Relying on donations to support the Tower of Babel of knowledge! Wikipedia has survived for 23 years, but also faces great risks?

When it comes to public goods in the Internet age, Wikipedia may be the most representative case. This well-known online encyclopedia, founded by Jimmy Wales and Larry Sanger in 2001, aims to provide a freely accessible knowledge platform through the Internet, 'so that everyone can freely access the knowledge of all mankind'.

To this day, Wikipedia has unquestionably achieved this goal by using an open editing model of 'user-uploaded content', allowing anyone to contribute content online, thus gathering 'think tanks' from around the world.

As of now, the platform has over 300 languages with over 62 million entries, with over 14 million editing activities every month. The data of the English Wiki alone has exceeded 20TB, and the monthly traffic is more than 6 billion, ranking among the top 10 most popular websites in the world. With these data, Wikipedia is undoubtedly the benchmark of knowledge base in the Web2 era.

And in the rapid development of AI, the value of Wikipedia is immeasurable. Computer scientist Jesse Dodge once said that Wikipedia is the largest single source of information for ChatGPT's underlying language model, and its content may account for 3% to 5% of the data captured by LLM. Nicholas Vincent, a lecturer at Simon Fraser University, even said, 'Without Wikipedia, generative AI would cease to exist.'

What is most surprising is that the Wikipedia, which is so large in scale and operates so successfully, is not a commercial private institution, and is even the 'largest non-commercial ad-free website in the world', which sounds incredible because most internet platforms of similar size rely on advertising fees or burning money to sustain themselves. For Web2 public goods with difficult monetization ability and generally short survival cycles, it is almost impossible to operate and maintain such a huge scale through non-commercial models.

Katherine Maher, CEO of the Wikimedia Foundation, said in 2021: 'If Wikipedia wasn't founded in the 21st century, it wouldn't have been born in today's fragmented, commercialized internet world.'

What makes Wikipedia, a non-profit, so influential today? The mystery behind it is worth exploring. With a research interest in public goods, we conducted a simple study on Wikipedia. This case has significant implications for operators of public goods, especially content output platforms. We recommend everyone to read this article. Below, we will elaborate on Wikipedia's content production model, sources of cash flow and expenditure allocation, as well as controversies over power and finance from multiple perspectives.

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UGC: A revolutionary content generation model

Wikipedia's open editing model can be traced back to its early days. Its predecessor was Nupedia, which aimed to build a high-quality online encyclopedia website. However, Nupedia's editing process was very slow, and the uploaded content had to go through multiple reviews and expert approvals, severely limiting the speed of content generation. Within a year of its establishment in 2000, the number of articles included in the project was very few.

In order to improve the efficiency of content production, Nupedia's founder Larry Sanger proposed a new idea and developed a knowledge network system called "Wiki", which allows users to freely upload content and anyone can participate in editing entries. This later became Wikipedia.

From the product perspective, wiki is a knowledge network system. The cost for users to create, modify, and publish wiki text on the basis of the web is much smaller than that of HTML text. At the same time, the wiki system supports community-based collaborative writing, providing simple tools for community communication, which helps to share knowledge of a certain industry.

In the book "The World is Flat", the author directly refers to the above model as "community uploaded content", and in more literature, the content editing model launched by Larry Sanger is called UGC (User-Generated Content), that is, "user-generated content", which often has no considerable material incentives behind it, and is more driven by interest.

UGC quickly broke the traditional form of encyclopedias dominated and controlled by experts and publishers. It can flexibly include hot events that are not academic-oriented but have certain attention, and therefore quickly captured the minds of users. This bottom-up 'crowdsourcing' model allows Wikipedia's information to quickly extend to all aspects. After being launched in January 2001, Wikipedia quickly surpassed Nupedia, which was closed in 2003. The Encyclopedia Britannica also announced the cessation of print publication in 2012 under the impact of Wikipedia.

Currently, there are still millions of volunteers worldwide participating in editing and maintaining content on the Wikipedia platform. There are approximately 120,000 active editors (participating in editing at least once a month) and about 300 editing events occurring on the website every minute.

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Although UGC has created conditions for the rise of Wikipedia, the side effects it brings are equally obvious. In an open and free editing mode, how to ensure the accuracy of content is an unavoidable pain point. Wikipedia has experienced countless incidents of falsification or destructive editing in the most common forms, including inserting false information, advertising copy, or politically biased content, among which the most famous is the 'John Seigenthaler Wikipedia biography editing incident'. How to address these destructive behaviors is actually a very difficult and difficult task to eradicate.

The current solution of Wikipedia is to provide a function that allows the content of entries to be rolled back to previous versions. There is a revision history for the behavior of each entry, and anyone who discovers that an entry has been maliciously modified can roll it back to a previous version.

According to statistics, obvious malicious editing behavior is easily detected and removed. According to experimental tests, such error-correction behavior can be triggered on average in a few minutes. Wikipedia now extensively uses BOT to correct simple written errors or vulgar content, but destructive behaviors that are difficult to detect still require manual intervention.

For problems that require human intervention to solve, Wikipedia has developed a three-tier security system to implement Decentralization as much as possible. The most common way to deal with malicious editing behavior is through 'modification, rollback, and discussion'. When user A edits an entry, if user B has doubts, it can be rolled back to the old version and then explain the differences on the discussion page to seek Consensus.

Sometimes, the two sides of a dispute are prone to deadlock, repeatedly experiencing 'editing, reverting, editing, reverting', which requires the intervention of higher-privileged roles, commonly known as administrators and inspectors.

Administrators have the authority to delete entries, protect pages, prevent edit conflicts, and handle complaints, while patrollers are primarily tasked with quickly reviewing and marking the latest published content. They can mark problematic content as 'pending review' and report to administrators or higher-level volunteers.

In addition, administrators can set entries that are easily maliciously modified (such as entries for public figures) to partial or complete protection status, restrict editing permissions, and maintain the stability of the entry status. Administrators also have the right to ban users who maliciously edit entries.

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For more complex situations, Wikipedia also has an arbitration committee composed of senior volunteers as a final means of resolution. Committee members are all senior volunteers, and their decisions are based on Wikipedia's editing policies and community norms, ensuring that the content meets neutral and verifiable standards.

In terms of the Open Source content licensing protocol, Wikipedia has adopted several Creative Commons licensing protocols, the most important of which is the CC BY-SA 4.0 protocol, which allows users to freely share or adapt the content, but must meet two conditions:

The original author's name, work source, and link must be indicated

If the work is adapted, the adapted work must also be published under the CC BY-SA 4.0 protocol, making it easier for more users to engage in derivative creation. In addition to CC BY-SA 4.0, some earlier content and images are still covered by the GNU Free Documentation License (GFDL) protocol.

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Cash flow analysis: Can the Tower of Babel be sustained by donations alone?

Cash Flow Resources

For large-scale network platforms with a large user base, how to obtain a stable cash flow is the most troublesome issue. It is almost impossible for Wikipedia, which focuses on non-commercialization, free reading, and neutral values, to monetize like commercial platforms such as Twitter and YouTube by inserting advertisements or implementing membership systems. In addition, Wikipedia lacks powerful private institutions to provide substantial subsidies, so how it obtains cash flow to maintain its operation is a question that many people are curious about.

In this case, we can first take Baidu Baike as a comparison. For example, when searching for the entry 'health insurance', it is easy to find that Baidu Baike heavily relies on advertising system revenue. This commercialization method often brings about biased or false information. For example, the 2016 Wei Zexi incident was a victim of this model, ultimately driving the Cyberspace Administration and other departments to order related online platforms to drop the proportion of commercial promotion.

If we measure the Wei Zexi incident based on Vitalik's 'Income - Evil Curve', it can be regarded as a typical case of negative externality caused by excessive monetization of public goods. In contrast, Wikipedia's non-commercial policy makes it more neutral and able to retain more positive externalities, but can this model really sustain?

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Image source: Comparison table of Geekweb3 Wikipedia and other 'encyclopedia-like' products

Regarding the sustainability issues of Wikipedia, we have to trace back to its founding organization - the Wikimedia Foundation. The foundation was established in 2003 and is headquartered in San Francisco, with a current staff of over 500 people. Its funding mainly comes from donations and grants. According to its publicly disclosed materials, the Wikimedia Foundation's sources of income include the following aspects:

First is user donations. Every year, the Wikimedia Foundation launches fundraising campaigns, appealing to global users to donate to support platform operations. Most of these donations are small in amount, but the number of donors is large, accounting for a significant proportion of the Foundation's income. When most users browse Wikipedia, a banner pops up on the screen twice a year, asking users to donate to maintain platform operations.

According to the Wikimedia Foundation's data for the 2022-2023 fiscal year, the total revenue of the Foundation reached $180 million, with small user donations accounting for over 90% of the funding. On average, each donor contributes about $11, and approximately 7.5 million people worldwide support Wikipedia in this way.

In addition to individual donations, the Wikimedia Foundation also receives funding from large corporations and foundations such as Google, Microsoft, and the Gates Foundation. Google and the Alfred P. Sloan Foundation alone have donated over $3 million to Wikipedia.

In addition, the Wikimedia Foundation actively applies for grants for public welfare projects. A typical example is 'Reading Wikipedia in the Classroom', which aims to help teachers and students around the world better utilize Wikipedia for teaching. It was initially piloted in Nigeria, Bolivia, and the Philippines, and has now expanded to over 40 countries, helping people in those regions effectively use Wikipedia in classrooms. Through this project, the Wikimedia Foundation has successfully received longer sponsorship.

For the sake of sustainability, the Wikimedia Foundation is actively exploring alternative sources of revenue in addition to donations. In October 2021, the foundation launched the "Wikimedia Enterprise" service, mainly targeting large tech companies such as Google and Amazon, providing specialized paid APIs. This service has brought additional income to the foundation. In the 2022-2023 fiscal year, Wikimedia Enterprise generated millions of dollars in revenue, with Google alone paying over $2 million to Wikipedia. The paid API business is expected to become a significant driver of future revenue growth for Wikipedia.

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The Foundation also operates an online store (store.wikimedia.org), selling merchandise with the Wikipedia logo, such as T-shirts, mugs, and stickers. Although this portion of revenue is relatively small, it is also one of the Foundation's supplementary sources of income, generating hundreds of thousands of dollars in additional revenue each year.

In addition to the stable funding sources mentioned above, we can also see from the balance sheet that the Wikimedia Foundation will also participate in some investment activities. In 2023, the Wikimedia Foundation made a profit of about $6.5 million from its investments, but its investment activities resulted in a loss of over $11 million in 2022.

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Expense allocation

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The Wikimedia Foundation has detailed budget planning and financial auditing for all fund usage, with multiple approvals for larger expenses to ensure reasonableness and transparency. The financial reports of the Wikimedia Foundation are also regularly disclosed to allow donors and the public to understand the specific use of funds.

According to the Wikimedia Foundation's report, we can see its specific expenditure situation. In the 2022 fiscal year alone, its expenditure reached 169 million US dollars, of which 60% was spent on employee compensation and benefits. This fund is mainly used to pay the salaries and related benefits of the technical team and community personnel, covering expenses such as server maintenance, software updates, and data security.

As the largest online encyclopedia in the world, Wikipedia needs to handle massive amounts of data and traffic. Just maintaining and upgrading servers, data centers, and other technical resources is a huge expense. As of 2024, Wikipedia has 6 data centers worldwide, distributed in the United States, the Netherlands, France, and Singapore, to ensure the stable operation of Wikipedia and other Wikimedia projects.

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At the same time, Wikipedia relies on the support of a global community of volunteers. The Wikimedia Foundation provides various awards and funding activities around the world to promote community development, accounting for about 14% of the total expenses. For example, the Wikimedia Foundation has organized 'edit-a-thons' in some regions, encouraging volunteers to focus on editing specific topic entries to expand the breadth and depth of content. Typical cases include the 'Fashion Edit-a-thons' held in multiple countries with a focus on France, as well as the 'Wiki4Climate' event in 2020, which focused on climate-related topics.

In addition, the Wikimedia Foundation has also invested a large amount of resources in professional services, including legal advice, external technical support, and financial audits, to ensure the compliance and operational security of Wikipedia globally.

At the same time, the management fee of the foundation also covers the rental of office facilities and daily management expenses to maintain internal operations, and regularly holds technical seminars and international editing conferences to promote cooperation and exchange in the global volunteer community, which also requires financial support.

The above two parts together account for 15% of the total expenditure. In addition, the Wikimedia Foundation spends 4% of the total expenditure on fundraising activities initiated in society through advertising and payment channels.

The Challenges of Wikipedia: Fraud, Corruption, and Political Correctness

The sustainable development of any public good is an issue that cannot be ignored. It is undeniable that Wikipedia has done a good job in this regard, but it still faces hidden dangers and challenges. First, Wikipedia's operational funding mainly relies on user donations. Although this model sustains the platform's development, its non-autonomous economic source still has significant instability. Under the impact of large language models, users' willingness to donate to Wikipedia is more easily affected.

Secondly, as a nonprofit organization, if the Foundation tries to increase revenue through typical commercial means such as paid APIs, it may also cause controversy over the platform's nature and neutrality. In this regard, the instability of Wikipedia's economic sources and neutrality has become a stubborn problem, which leads to an issue that cannot be ignored.

As the saying goes, "a tall tree catches the wind." Wikipedia relies solely on donations, yet it has obtained such a huge source of income. There is much dissatisfaction from the outside world, and the use of its funds is quite controversial. Rumors such as "overfunding" and "fraudulent donations" seem to have never subsided. On the one hand, Wikipedia's fundraising materials sometimes exaggerate the urgency of its financial needs, even giving the impression that Wikipedia is "about to collapse," leading users to misunderstand the platform's financial situation.

On the other hand, some insiders have provided concrete data indicating that Wikipedia's operations do not require so much funding, and there is a high suspicion of embezzlement.

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Kolbe, the former co-editor-in-chief of the Wikimedia community newspaper, said that he is very familiar with the internal operations of Wikipedia. The donation fund launched by the Wikimedia Foundation in 2016 originally planned to raise 100 million dollars within 10 years. However, recently, there has been a significant increase in fundraising activities and fundraising ad density, which means that the fundraising goal that is several times larger than this can be achieved at least 5 years ahead of schedule. In contrast, Wikipedia only needs $10 million to operate normally each year.

Previously, Brazilian editor Felipe da Fonseca also said: 'It is too ugly and unethical to ask for money using other people's work.'

Wikipedia's co-founder Jimmy Wales has also frequently faced community accusations. Many people believe that the cost-effectiveness of the Wikimedia Foundation is dismal, as the foundation has spent millions of dollars on software development over the years without producing anything effective. In 2014, Wales admitted to feeling frustrated by the endless controversies, which accused him of persistently wasting funds on developing software of no practical value without sufficient community consultation, and failing to make proper incremental promotion to compensate for the mistakes.

In February 2017, The Signpost published a column titled 'Wikipedia has cancer', criticizing the Wikimedia Foundation for continuously increasing annual expenses without corresponding output results.

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Musk is also a staunch critic of Wikipedia. In 2023, Musk caused a lot of discussion by renaming Twitter to 'X'. At this time, Musk joked in a post: If Wikipedia changes its name from 'Wikipedia' to 'Dickipedia' for a year, I will immediately donate 1 billion dollars to the Wikimedia Foundation to express his dissatisfaction with Wikipedia's call for donations and rumors of overfunding. Later, Musk also made statements such as 'Wikipedia is broken' and 'Wikipedia is losing its objectivity', and this article does not list them one by one.

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Musk's remarks may contain some political factors (many entries on Wikipedia have an obvious anti-Trump tendency). We do not discuss this, but it does represent the negative attitude of many well-known figures towards Wikipedia.

In response to such rumors, the Wikimedia Foundation explained that the funds raised are not only used for daily operations, but also to ensure that Wikipedia has sufficient reserves to deal with potential crises under the premise of being ad-free, freely accessible, and unaffected by commercial interests. This financial management strategy can enhance its fault tolerance and help Wikipedia maintain its independence and stability as a non-profit public good.

In addition to the above-mentioned issues, Wikipedia's development also faces various problems.

First of all, as an open-editing platform, Wikipedia's content relies on global volunteers to create and maintain. Although this model encourages widespread participation, it also brings about misleading, inaccurate, and even malicious modifications. Despite the platform having strict editing rules and review mechanisms, ensuring the reliability and neutrality of content in the AI era, and promptly correcting errors, will be a challenge that cannot be ignored in its development process.

At the same time, through some third-party data, we can find that although the number of Wikipedia users is increasing year by year, the number of active editors on the platform has decreased significantly in recent years. There are two main reasons for this phenomenon:

Wikipedia's review mechanism is becoming increasingly stringent, and the enthusiasm of new editors is being dampened.

Administrator permissions are getting higher, and they can block the account and IP Address of some editors, there is a phenomenon of abusing power.

In addition, the management team is not a monolithic group, especially the Wikipedia community and the Wikimedia Foundation actually have many differences, and at one point they even came to the surface, involving issues of corruption and abuse of power within the management team.

In 2014, the Wikimedia Foundation attempted to install new software on the German version of Wikipedia that could display multimedia content, but the German Wikipedia editors refused to update the user interface, and the two sides were deadlocked. In the end, the Wikimedia Foundation forced the installation of the new software and set advanced permissions to prevent editors from rolling back to previous versions.

On September 13, 2021, the Wikimedia Foundation also launched an action against the Chinese Wikipedia, resulting in the banning of 7 users and the removal of permissions from 12 administrators. Three of the banned users were among the top ten most active users on the Chinese Wikipedia. Due to the lack of systematic and detailed evidence or explanation from the Wikimedia Foundation afterwards, the incident was considered by the Chinese Wikipedia community and Chinese media to be suspected of excessive interference with community autonomy, suppression of those holding opposing Western ideologies, and a lack of procedural justice.

In addition, in resource allocation related issues, such as the fund allocation between different language versions, the cost setting for developing software, maintaining infrastructure, and the investment in different regions, the Wikipedia community and foundation have actually been competing for dominance.

As a public good, Wikipedia relies on credibility to obtain donations for sustainable operation. This credibility relies on the authority and comprehensiveness of its content, as well as the power distribution of Decentralization between the community and the foundation to maintain it. The aforementioned public infighting behavior is a destruction of credibility, and the impact of large language models such as AI may cause irreversible decline in Wikipedia's entry quality and user base, leading to further downgrading of its credibility.

At the same time, Wikipedia also faces the problem of insufficient diversity of volunteers. For example, content about women, ethnic minorities, and non-English-speaking cultural regions is often ignored. How to attract more volunteers and encourage participation from different backgrounds and regions is another key to the future development of the platform.

Summary

The success of Wikipedia lies not only in its outstanding achievements as a knowledge-sharing platform, but also in providing valuable thinking for the sustainable development of public goods. As the world's largest open encyclopedia, Wikipedia does not use commercial means to profit, and strives to maintain content neutrality, successfully addressing the challenges of the Internet age, which has profound implications for the management of other public goods.

The history of Wikipedia shows that only through stable economic sources, efficient use of funds, transparent financial management, and community participation can public goods develop steadily in the long term. At the same time, we also need to see that Wikipedia's operation, whether from a financial, organizational, or public opinion perspective, is not perfect and there are significant problems that have led to controversies that cannot be ignored. This should serve as a strong warning for the creators of other public goods, drawing lessons from the past and serving as a guide for the future.

In the future, the sustainable development of public goods will face more complex environmental changes, including the impact of fragmented self-media on user attention and a sharp increase in operating costs, as well as the adjustment of laws and regulations worldwide and the continuous evolution of user demands. This means that public goods need to not only continue to attract user participation, but also actively explore more sources of revenue to develop a stable and sustainable path.

【Disclaimer】There are risks in the market, and investment needs to be cautious. This article does not constitute investment advice, and users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their specific situation. Invest at your own risk.

This article is authorized to be reprinted from: "Foresight News"

Original authors: White Ding & Wu Yue, Geek web3