Wikipedia Business Model | How Does Wikipedia Make Money?

Wikipedia is a free, openly editable, multilingual online encyclopedia based on the wiki concept. 

Alexa ranks it among the top 100 most popular websites globally as one of the world’s most popular general reference works. 

Wikipedia business model is based on donations that mean it is funded by its readers and has no commercial source of income. 

The Wikimedia Foundation, a non-profit organization that is funded by donations, owns and manages the site.

Wikimedia Foundation operated Wikipedia, funded primarily by donations and contributions totaling $98 million in 2018. 

Wikipedia is the dominant website on the internet. It is a non-profit, open project that has funded twelve other projects.

Wikipedia’s decentralized nature sets it apart from its predecessors. The information on Wikipedia is collected, updated, and maintained by unpaid volunteers instead of its employees and external field specialists.

What is Wikipedia?

Wikipedia is an online encyclopedia that (nearly) anyone can contribute to and edit – as long as they have an internet connection.

Wikipedia earns money through donations, investments, and goods sales. It intends to develop an API in the future that will charge corporations for access to its data.

Wikipedia has evolved into one of the most visited websites on the Internet since it was established in 2001. There have been nearly 56 million articles published so far on Wikipedia.

Company NameWikipedia
Company TypePrivate
FoundersJimmy Wales
Larry Sanger
ProductOnline encyclopedia Wikipedia
OwnerWikimedia Foundation
Founded DateJanuary 15, 2001
HeadquarterUnited States
Location ServedWorldwide
Websitehttps://en.wikipedia.org/

How Does Wikipedia Work?

Wikipedia is a free online encyclopedia edited and maintained by thousands of anonymous contributors (more than 280,000, in fact).

A Wikipedia article can be edited in any of the 300 languages available on the site by almost anyone with an internet connection.

The content of some highly-visited pages, such as those regarding Brexit or the COVID-19 pandemic, can only be modified under limited circumstances by an accredited and validated group of editors.

The five fundamental tenets that guide Wikipedia are as follows:

  • Wikipedia is an encyclopedia, not a publication or a platform for advertising.
  • Wikipedia content is objective, which means that articles have been verified and cite credible and authoritative sources (for example, peer-reviewed studies).
  • Anyone can access, use, alter, and distribute content online for free.
  • The editors of Wikipedia should treat each other with respect, including refraining from personal attacks and assuming good faith.
  • Wikipedia does not adhere to rigid laws or rules but rather follows evolving standards.

You can make changes in the top right corner of the webpage once you’ve logged in. The View history tab keeps track of all subsequent changes to a page.

However, due to its crowdsourcing model, Wikipedia does not always maintain the maximal credibility of its content, especially when the page garners little attention in the first place.

A forum for community questions, suggestions for new features, and discussions of policy-related issues is also available.

The homepage of Wikipedia also encourages visitors to read new articles, provides information about events that occurred the day the site was viewed, or provides simple facts (under the “Did you know…” section).

Wikipedia is accessible via its mobile and tablet applications (Android and iOS) and its website.

Wikipedia Business Model

It is a collaboratively edited crowdsourced encyclopedia that is crowdsourced by its users. It is a unique form of online encyclopedia meant to facilitate collaboration and data production through trusted sources. There are thousands of volunteers around the world who contribute content to the site.

Wikipedia’s business model is simplified because the organization focuses exclusively on website management, server administration, and administration, while most of the content is freely provided by volunteers.

How Does Wikipedia Make Money?

Wikipedia is a donation-based organization that receives most of its funding from millions of individuals and corporations worldwide.

Wikipedia Business Model

Wikipedia earns money through donations, investments, and sales of merchandise. It intends to develop an API in the future that will charge corporations for access to its data.

The section below examines each of its revenue sources.

Donations

A large percentage of Wikipedia’s income comes from contributions made by individual contributors and corporations.

There are two types of donations: those made in the donor’s preferred currency and those made in the form of in-kind contributions. 

Commodities, services, and transactions unrelated to money (e.g., if someone donates a car or works for free for Wikimedia) are considered in-kind services.

Apple, Google, Craig Newmark (the creator of Craigslist), Microsoft, and Humble Bundle are among the largest supporters of Wikimedia, with some of them contributing more than $1 million to the open-source project.

The Wikipedia website has been known to place banner advertisements at the top of its pages to entice users into donating.

Wikipedia currently has approximately seven million donors, each contributing an average of $15 per year.

Capital investments

Wikipedia also earns money through several investments. It earned nearly $5 million in revenue from investments alone for the fiscal year 2020, for instance.

The majority of Wikipedia (or rather, the foundation’s) assets are equities and fixed income securities.

The investment portfolio of the foundation is broken down into three different categories:

  • level 1: Investments in marketable securities, more precisely stocks, and mutual funds.
  • Level 2: Investing in corporate bonds, mortgage-backed securities, and US Government debt, among many others.
  • Level 3: Unobservable inputs occur when people assume what will be used by market players to price instruments (however they define that).

Currently, the foundation is diversifying its investments to spread them evenly across various levels.

Merchandise Sales

Wikipedia also earns money from the products it offers through its store. Individuals can purchase a variety of products, including:

Wikipedia Business Model

T-Shirts, bags, mugs, and hats are among the items available. Wikipedia logos or product names appear on all Wikipedia products. The merchandise giveaway program also allows Wikipedia editors to recommend others for free items.

API

Wikipedia announced the launch of Wikimedia Enterprise API in March 2021. 

Developers can use the API to develop their services from existing Wikipedia data (and other websites).

Internal teams at all major technology companies are tasked with translating Wikipedia content for use in their products. 

Wikipedia links, for example, are automatically incorporated into YouTube videos that demand objectivity.

Wikimedia will then charge these companies for access to the cleaned data. It is reasonable to presume that payments are proportional to the size of files imported by the company in question.

It is important to note that all income earned by the API will go to Wikimedia, LLC, an independent, for-profit company.

Who is the Owner of Wikipedia?

The Wikimedia Foundation, a non-profit organization, runs Wikipedia and numerous other free information websites to create a freely accessible knowledge database.

Success Story of Wikipedia

Wikipedia was started in 2001 by Jimmy Wales and Larry Sanger and is presently located in San Francisco, California.

Wales, who grew up in Huntsville, Alabama, began his career in Chicago as an options and futures trader after graduating from Auburn University with a finance degree.

In 1996, he founded his first internet company, inspired by the dot-com explosion. He eventually co-founded Bomis, which began as a search directory for information on the city of Chicago.

Unfortunately, city directories do not pay well, and the site eventually shifted its focus to sexual content.

For example, the “Bomis Babes Report” included explicit photographs, while “The Babe Engine” enabled users to search for sensual content.

Wales utilized the earnings from that venture to develop Nupedia, an online encyclopedia with information written by subject-matter experts (such as research scientists).

Wales attracted Larry Sanger, who was then seeking a Ph.D. in Philosophy at Ohio State University.

Sanger and Wales first met in 1994, when she subscribed to Wales’ newsletter, “Moderated Discussion of Objectivist Philosophy” (MDOP). 

Wikipedia Business Model

A year later, Wales phoned Sanger to revisit a couple of the issues they had previously disputed. From that moment forward, their relationship essentially formed.

Wales reconnected with Sanger in January 2000 and pitched him on the notion of an encyclopedia that was rigorously verified and maintained by users.

Sanger later relocated to San Diego to work full-time on Nupedia. Regrettably, it became evident that the project would be far more difficult to complete than anticipated. 

Nupedia had only published a few dozen entries in a few months due to its stringent publishing standards.

Several conflicting accounts of what happened next, so we’ll stay with the most frequently cited. According to Sanger, he had supper with Ben Kovitz on January 2, 2001, a buddy he met through Wales’ mailing list.

Kovitz was gushing about a new technology called “wikis” (Wiki wiki meaning rapid in Hawaiian), which enabled people to edit webpages straight from their computer browsers. 

Sanger presented that proposal to Wales, who quickly approved and included it in Nupedia (renamed Nupedia Wiki).

Regrettably, the existing Nupedia community was not on board with the more flexible editing style, prompting Wales to register two distinct domains – Wikipedia.com and Wikipedia.org. 

On January 15, 2001, the Wikipedia website went live, greeting readers with the phrase “Hello, world!”

Wikipedia, its improbable forerunner, took off immediately. By January’s end, the site had accumulated 600 articles. 

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By May, that figure had risen to over 4,000. While Sanger remained partially associated with Nupedia, he devoted an increasing amount of his time to growing Wikipedia. Nupedia was finally decommissioned in 2002.

The September 11th attacks on the twin buildings catapulted Wikipedia to new heights. As people sought accurate information about what was happening, the website attracted an increasing number of visitors.

By 2002, Wikipedia’s website was receiving millions of monthly visitors. However, before that moment, the site was mostly accessible via its dot-com domain. 

Wales advocated that to profit from the website’s popularity, display advertisements be placed on Wikipedia.

To his detriment (or perhaps fortuity), the community roundly rejected that notion. Fortunately, Wales had the foresight to obtain the dot-org domain version of Wikipedia when he founded it. 

As a result, he founded the Wikimedia Foundation in June 2003 as a nonprofit entity to handle Wikipedia and all subsequent assets. Wikipedia.org has become a legal entity.

Wales also became the foundation’s de facto spokeswoman. In July 2005, he delivered a TED talk about the development and rise of Wikipedia, establishing him as a global figure. Later that year, Bono of U2 invited him to speak at the Davos World Economic Forum.

Wales was named one of Time Magazine’s 100 Most Influential People in 2006. That same year, American comedian Stephen Colbert invited Wales to appear on his late-night show The Colbert Report, allowing viewers to fix factual errors in several of the show’s stories. 

The action demonstrated the potential of crowdsourced content and the vulnerability of Wikipedia’s information accuracy.

One of the primary reasons Wikipedia spread like wildfire was because of its link with search engines. Google, for instance, frequently displayed content from Wikipedia at the top of their search results.

As a result, it came as a surprise when Google revealed in December 2007 that it would establish a competitor service called Knol. 

The program, which launched in July 2008, would allow professionals to provide content on subjects about which they are informed. 

If you’re wondering why you’ve never heard of the service, Google discontinued it three years later.

Meanwhile, the foundation’s meteoric development enabled it to relocate its offices from St. Petersburg, Florida, to San Francisco. 

Simultaneously, Wales stepped down as president of the charity and was eventually succeeded by Canadian writer Sue Gardner.

In March 2008, reports surfaced accusing Wales of embezzling funds from the foundation’s expense account. 

He allegedly used the funds to purchase bottles of wine worth more than $300 and visits to Moscow massage parlors.

Wales, who remained married at the time, was also having an affair with Canadian television commentator Rachel Marsden. 

While an affair is morally dubious in and of itself, Wales allegedly used his position to have favorable edits made to Marsden’s Wikipedia article.

Despite Wales’ gaffes, Wikipedia expanded its reach on the strength of its editor’s efforts. 

When Wikipedia turned ten years old in January 2011, it raised $16 million in less than 1.5 months. 

To accomplish this purpose, Wikipedia erected massive banners featuring Wales pleading with donors to give — a tactic that many media outlets felt highly intrusive.

Eventually, the Wikimedia Foundation began to leverage its popularity to develop additional projects. 

For example, it launched Wikivoyage in January 2013, a crowdsourced website that provides thorough information on various vacation destinations.

Additionally, the foundation organized so-called edit-a-thons, in which editors, notably female editors, gathered to edit pages during a specified time. 

The edit-a-thons were organized in response to two troubling developments on Wikipedia: a lack of editor growth and a low proportion of female editors.

Additionally, guys make up 80% of Wikipedia editors (a problem that exists to this date). While its editor base grew dramatically up until 2007, it subsequently stayed stagnant at roughly 140,000. As a result, many of its edit-a-thons were developed expressly for women to create and modify female-related pages.

Sue Gardner resigned as executive director of the charity in June 2014. Lila Tretikov, a former software engineer and product manager at many Silicon Valley-based technology companies, took her position.

By the end of 2015, Wikipedia had surpassed the five million mark for published English articles. Swedish, surprisingly, was the second most-published language, with about two million pieces.

In January 2016, on the occasion of Wikipedia’s 15th birthday, The Wikimedia Foundation announced the establishment of a new $100 million endowment fund to serve as a “permanent safekeeping fund.” 

The goal was to raise $100 million over the next decade, which the foundation did five years ahead of schedule (in April 2021).

Apart from safeguarding Wikipedia’s future, the endowment fund was supposed to be used to accelerate innovation on the site’s mobile website and apps. 

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People from developing countries are increasingly coming online, although they frequently only have access to the internet via their phones.

As a result, in 2012, the foundation launched Wikipedia Zero, persuading mobile network carriers to eliminate data rates anytime users browse a Wikimedia property. 

While the service was eventually shut down in 2018, the organization said it successfully facilitated access to Wikipedia material.

Turkish authorities stopped access to the site in May 2017. The prohibition lasted more than 2.5 years. 

Turkey’s Constitutional Court ruled in January 2020 that the prohibition was unconstitutional. Meanwhile, Wikipedia has previously been censored for an extended time in China.

China employed almost 20,000 employees to develop the country’s version of Wikipedia the same month Turkey enforced the ban. 

Russia’s government invested over $31 million in December 2019 to create its encyclopedia as well.

While despotic governments restricted access to Wikipedia, businesses made great use of it as a marketing tool. The North Face, an outdoor firm, substituted travel-related imagery with images of its products.

A few months later, Wikipedia was the victim of a distributed denial-of-service attack, or DDoS, which brought its European and African sites to a halt.

Despite these shortcomings, Wikipedia remains one of the most significant websites of our generation. The site will turn twenty years old in January 2021.

Each month, Wikipedia receives about 15 billion page views. The site now has around 300,000 volunteer editors who contribute information in approximately 300 languages. Meanwhile, the Wikimedia Foundation has grown to about 500 employees.

What is the Future of Wikipedia?

The Wikipedia community has grown to such a size that it is practically hard to ignore its success. However, is this business model viable? Will Wikipedia continue to exist in twenty years?

The company’s primary impediment at the moment is the proliferation of cell phones. The increase in smartphone visits has resulted in a decline in the number of editors and content providers. 

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Nonetheless, the firm recently initiated a worldwide conversation dubbed Wikimedia 2030 to establish the future of Wikipedia and the Wikimedia movement by 2030. 

It intends to adapt to changing technological developments, ensuring that they continue to satisfy their users’ needs and give reliable, clear, and neutral information.

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