Crowdsourcing is Broken: How to Fix It

Background of his article is as follows: Many companies have detected the benefits of involving company externals into the innovation process. Now, everybody creates crowdsourcing communities, in order to solve given problems. On the other hand the number of experts, who are able to solve these problems, does not grow. Or, the experts do simply not see sufficient financial benefit to participate – at least in a business context – and your community starts to starve. Here his most central thought:

„The forces that enable crowdsourcing are being used to get thousands of people to do work for free, with a chance of getting paid only if their work is selected for use. This is fine for hobbyists or friendly competitions offering a token prize. But in a business context, it doesn’t pay for either party.“ – says  Scott Belsky

Free goods

The phenomenon is as old as menkind: If a market consists of several participants, who offer a service for free, the prices decline. On one hand side this development is positive for consumers, however at a certain point in time it does not make any longer sense for professionals to participate. In the moment when the market ceases to exist, the entire model makes everybody worse of, and in particular those companies that seek for support in their innovation process.

Some examples for such markets are as follows:

• Due to the price decrease for photo equipment it is nowadays easy for people to get photos for free, however, on the other hand it makes it difficult for professionals to get paid for their work.
• Several people work in jobs, which do not earn sufficient money to secure their survival with own work – these people need support. Here the society supports companies, which are not willing to pay good wages.
• Before iTunes the download market for music was a market that worked with illegal downloads. After iTunes people started to pay again for music downloads, as using iTunes offered several benefits to them.

Vicious Cycle

In my opinion it is only possible to leave the vicious cycle, if it is possible to implement a minimum solidarity-level into the market/community. If this solidarity is working successfully, the number of people being willing to work for free is smaller, and thus the willingness to pay is improved.  For the crowdsourcing strategies this would mean that people need to stop working for communities that do not offer a minimum set of benefits.

A different possibility to leave this cycle is to bring the demand side into a position, in which it is willing to pay. Customers are normally willing to pay, if this offers a benefit. In the sense of crowdsourcing this would mean that you would offer paid communities, because there the level of participant expertise would be higher than in free communities.

What to do

At current we see that crowdsourcing is starting to become tricky. I think, we will see both changes in crowdsourcing-strategies:

• Because the economic conditions are getting worse, and this has people to ask for funding, we will see a decline in the willingness to work for free.
• Finally, all of us will  detect that crowdsourcing strategies are not about getting free work, but are a means to increase the number of brains in your innovation project. This will increase the willingness to pay.

I recommend you to adapt your projects accordingly.

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This entry was posted on Dienstag, Februar 2nd, 2010 at 8:50 pm. It is filed under Innovation, Thema des Tages and tagged with Communities, Crowdsourcing, English Content. You can follow any responses to this entry through the RSS 2.0 feed.