Wikipedia Finds A Business Model That Actually Works, But What About The Rest Of Web 2.0?

Wikipedia has staved off the icy clutches of the credit crunch for a few brief months by just asking everyone for money, and threatening to post adverts if they don’t cough up; they’ve announced the site has successfully passed a $6m funding target. The funds will not last long however, only promising to stave off the advertising demons until June 2009, but still, it’s an impressive feat, considering the globe full of tight-wads we currently constitute.

Just over $6.2 million has been raised in donations through the Wikimedia foundation since November, from somewhere in the region of 125,000 people. (These facts are not garnered from Wikipedia and so can be generally considered to be correct. Although they are from Wikipedia themselves. Does Wikipedia generate their press releases like they generate their content? Lets hope not.)

Key to the hearty response could have been founder Jimmy Wales’ personal plea to last- minute dissertation writers and lazy journalists the world over. In his victorious speech, he described the bombastic Wiki mission: “to bring free knowledge to the planet, free of charge and free of advertising.” I hope he did an air punch when he wrote that sentence – I did. There was also the added novelty of being able to pay in any currency (which makes it feel less like real money). A prudent friend of mine donated 2,301 Nepalese rupees.

This interesting, but ultimately short-term exercise serves as a frightening reminder that people really hate adverts all over their online communities, and that this is the best business model web 2.0 currently operates. It points to a bigger problem: How to monetize web 2.0.

We’ve already had a look at Twitter and Facebook, both of which are Silicon Valley shorthand for “no business model”; while Twitter still fannies about with unwieldy and not-remotely-lucrative SMS charges, advertising is currently the best of a pretty shoddy bunch where large scale operations are concerned. But if users despise adverts as much as the Wikimedia foundation has shown, then it seems that there’s a flaw in this business model too. It does not seem to be a plausible long-term scheme to plead users to cough up for their spam-free screens every time you have bills to pay. A model like this could easily see a steady drop in donations.

Others aren’t better placed either. Flickr reports hosting over 3 million images, from 26 million registered users, yet of all of its many business links with companies who provide services to print your images on anything from underpants to business cards, but two years ago, only around 80 people a week out of 10 million actually used these services. In other words – they didn’t catch on. Their owners, Yahoo!, are struggling in the current economic downturn, and Flickr isn’t bumping up the margin. Flickr also decline to state how many paid up (advertising-free) pro-accounts they carry, which cost $24.95 per year. There’s a gaping hole in web 2.0, and nobody has yet found a cork to plug it.

Posted by Jennifer Allan in Sci-tech | January 7, 2009 2:01PM |