In this article, we will be exploring one of the most well-known websites in the world: Wikipedia.
We will be revealing how the finances work for this popular resource. We’ll also answer the question on everyone’s lips: How does Wikipedia make money?
Wikipedia is managed by the Wikimedia Foundation. It is a nonprofit organization registered in the United States.
However, the organization has brought in hundreds of millions in income from around the world over recent years. It’s continuing to grow in size and is showing no signs of slowing down.
What is Wikipedia?
Wikipedia is synonymous with the internet for many people. It was founded in early 2001 as an independent website, led by developers Jimmy Wales and Larry Sanger.
Today, Wikipedia has over six million articles on the English version of the site. It receives huge amounts of traffic, averaging around 255 million individual visits every day.
There have been over 306 different language ‘projects’ on Wikipedia during its existence.
Although some have been shut down, most remain. The articles that make up each site are created, edited, and moderated by Wikipedia’s community of over 120,000 regular editors.
While Wikipedia has a permanent staff, volunteer contributors working for free have generated the vast majority of the content.
Containing more than 17 million individual articlesWikipedia is by far the largest encyclopedia in the world.
In totality, it probably represents the most comprehensive and accessible compendium of information ever amassed in human history. The site is continuing to grow, too, with an average of 600 new articles added each day.
Free at the point of access and easy to navigate, Wikipedia was the 7th most visited website globally during 2021.
This is no surprise as Wikipedia is the go-to resource for many people seeking an answer to a burning question, or to check a fact, figure, or date.
How does Wikipedia make money?
One of the reasons for Wikipedia’s continued popularity and the thing that sets it apart from many similar sites is that it is committed to being ad-free.
In 2009, the Wikimedia Foundation committed to keeping Wikipedia free from ads forever. On their information page, the organization lists multiple reasons why this is a priority. These reasons include:
- A commitment to privacy
- Concern about degrading the readability of the website, and
- The intention to maintain a position of neutrality.
So, how does the site generate income?
Wikipedia generates most of its income from donations from corporate donors like Amazon, Google, and Facebook, along with Wikipedia readers.
A small proportion of donations also comes from profits from its retail arm. This is mainly from the online sale of branded merchandise such as t-shirts in the Wikipedia Store.
Wikipedia has also been the beneficiary of grants from charitable foundations, including the Open Society Institute to pay for discrete projects and initiatives.
Why does Wikipedia ask for donations from its users?
The reason Wikipedia asks for reader contributions is to generate the income that it needs to continue to run. Wikipedia is a not-for-profit website, managed by the Wikimedia Foundation to fund and manage the website and its subsidiaries.
Much of Wikipedia’s fundraising marketing starts by declaring that only 2% of Wikipedia users donate to the site.
The Wikimedia Foundation is clear that it requires donations to keep Wikipedia free and accessible to millions of users around the world. Donations are critical to the upkeep of the website, particularly the operation of the servers.
However, some Wikipedia users and community members have been critical of the Wikimedia Foundation’s fundraising campaigns.
The emphasis on Wikipedia being dependent on small donations has been described as disingenuous, particularly given the large number of reserves and assets the Foundation has amassed over the years.
Nevertheless, compared to many other non-profits, the Wikimedia Foundation is open about its fundraising and the organizations that make donations.
Jimmy Wales, one of the co-founders of Wikipedia, is now a prominent spokesperson for the Wikipedia Foundation. He has talked openly about the importance of fundraising campaigns, and the importance of keeping Wikipedia ad-free.
This, he says, is to prevent accusations of bias – be it geographical, political, or commercial.
The vast majority of the money [comes from] small donors rather than three or four major philanthropic donors because then we run into the question about how independent we can stay if one person is paying the bills.
This comment made by Jimmy Wales in 2016 reflects the position of the Wikipedia Foundation. Even with the ability to persuade large charitable foundations and corporations to donate large amounts of money, encourage smaller donations remains important to the independence of Wikipedia.
How much money does Wikipedia Make?
Wikipedia raised over $127 million in revenue during 2019 and 2020, according to the accounts published on the Wikipedia homepage.
During the initial years of the website operating, for example in the 2003-2004 period, they raised only $80,000. The increase in revenue generated since then reflects the rising costs of running the site as it has grown.
When you consider the question of how much it costs to start a website, those are fascinating numbers.
Alongside pursuing grants from corporations and donors, the Wikimedia Foundation also oversees fundraising targeted at Wikipedia users.
They ask users to make one-off and regular donations, usually in a pop-up on the page they are browsing. This strategy caused controversy during 2020, when the Foundation launched a large fundraising campaign, including direct mail to Wikipedia users. The campaign claimed that Wikipedia is dependent on a donation-based revenue model to keep going.
What does Wikipedia do with its money?
The Wikimedia Foundation uses its money principally for maintaining the management of the Wikipedia website. Significant costs include the salaries of 550 employees, many working from the corporate headquarters in San Francisco, California.
Alongside the office expenses and legal and staff costs, technology to support the infrastructure of the servers and website is another significant expense for the Wikimedia Foundation.
Server costs are a substantial outlay. This is because of the high numbers of visitor traffic that require large servers to enable the website to be easily accessible.
The Wikimedia Foundation also funds several sister projects, including Wikidata.
How much does Wikipedia Cost to run?
Wikipedia spent $112 million on expenses during 2019-2020. This amount includes financial contributions to the Wikimedia Endowment Fund established in 2016.
The Wikimedia Foundation publishes information on how they spend their annual budget each year.
The November 2021 report, the latest that they had published at the time of writing, states that 43% of the previous year’s expenses went towards direct support to the website, including servers, engineering, and legal costs.
The breakdown of the other costs are as follows:
- 32% of the funds spent is direct support to communities. This includes grants, training budget, and legal costs for editors when needed.
- 13% is administration and governance, which includes staff members and office costs.
- 12% goes towards fundraising. This is mainly for marketing and promotional expenses.
They established the endowment fund to try to provide longer-term stability to the Foundation. Its target was to raise $100 million within ten years. They achieved this in September 2021, five years ahead of the target.
You can think of the endowment fund as reserves. It allows the Foundation to be able to dip into savings in the event of financial difficulties.
Given the constant increase in the costs of running Wikipedia, currently, the endowment fund would be able to cover the cost of running Wikipedia for one year, in the event that no other funding streams were available.
How Does Wikipedia Make Money? Final Thoughts
Wikipedia has a global reputation as a knowledge resource. Because of its commitment to presenting information free from bias, it is one of the most referenced and commonly used information sources on the internet.
Some journalists and other commentators have commented that because of the constant review of thousands of contributors and editors, many of the pages provide some of the best summaries on topics that are available.
Nevertheless, there is also criticism of Wikipedia. This can be seen particularly when it comes to more controversial topics, which are often handled differently in different languages.
Wikipedia’s business model is a donation-based revenue model, reflecting the commitment to continuing to operate thanks to donations.
The alternative is a commercial operating model used by many other websites, including media and news sites which tend to rely on advertising revenue or a subscription model.
Wikipedia could probably generate more money if it chose a subscription system, where users paid for access or featured advertising on the website.
The community that has been established around Wikipedia, as well as its leaders, has always prioritized the importance of the site remaining free to access.
It’s important that the site remains free from restrictions and the potential for accusations of commercial bias.
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