based on the website’s ludicrously high traffic statistics – the English Wikipedia alone ranks 15th according to Alexa, just three places behind eBay.

Much of Wikipedia’s allure is that it is free, “open” in every sense of the word, and available to all. Introducing advertising of any kind introduces a number of major problems.

  1. By having any one company provide the advertising space, Wikipedia risks angering Yahoo!, the company that donates 23 servers to run various Wikimedia projects. Such a conflict of interest could easily result in the donor pulling those servers, as a serious blow to the site.
  2. Advertising, in its most effective form, places ads that are relevant to the content displayed on the page. See the problem here? Users reading about a company like Microsoft or, for that matter, Yahoo!, would have a hard time believing in the neutrality and accuracy of an encyclopedia that actively promotes the subjects of its articles — particularly when Wikipedia’s articles on AOL (Calacanis’ preferred advertising provider), Yahoo! and the rest would all like to remove some of the less savoury content from their respective articles. Clearly, unbinding donations are the only viable solution in this respect.
  3. The loss of credibility that comes with this second point would obviously spell disaster for Wikipedia. An encyclopedia that throws its values to the wind to make money loses readers, and with fewer readers, the value of the advertising is reduced. The end result? Wikipedia ends up with a tenth the web traffic and a meagre sum of cash, destroying both its community and – consummately – its viability as an encyclopedia.
  4. It would anger the community of contributors. The thousands of people that edit Wikipedia on a regular basis – such as me – do so out of a sense of generosity towards the site, because it is free, open and so on. The difference between working in your free time to support a commercial enterprise is stark, and I wouldn’t be surprised if Wikipedia soon had to pay contributors to do what they used to do for free. This means less content, less loyalty from both readers and contributors and, again, less daily traffic.

What’s most annoying about this article is the author’s apparent failure to actually read their own source. From the article:

Note: I’m bringing this up again a good friend pointed me to this very, very conservative valuation of Wikipedia. Wikipedia if it was a private company would be worth $5B.

Why do I take issue with this statement? Well, looking at their “very, very conservative valuation”, we find this choice quote:

Of course, we stress some obvious realities: if Wikipedia.org served ads, only 1% of the sites that currently link to it for free would continue to link to it; this would pummel its PageRank strength (notice how often Wikipedia.org’s result is tops on Google). This would effectively reduce traffic and potential revenue potential.

Indeed, HipMojo explicitly notes that their entire article was a thought exercise, devoting a large space at the top to saying that their conclusions would bear no relation to reality.

Wikipedia, and the people that edit it, have traditionally been strongly against the commercialisation of the site. More than a few users hold a powerful dislike for Jimbo Wales’ for-profit entity, Wikia, and it’s very clear to me that any hint of advertising on the site would result in a very negative backlash from the community. In short, it’s a bloody stupid idea.

Personal Attacks

The Digg page that originally drew my attention to this article deserves a little attention of its own. Calacanis has drawn an enormous amount of fire for posting his opinion, becoming the target of comments like “you money grabbing whore” — on his very own blog!

It’s equally distressing that the second comment on digg, which itself has been dugg 109 times, is simply this: “‘Hi my name is Jason Calacanis and I’m a stupid fuckhead. Please sell out to AOL like I did.’

Wow.

Spreading Just Like Wildfire

So very soon after Jason posts his proposal for advertising, the original website he drew his information from posts this: “Why Wikipedia Should Avoid Ads“. In this new piece, they spend a bit of time both rebutting his hyperbole, noting that Wikipedia could hardly be worth $5 Billion, when Youtube – a company that currently boasts 60-odd employees and a similar traffic ranking to Wikipedia – sold for “only” $1.6 Billion.

That’s still a lot of money, though, and the new article ends on a familiar note: that Wikipedia is doing just fine from simply fundraising. It’s well worth a read.

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6 Responses to “Wikipedia did not leave $100M on the table”

  1. Bob Dole Says:

    “…would have a hard time believing in the neutrality and accuracy of an encyclopedia…” – Oh, you mean how most people already see the trivapedia, I mean encyclopedia.


  2. […] People smarter than myself have torn the Calcanis post apart, and rightly so. There are just so many problems with his assumptions. He also doesn’t seem to understand that not everything is about money – that people might value community and a shared purpose. And maybe this lack of understanding is what makes for such an interesting chart (comparing the traffic between Netscape and Digg): […]

  3. Isaac Says:

    I would not have a problem with small ads on Wikipedia. If a user would get the choice to use ads to support Wikipedia, I would do so.
    Your points:
    1) Possibly angering Yahoo! I agree with that point.
    2) Neutrality and Accuracy. The example of the Yahoo! servers kind of does that as well. Also since anyone can change the content of the pages (like stakeholders of the company), I always keep this in mind that the article might not be neutral or accurate. But I agree that it could be worse if the ‘senior’ editors have vested interests because of ads.
    3) I agree, this is something to keep in mind, whether that point of view is justified or not. You can’t change it without the support of the community, so you’d have to convince them first.
    4) Even with ads it would still be open and free. The ads would just allow to make more (existing) content open and free. The money would be used for the cause, it would benefit everyone, not to enrich a few owners. So I would not have a problem with continuing to support such an organization.

    Ads might be able to speed up process of creating of free and open content. However fundraising is sufficient to keep it going. I think however that fundraising could also be the way to speed up the process. The sheer size of the community makes it possible to cough up $100 million a month, I think. Organise a fundraiser to free a collection of books. With these funds the copyrights of these works can be bought and can be made free (Only buy the rights of the works for which they ask a fair price). (Like Jimmy Wales’ question to come up with a ‘copyright wishlist’). If millions of people donate say $10, everyone would get a lot more value for their money than what they get for it now when they spend it on these works. People would not spend less on books, but they would get a lot more books for their buck. I think this is an idea that should be discussed in the same way as this ads idea. I’m curious if there is enough support for this, and see some calculations of what would be feasible.

  4. Superhero Says:

    This is really fresh idea of the design of the site! I seldom met such in Internet… Good Work dude!

  5. DermaZinc Says:

    I have already enjoy your website, and it is so nice and cool. I will visit your website again. Thank you.


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