Commercialization
Would the commercialization of Wikimedia be a good thing? (By "commercialization," which is meant is "exploitation for maximal profit" or "organization principally for financial gain.") Commercialization could be implemented by, for instance, Wikimedia selling Wikipedia, MediaWiki and its other projects to a private venture (which presumably would be lawful, as long as the proceeds were to be invested charitably). A for-profit venture operating Wikipedia and other projects would likely support itself by advertising.
[edit] Arguments in favor
Arguably, commercialization could result in efficiency gains. Presently, Wikimedia is run by a Board of Trustees. As Murray Rothbard pointed out:
| “ | Trustee governance is, in general, a poor way to run any institution. In the first place, in contrast to profit-making firms, partnerships, or corporations, the trustee-run firm is not fully owned by anyone. The trustees cannot make profits from successful operation of the organization, so there is no incentive to be efficient, or to serve the firm's customers properly. As long as the college or other organization does not suffer excessive deficits it can peg along at a low level of performance. Since the trustees cannot make profits by bettering their service to customers, they tend to be lax in their operations. Furthermore, they are hobbled in financial efficiency by the terms of their charters; for example, the trustees of a college are forbidden from saving their institution by converting part of the campus into a commercial enterprise — say a profit-making parking lot. | ” |
Like any other democracy, Wikimedia is subject to the public choice dilemma of rational ignorance, in which, especially as the electorate expands, individual voters' incentives for making an informed decision diminish. The individual Wikipedian knows that his vote for trustee, or his input for or against a particular organization-wide proposal, is unlikely to tip the outcome, so he is unlikely to spend much time thoroughly researching the issues and voting accordingly. Turnout for trusteeship elections is not particularly good; only 2,940 votes were cast in the 2009 board elections. The quality of voters' decisions can, perhaps, be judged by the board's actions (and inactions). The other problem with democracy is that it is two wolves and a lamb voting on what to have for dinner; that is, the majority (or "rough consensus," as the case may be) of editors can override the minority, to the detriment of the encyclopedia. There is no profit motive to deter voters from putting their own personal agendas ahead of the interests of the encylopedia as a whole.
If Wikimedia were to sell Wikipedia, MediaWiki and its other projects to a private venture, then a new set of incentives would kick in. Investors and the analysts and financial managers they employ have a strong incentive to be well-informed about matters affecting the profitability of a firm, and their decisions to buy or sell a stock affect its share price. Management would need to maximize profitability, or else the share price would fall, potentially causing shareholder rebellion or hostile takeover, and diminishing the value of any executive stock options. The profit motive might increase management's sense of urgency in improving the software and implementing policies that will attract editors and readers.
The possibility of receiving a return on investment might also increase the availability of funds, as it would become possible to sell shares of equity in the firm and to borrow money on the expectation of paying it off with future profits. It would not be necessary to rely on donors. The funds could be used to invest in technology (including software enhancements) needed to improve the project.
There are many profit-seeking firms that have been able to sustain volunteer collaboration. A prime example is Wikia, but other examples include Urban Dictionary, Yahoo Groups, Ubuntu, etc. It is not necessary that the organization that coordinates not-for-profit collaboration itself be a not-for-profit. As for the question of the integrity of the encyclopedia, it is worth noting that Encyclopedia Britannica and most other encyclopedias are created by profit-making enterprises.
Advertising need not be obnoxious, and indeed, it might be less obnoxious than some of the donation pitches that have been used. As for the argument that advertising would create a conflict of interest in which Wikipedia would be reluctant to host material criticizing its advertisers, that argument could be raised about any number of magazines, such as PC Magazine, which contain reviews criticizing various products, or popular news magazines that sometimes criticize leadership of various companies. Management, if its profitability depends on its reputation as a source of objective, reliable information, must put that before the desires of its advertisers. Competition is the best safeguard against abuse, because if Wikipedia fails to provide good information, readers will go elsewhere. And because the content is irrevocably copylefted, competition can arise easily via a fork.
Profit-seeking firms have another built-in safeguard, in that disgruntled minority shareholders can dump their stock and take their money elsewhere, and in so doing send signals to the financial markets about problems at the firm; but disgruntled donors and editors to a nonprofit have no such recourse. They can vote against the majority, but that gets old after awhile and eventually they just leave, or else knuckle under and abide by the wishes of the majority.
It should be noted too that there have been many nominally for-profit corporations that existed to provide needed infrastructure for public use. For instance, the turnpike corporations of 19th century America built tens of thousands of highways, seeking only to break even. The shares were bought by farmers, artisans and others seeking to improve their profits by furthering transportation, and the commerce it facilitated, in their region.
[edit] Arguments against
If Wikimedia were commercialized, donations would decline or go away altogether. Management might make decisions that, while profit-maximizing, would diminish the integrity of the encyclopedia. Editors would be less inclined to contribute to a for-profit entity, unless they received some compensation themselves. A for-profit firm would not have the advantage of tax-exempt status.
