how-does-wikipedia-make-money

How Does Wikipedia Make Money? Wikipedia Business Model Analysis 2022

Wikipedia is sustained by the Wikimedia Foundation, which is supported mostly by donations and contributions, which in 2021 amounted to over $153 million. Wikipedia is among the most popular websites on earth, and it is, as of these days, an open, non-profit project, on which other twelve projects have been developed.

Wikipedia origin story

Back in 2001, Jimmy Wales and Larry Sanger stumbled on the idea of having an encyclopedia, rather than be edited centrally, could instead be built by hundreds of contributors. Initially, the project was called Nupedia.

However, it later changed the name to Wikipedia, to recall the Hawaiian term “wiki” which stands for “quick” or “super-fast” – “wiki wiki.”

A few years before, Jimmy Wales had retired from his options trading career, and having made some money, he had started another website called Bomis, which would aggregate erotic photographs materials. While Bomis would eventually close, from its resources, Nupedia was created. Thus, bringing to life Wikipedia.

Today Wikipedia is among the most popular sites on earth and for sure the most known encyclopedia.

As Jimmy Wales – founder of Wikipedia, recounted, in a TED talk, in 2007:

Charles Van Doren, who was later a senior editor of Britannica, said the ideal encyclopaedia should be radical it should stop being safe.

But if you know anything about the history of Britannica since 1962, it was anything but radical.

Still a very completely safe, stodgy type of encyclopaedia.

Wikipedia, on the other hand, begins with a very radical idea, and that’s for all of us to imagine a world in which every single person on the planet is given free access to the sum of all human knowledge.

And that’s what we’re doing.

So Wikipedia it’s a freely licensed encyclopedia. It’s written by thousands of volunteers all over the world in many, many languages.

It’s written using wiki software so anyone can quickly edit and save,

And it goes live on the Internet immediately.

And everything about Wikipedia is managed by virtually an all-volunteer staff.

Wikimedia family

wikimedia-projects

The Wikimedia Foundation is a non-profit that hosts Wikipedia and other free knowledge projects brought on by the Wikimedia family. The Foundation was established as a nonprofit in 2003.

In 2012, asked how he decided the best way to go, Jimmy Wales said: “Thinking about how do we sustain it? How do we make this work? Putting it into a non-profit (referring to Wikipedia) seemed a reasonable way to go.”

13 projects are part of this family and are divided into five main categories:

  • Reference.
  • Collections.
  • Technology.
  • Guides.
  • Collaboration.

Reference

  • Wikipedia “All the world’s knowledge” is an encyclopedia written in 300 languages.
  • Wikibooks or a collection of free e-book resources including textbooks, annotated texts, instructional guides, and manuals.
  • Wiktionary is a dictionary for over 170 languages.
  • Wikiquote is an online collection of sourced quotations.

Collections

  • Wikimedia Commons, is the world’s largest free-to-use library of illustrations, photos, drawings, videos, and music.
  • Wikisource, a library of freely-licensed source texts and historical documents.
  • Wikiversity, learning resources, learning projects, and research for use in all levels, types, and styles of education.
  • Wikispecies, a database for taxonomy that covers living and fossil representatives of Animalia, Plantae, Fungi, Bacteria, Archaea, Protista, and all other forms of life.

Technology

  • Wikidata, central storage of structured data for Wikimedia projects.
  • MediaWiki is free and open-source wiki software that anyone can use and develop. The platform on which Wikimedia projects are built.

Guides

  • Wikivoyage which aim is to provide the world’s largest free, complete and up-to-date worldwide travel guide.
  • Wikinews is a free content alternative to commercial news sites with articles that are fact-checked and peer-reviewed.

Collaboration

  • Meta-WikiProject is a project used as a central hub for various coordination and organization tasks.

How does Wikimedia spend money?

wikimedia-foundation-expenses

The Wikimedia foundation expenses comprise four main categories:

  • Direct support to websites: servers + ongoing engineering improvements, product development, design and research, and legal support.
  • Direct support to communities through grants, programs, events, training, partnerships, tools to augment contributor capacity, and support for the legal defense of editors.
  • Fundraising.
  • Administration and governance with 350+ staff and contractors to support a wide variety of projects.

How does Wikimedia make money?

As Jimmy Wales, himself explained: “As a business, it’s pretty terrible, It exists based on donations.”

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Connected Business Model Types

Open Source

open-source-business-model
Open source is licensed and usually developed and maintained by a community of independent developers. While the freemium is developed in-house. Thus the freemium give the company that developed it, full control over its distribution. In an open-source model, the for-profit company has to distribute its premium version per its open-source licensing model.

Open Core

open-core
While the term has been coined by Andrew Lampitt, open-core is an evolution of open-source. Where a core part of the software/platform is offered for free, while on top of it are built premium features or add-ons, which get monetized by the corporation who developed the software/platform. An example of the GitLab open core model, where the hosted service is free and open, while the software is closed.

Freemium

freemium-business-model
The freemium – unless the whole organization is aligned around it – is a growth strategy rather than a business model. A free service is provided to a majority of users, while a small percentage of those users convert into paying customers through the sales funnel. Free users will help spread the brand through word of mouth.

Subscription-Based

subscription-business-model
Subscription-based business models are built on a recurring customer base, where customers rather than own, usually have access to the product or service. The customer can have the upside of the service, without owning the good underlying it, which is maintained by the company running the subscription-based business.

Cloud As Service

cloud-as-a-service
Cloud as a service is a business model that combines the cloud infrastructure delivered to customers as a subscription-based service, where the customer can access a cloud infrastructure without running it on-premise. Therefore, the whole premise of the cloud as a service business model is to offer a more agile cloud infrastructure at a fraction of the costs compared to on-premise software, and that can be scaled up according to the need of the business.

Connected Case Studies

WordPress

how-does-wordpress-make-money
WordPress.org became the most popular CMS and blogging platform in which the Foundation owns the trademark, and revenues come from donations. The Foundation holds a public-benefit-corporation who manages the revenues coming from WordPress events and conferences. Automaticc – the business arm – monetizes premium tools built on top of WordPress.com (a premium platform) through freemiums.

Wikipedia

how-does-wikipedia-make-money
Wikipedia is sustained by the Wikimedia Foundation, which is supported mostly by donations and contributions, which in 2018 amounted to almost $98 million. Wikipedia is among the most popular websites on earth, and it is, as of these days, an open, non-profit project, on which other twelve projects have been developed.

Mozilla

how-does-mozilla-make-money
Most of Mozilla Corporation’s revenues come from royalties earned through Firefox web browser search partnerships and distribution deals. According to StatCounter back in 2008 Mozilla Firefox controlled over 26% of the browser market. Today, due to the market dominance of Google Chrome and Safari, Mozilla has less than 5% in market share.

GitHub

how-does-github-make-money
GitHub provides web-based hosting for software development and version control using Git, which facilitates collaborative source code development among programmers. GitHub was founded by Chris Wanstrath, P. J. Hyett, Tom Preston-Werner, and Scott Chacon in 2008. Microsoft acquired the company for $7.5 billion in 2018, and it was integrated as part of Microsoft’s enterprise offering. On top of its free repository, GitHub also offers plans for teams and enterprise customers. And the GitHub marketplace also monetizes on some of the apps developed on top of it.

GitLab

open-core
While the term has been coined by Andrew Lampitt, open-core is an evolution of open-source. Where a core part of the software/platform is offered for free, while on top of it are built premium features or add-ons, which get monetized by the corporation who developed the software/platform. An example of the GitLab open core model, where the hosted service is free and open, while the software is closed.

Slack

slack-business-model
Slack follows a freemium model, where a free version is offered, and users can convert in paying customers if they want more usage or advanced functionalities. Slack combines the free model with a direct sales force to acquire enterprise customers with yearly recurring revenue of over 100K. Those customers were 575 in 2019, and they accounted for 40% of its revenues. 

Grammarly

how-does-grammarly-make-money
Grammarly leverages on a freemium service, where free users are prompted to switch to a paid subscription. Grammarly makes money by selling premium plans starting at $11.66 to $29.95 per month. The company also makes money by selling human proofreading services to its paid users.

Dropbox

dropbox-business-model
Dropbox generated over 90% of its revenue via its self-serve channels to convert users in paying customers through in-product prompts and notifications, time-limited free trials of paid subscription plans, email campaigns, and lifecycle marketing. Dropbox generated over $2.1 billion in revenue in 2021, with an average revenue per paying user of $133, based on 16.79 million paying users.

Zoom

zoom-business-model
Zoom is a video communication platform, which mission is to “make video communications frictionless.” Leveraging on the viral growth from its freemium model, Zoom then uses its direct sales force to identify the opportunity and channel those in B2B and enterprise accounts. 
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