Wikipedia and Nupedia

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“It's a strange feeling to realize you're helping make history.”[1]


This case study looks at how the Wikimedia Movement, centred around Wikipedia, grew from being originally a side project of Nupedia, to holding its current position as the 6th most popular website in the world[2]. The first free online encyclopaedia was launched in October 1999 by Encyclopedia Britannica, which could trace back its origins to Edinburgh in 1768[3]. Jimmy Wales founded Nupedia in 2000[4] and Larry Sanger was appointed editor in chief. Wikipedia was added in January 2001. However in July 2001, Encyclopedia Britannica decided to start charging anyone who wanted to read more than a few lines. Faced with the current economic slow-down, their representative, Tom Panelas said “The economics of the all-free model has changed” [5]. However, Sanger challenged this view: “The grandest days of free content have not yet begun. Britannica and other proprietary encyclopedias will be hopelessly obsolete within ten years – small, out-of-date, and generally irrelevant – by comparison with Nupedia, Wikipedia, and the many other non-proprietary reference works that are being and will be developed.” [6]. Sanger went on to speculate that by 2008 Wikipedia might have 84,000 articles – he was way out: In April 2008 there were 10 million articles [7]. His article also concentrated on Nupedia: he was wrong on this as well. Nupedia closed in September 2003. However CNET did classify Nupedia as one of “The greatest defunct Web sites and dot-com disasters” [8].

Wiki Technology[edit]

Before analysing the different business models, it is useful to look at the technological innovation which led to the Wikipedia phenomenon. The first Wiki was created by Ward Cunningham in 1995. Basing it on his previous experience developing information stacks on Apple Computers HyperCard, Cunningham developed a website which enabled visitors to edit the material they found there in a comparatively straightforward way. In an interview in 2006 Cunningham commented that he had considered patenting his technology but “if I got a patent then I'd have to go out and sell people on the idea that anyone could edit. That just sounded like something that no one would want to pay money for.”[9]. He also wanted to get it used by software developers and people into the study of patterns. His business model consisted of providing it as open source software, so as to raise his profile: “I also thought, well, if it is more widely used it'll just be a calling card and a way for people to know me. It certainly worked in that regard.” Cunningham invited people he knew interested in Design Patterns (a term used in software design to describe the application of a solution in a wide range of circumstances, independent of the specific coding used) to get involved. Over the next five years his wiki developed: by 1997 he was getting about 70,000 hits a month. However in 1998 tensions arose between partisans of Extreme Programming (a methodology developed by Kent Beck – currently working for Facebook – for computer programming which involves frequent small changes using users feedback to adjust errors) and those more interested in Design Patterns, as outlined by the “Gang of Four”[10]. The two communities parted ways[11]. In 2000 wikis were still largely unknown outside the computer programming communities.


In 1996 Jimmy Wales and Tim Shell set up Bomis. Wales had studied finance before becoming a player on the Chicago stock market. After six years he had made enough money that he would not need to work again. Having come across the Open Source movement he wondered if the same technique of mass user involvement could be used to develop an encyclopedia. He had met Larry Sanger through a shared interest in the philosophy of Ayn Rand. In February 2000 Bomis took Sanger on as Nupedia's Editor in Chief[12]. They adopted the “One Best Way” model. This approach is most readily associated with Frederick Taylor – and indeed is the title of Robert Kanigel's biography[13]. The model which Nupedia developed was that they aimed to attract academically qualified volunteers generally possessing a PhD in the area they covered. These would either act as editors or peer reviewers. Just as most academic publishing has no financial reward for the author, Nupedia hoped that by becoming a recognised repository of reliable information rigourously peer-reviewed, this would provide academics with suitable social capital, in terms of being recognised as the author of the relevant piece[14] (Nupedia 2000). The articles were published under the GNU Free Document License. This had been designed by the Free Software Foundation for Richard Stallman's GNU Project. Bomis supplied free hosting and was using a business model they had developed around hosting web rings on topics aimed at young men: soft porn, sports, entertainment. These web-rings generated income through direct advertising and affiliate marketing. Sanger and Wales have subsequently disagreed about how the matter of advertising was to be handled. Sanger says that he was nervous about having his job paid for by the work of volunteers in a profit-based company[15] (Sanger 2011). Originally the procedures being developed were a rather clumsy adaptation of the hard-copy academic publishing model. Nupedia a seven step process and an advisory body drawn from its editors and reviewers. By January 2001, when Wikipedia was launched, they had 2,000 members. However by July 2001 they had only been able to produce 20 articles[16].

In autumn 2000 Wales and Sanger had been concerned about the slow progress. They discussed various options which would allow a more open editing process, but these all turned out to require too much investment in software development to be viable. Then Sanger met Ben Kovitz – who both he and Wales knew from their shared participation in internet postings lists. Kovitz told Sanger about Cunningham's wiki. Sanger took the idea to Wales and the first wiki was soon installed on Nupedia on 10 January 2001. However when the matter was discussed by the Nupedia Advisory Board, a clear majority wanted to have nothing to do with the wiki. Thus Wikipedia was established on 15th January 2001[17].


Wikipedia's business model has evolved as it has grown. Within a year it had attracted 350 users and generated 15,000 articles with 200 characters or more. By that time Nupedia was up to 25 articles with several dozen in preparation. Sanger proposed developing a simpler process to get articles up to standard. Originally Wikipedia was conceived as a way of allowing a pool of contributors to work together on articles which could then be transcluded to Nupedia. This did not have much of an impact on the productivity of Nupedia. Sanger was drawn into spending more and more time on Wikipedia, with little time for Nupedia. As Wikipedia grew, Sanger started a page on “What Wikipedia Is Not” where he and the community defined the limits if the project. Having a “Neutral Point Of View” soon became one of key criteria by which contributions were judged. The community started out managing disagreements within a consensual framework. Sanger refused the job title “Editor-in-Chief”, preferring “Chief Organizer”. But then a conflict arose between Sanger and an editor who used the nom de plume Cunctator or Cunc for short. Cunc advocated absence of hierarchy and removal of content limitation. Sanger was too busy to challenge Cunc's views effectively, but things got worse when an edit-war developed between the two men – this means they spent time removing each others contributions. Sanger then issued an appeal to the community requesting that they recognise him as the leader. However, he also deleted a number of pages – by Cunc and others – leading to criticism from across the community. In his response, he suggested that the irresponsibility of others meant that he was in fact being trained to act like an autocrat. The situation deteriorated: the social relations created by the new form of the wiki meant that Sanger did not have any suitable sanctions with which to control Cunc. Today an editor who misbehaves can be banned, a process handled by volunteer administrators complete with appeal process and variations of period, from 24 hours to a life-time ban. It has taken a decade to organically develop a self-organising community of volunteers. Wales saw that Sanger could not “manage' the project and citing financial difficulties, Sanger was made redundant in January 2002[18]. However writing in 2008 Sanger attributed Wikipedia's success to:

  • Open content license
  • Clear Focus on purpose: an encyclopedia
  • Openness: everyone would be encouraged to contribute
  • Ease of editing – much easier than using html code
  • Radical collaboration – no article has an individual's signature, but all contributions can be seen from an attached “History” page
  • Unedited, unapproved content ready for further development
  • Neutrality
  • A core of good people to start with
  • High rating on Google – which happened without being planned[19].

These were the features which provided a supportive environment to a world-wide community of 100,000 volunteers editing in over 280 languages. In 2003 Wales transferred ownership of Wikipedia to the Wikimedia Foundation. A recent fund-raising drive raised £9 million from 500,000 donations[20]

The Cathedral and the Bazaar[edit]

When Wales was originally discussing Nupedia with Sanger, he mentioned Eric S. Raymond's book The Cathedral and the Bazaar[21] which had recently been published. Raymond was also an avid reader of Ayn Rand. Adam Curtis has commented on the role of Rand's libertarian views on the growth of what Richard Barbrook and Andy Cameron dubbed The Californian Ideology [22][23]. This developed primarily amongst the open-source programmers during the dot-com bubble (1995–2000). Principally focusing on software development, Raymond argued against a top down approach – the cathedral model – where source code is available with each software release and in favour of the bazaar model – where the code is developed over the the internet in public view. In his text he discusses the implications of Beck's Extreme Programming and the Gang of Four's Design Patterns. Sanger and Wales adapted this analysis to developing an on-line encyclopedia. However, despite a number of initial problems in how the Wikipedia community should be managed, Wales' Wikipedia Bazaar model far out-stripped Sander's Nupedia Cathedral model. In 2006, Sanger launch Citizendium as a fork to Wikipedia after five years and all sorts of squabbles, Citizendium got bogged down just like its predecessor. However Sanger defended his model: "A lot of people are going to try to draw the conclusion that there's something about the model which meant that it couldn't take off. I really don't think that's the case. The model works very well in many ways."[24]. However, Clay Sharky has provided a critique of Sander's model, suggesting that “Citizendium is based less on a system of supportable governance than on the belief that such governance will not be necessary, except in rare cases.”. Sharky goes on to place Nupedia/Citizendium at the bottom of a U curve between a functioning hierarchy and a functioning community. According to Sharky Wikipedia functions because of deference to specific piece of texts comprising individual editors edits, rather than deference to the individuals themselves, which can only be maintained through the upkeep of expensive institutions.[25] It should come as no surprise that such an engaged approach to business modelling should emerge amongst the open source software development community. As they see problems of business modelling forming a subset of the problems they have to deal with as computer programmers, they adapt their skills learnt from the programming of computers to an understanding of how human beings as social beings use computers. However this cybernetic approach may act as restraint on considering other forms of business models.


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