Crowdsourcing

I understand crowdsourcing as kind of an industrial age, corporatist framing of a cultural phenomenon. There’s human energy being expended here. A company can look at that as either a threat — to their copyrights and intellectual property or as some unwanted form of competition — or, if they see it positively, then they see it as almost this new affinity group population to be exploited as a resource.

- Douglas Rushkoff [1]

Introduction

Crowdsourcing is a concept from an article in Wired magazine on the emergence of Distributed Labor Networks.

It refers to the usage of distributed, voluntary collaboration from a wide community of users/participants, used in the context of commercial value generation and innovation. It can be associated with Revenue Sharing strategies.

Please note that when there is a direct connection between production and payment, crowdsourcing then differs from non-reciprocal Peer Production

A related term used in the media field, and not necessarily connnected to commercialization, is User-Generated Content

Also the title of a book on the subject, by Jeff Howe. [2]

Definition

1.

"Crowdsourcing is the act of taking a job traditionally performed by a designated agent (usually an employee) and outsourcing it to an undefined, generally large group of people in the form of an open call." (http://crowdsourcing.typepad.com/cs/advertising/index.html)

2.

"crowdsourcing involves paying (often very small amounts of money) for the content produced by crowds of people. This model does not likely lead to exceptional content by passionate people, but rather acceptable content by people motivated largely by money. This type of content, I believe, does not support the readership ratios seen in Wikipedia and digg, and you can verify this by visiting some sites that are known to crowdsource.

I put it out to you, that instead of budgetting for crowdsourcing, your money would be better spent catering to your 1% of passionate users." (http://blog.productwiki.com/2007/02/wisdom-of-crowds-nay.html)

3.

"the basic idea is to tap into the collective intelligence of the public at large to complete business-related tasks that a company would normally either perform itself or outsource to a third-party provider. Yet free labor is only a narrow part of crowdsourcing's appeal. More importantly, it enables managers to expand the size of their talent pool while also gaining deeper insight into what customers really want." (http://www.bnet.com/2403-13068_23-52961.html)

=Typologies

The fourfold typology of Emma Johnson

Emma Johnson:

"In his book, Howe lays out four types of crowdsourcing: collective intelligence, crowdcreation, voting and crowdfunding.

Collective Intelligence

The first type assumes that the masses are smarter than individuals. Spiceworks, an Austin, Texas-based software firm, built a free application that helps IT managers of small businesses manage all their software and hardware. Integral to the product is a feature that invites users to comment on its various components and vote on others' suggestions. The two-and-a-half year-old Spiceworks now has 500,000 users and the software is now in its 10th version--with revenue generated by advertising.

Make sure you listen to the feedback you receive. Spiceworks CEO Scott Abel said when they started out, it was tough to take seriously comments that contradicted years of experience and heaps of market research. "They're telling us the way things are in the real working world, and we were reverting to our old market research ways," he says. "Today customers expect to be listened to--and if they're not, they're going elsewhere."

Crowdcreation

The second type, crowdcreation, has been successfully used by companies including Threadless and 99 Designs, a site on which those in need of logo, business card or website design can post an assignment and fee, and designers submit designs for consideration. The contest sponsor then chooses one design and awards the fee. Mackenzie of Gradigio used 99 Designs and other crowdcreation sites.

"The big advantage was that we got a broad range of designs right up front," Mackenzie says. "Traditionally, you work with one designer, and you never know what you're going to get."

Make sure that you pay appropriately. Many of those who participate in this form of crowdsourcing are professional scientists, designers and other professionals. Free publicity and an ego boost are not adequate enough compensation to attract top minds.

Be prepared for an avalanche of information by creating an in-house mechanism to filter and sort information.

Voting

The third type, voting, collects public sentiment by asking individuals to give feedback on an existing idea or product--in the case of Spiceworks, software users vote on peers' improvement ideas, while TripAdvisor aggregates travelers' votes on hotels and cruises.

Use it as free market research. Take advantage of the comments and ratings by making suggested changes to your business.

Respond. In the case of review sites, log in to the sites as a representative of your business and send private messages to those making mistakes. Be careful about posting public replies, as that can have a shouting down effect that makes others afraid to comment if they fear they might receive a snarky reply from the business.

Encourage customers to post comments and reviews through messages on marketing material.

Crowdfunding

The fourth type, crowdfunding, refers to the public's willingness to finance projects they believe in: lending money to a microfinancing project, funding an independent film, sponsoring a piece of journalism, or the takeover of a soccer team, in the case of MyFootballClub's collective purchase of England's Ebbsfleet United Football Club for 700,000 in 2007.

Be transparent. People want to know where their money is going.

Show something for it. Whether it's a profit from an investment, or a meaningful story about how donations helped someone in need, show users results." (http://www.msnbc.msn.com/id/29549600/)

Ross Dawson's six-fold typology

"Here are the six types of crowdsourcing mentioned in the article:

1. Distributed innovation platforms: "They find more than half the people that solve the challenges on Innocentive and these other distributed innovation platforms already know the answer. So why should they solve that problem again when they can find someone else who already knows the answer?"

2. Idea platforms: "These sometimes go under the guise of idea management software, but these are ones where people inside organisations – often – submit ideas or proposals for cost savings, or new products, or new services, or process efficiencies, and then they collectively assess and rate and vote on and select and evolve and refine and build on those ideas to become the innovation that will drive that organisation forward."

3. Innovation prizes: "Anybody anywhere can enter their own projects and ideas, others can vote on them and build on them and use the wisdom of the crowd to make them more effective, and from all of those submissions somebody wins a quarter of a million dollar prize."

4. Content markets: Threadless and Red Bubble are mentioned.

5. Prediction markets: "For enterprise software companies it is notoriously difficult to forecast sales. For many reasons, the sales pipeline that is put into CRM systems is often inaccurate. However, if you then ask the salespeople to predict what the sales are going to be for that quarter and you aggregate all of their opinions, you can get a far more accurate view of what the actual sales are going to be."

6. Competition platforms: DesignCrowd, CrowdSpring and Guerra Creativa are mentioned." (http://rossdawsonblog.com/weblog/archives/2010/07/six_platforms_t.html)

Patrick Meier's Allsourcing

Patrick Philippe Meier:

"the term “crowd” can mean a large group of people (unbounded crowdsourcing) or perhaps a specific group (bounded crowdsourcing). Unbounded crowdsourcing implies that the identity of individuals reporting the information is unknown whereas bounded crowdsourcing would describe a known group of individuals supplying information.

The term “allsourcing” represents a combination of bounded and unbounded crowdsourcing coupled with new “sourcing” technologies. An allsourcing approach would combined information supplied by known/official sources and unknown/unofficial sources using the Web, e-mail, SMS, Twitter, Flickr, YouTube etc. I think the future of crowdsourcing is allsourcing because allsourcing combines the strengths of both bounded and unbounded approaches while reducing the constraints inherent to each individual approach.

Let me explain. One main important advantage of unbounded crowdsourcing is the ability to collect information from unofficial sources. I consider this an advantage over bounded crowdsourcing since more information can be collected this way. The challenge of course is how to verify the validity of said information. Verifying information is by no means a new process, but unbounded crowdsourcing has the potential to generate a lot more information than bounded crowdsourcing since the former does not censor unofficial content. This presents a challenge.

At the same time, bounded crowdsourcing has the advantage of yielding reliable information since the reports are produced by known/official sources. However, bounded crowdsourcing is constrained to a relatively small number of individuals doing the reporting. Obviously, these individuals cannot be everywhere at the same time. But if we combined bounded and unbounded crowdsourcing, we would see an increase in (1) overall reporting, and (2) in the ability to validate reports from unknown sources.

The increased ability to validate information is due to the fact that official and unofficial sources can be triangulated when using an allsourcing approach. Given that official sources are considered trusted sources, any reports from unofficial sources that match official reports can be considered more reliable along with their associated sources. And so the combined allsourcing approach in effect enables the identification of new reliable sources even if the identify of these sources remains unknown.

Ushahidi is good example of an allsourcing platform." (http://irevolution.wordpress.com/2009/12/17/end-of-crowdsourcing-2/)

Discussion 1

How Crowdsourcing differs from Peer Production

Peer production is defined by:

- voluntary engagement

- a participatory process

- universal access property regimes

- there is no direct link between input and output (non-reciprocal character of peer production)

Most corporate-driven crowdsourcing will only apply the very first principle, i.e. voluntary engagement; they will aim to drive the production process; and the results will be proprietary. Finally, they will introduce payment or Revenue Sharing schemes. In terms of the hierarchy of engagement, crowdsourcing is more akin to swarming than to the collective intelligence of an intentional community.

How Crowdsourcing differs from Community

Cam Balzer, the Threadless VP of Marketing:

"Crowdsourcing is antithetical to what we're doing. That's because crowdsourcing involves random sets of people who suddenly have a say in how the business works, but that's not how Threadless operates. We've got a close-knit group of loyal customers and have worked hard to build that. The people who submit ideas to us, vote and buy our products aren't random people, and they aren't producing random work. We work closely with our consumers and give them a place on our site, the Threadless forum, where they can exchange ideas with one another--ideas that go beyond designing T-shirts. We have consumers who have voted on 150,000 designs, which means they've spent hours interacting on our site. People who do that aren't jumping into a random crowd. They're part of the community we've cultivated." (http://shareable.net/blog/two-reasons-why-the-term-crowdsourcing-bugs-me)

How Crowdsourcing differs from Open Source

Chris Grams:

"1. Typical projects run the open source way have many contributors and many beneficiaries.

2. Typical projects run the crowdsourcing way have many contributors and few beneficiaries"

More detail and graph at http://opensource.com/business/10/4/why-open-source-way-trumps-crowdsourcing-way

A Critique of the Crowdsourcing meme

Hugh McGuire how it differs from community production:

"Apart from the unfortunate outsourcing connotation, crowdsouring completely misses this point (which is something I have thought a lot about at LibriVox):

that what goes *in* is more important than what comes *out*.

crowdsourcing sounds like it is about extracting resources from a crowd (like a strip mine, exploiting resources)… when in fact the real power (and beauty) is in creating a community that wants to contribute *into* something.

I think you will find common elements that crowdsourcing doesn’t catch:

1. people want to contribute to the public sphere (with idealist motivations)
2. participating in the project becomes a highly social, almost family-like activity

in short, the opposite of crowd, and the opposite of sourcing" (http://www.billionswithzeroknowledge.com/2006/10/30/crowdsourcing-community-production-hugh-mcguire-libribox-interview/)

• Evan Prodromou's talk on WikiCommercialization ~~ MarkDilley

Citation from Jeff Howe

Jeff Howe: "Just as distributed computing projects like UC Berkeley’s SETI@home have tapped the unused processing power of millions of individual computers, so distributed labor networks are using the Internet to exploit the spare processing power of millions of human brains.

For the last decade or so, companies have been looking overseas, to India or China, for cheap labor. But now it doesn’t matter where the laborers are – they might be down the block, they might be in Indonesia – as long as they are connected to the network.

Technological advances in everything from product design software to digital video cameras are breaking down the cost barriers that once separated amateurs from professionals. Hobbyists, part-timers, and dabblers suddenly have a market for their efforts, as smart companies in industries as disparate as pharmaceuticals and television discover ways to tap the latent talent of the crowd. The labor isn’t always free, but it costs a lot less than paying traditional employees. It’s not outsourcing; it’s crowdsourcing."

Read the article at http://www.wired.com/wired/archive/14.06/crowds.html

How Citizen Science Differs from Crowdsourcing

"the distinction made between crowdsourcing and citizen science, by Yale-based astrophysicist and Galaxy Zoo founder Kevin Schawinski:

“We prefer to call this [Galaxy Zoo] citizen science because it’s a better description of what you’re doing; you’re a regular citizen but you’re doing science. Crowd sourcing sounds a bit like, well, you’re just a member of the crowd and you’re not; you’re our collaborator. You’re pro-actively involved in the process of science by participating.”

On comparisons between Galaxy Zoo and seti@home, stardust@home, etc., etc., etc.:

“Galaxy Zoo volunteers do real work. They’re not just passively running something on their computer and hoping that they’ll be the first person to find aliens. They have a stake in science that comes out of it, which means that they are now interested in what we do with it, and what we find.” (http://www.wikinomics.com/blog/index.php/2009/02/09/crowdsourcing-versus-citizen-science/)

Discussion 2

How to pay for crowdsourcing

Andy Oram asks:

How can you set up crowdsourcing where most people work for free but some are paid, and present it to participants in a way that makes it seem fair?

"This situation arises all the time, with paid participants such as application developers and community managers, but there's a lot of scary literature about "crowding out" and other dangers. One basic challenge is choosing what work to reward monetarily. I can think of several dividing lines, each with potential problems:

• Pay for professional skills and ask for amateur contributions on a volunteer basis.

The problem with that approach is that so-called amateurs are invading the turf of professionals all the time, and their deft ability to do so has been proven over and over at crowdsourcing sites such as InnoCentive for inventors and SpringLeap or 99 Designs for designers. Still, most people can understand the need to pay credentialed professionals such as lawyers and accountants.

• Pay for extraordinary skill and accept more modest contributions on a volunteer basis.

This principle usually reduces to the previous one, because there's no bright line dividing the extraordinary from the ordinary. Companies adopting this strategy could be embarrassed when a volunteer turns in work whose quality matches the professional hires, and MySQL AB in particular was known for hiring such volunteers. But if it turns out that a large number of volunteers have professional skills, the whole principle comes into doubt.

• Pay for tasks that aren't fun.

The problem is that it's amazing what some people consider fun. On the other hand, at any particular moment when you need some input, you might be unable to find people who find it fun enough to do it for you. This principle still holds some water; for instance, I heard Linus Torvalds say that proprietary software was a reasonable solution for programming tasks that nobody would want to do for personal satisfaction.

• Pay for critical tasks that need attention on an ongoing basis.

This can justify paying people to monitor sites for spam and obscenity, keep computer servers from going down, etc. The problem with this is that no human being can be on call constantly. If you're going to divide a task among multiple people, you'll find that a healthy community tends to be more vigilant and responsive than designated individuals." (http://radar.oreilly.com/2010/05/crowdsourcing-and-the-challeng.html)

Examples

Crowdsourcing examples at http://crowdsourcingexamples.pbwiki.com/

The three first examples below are from the Business Week article at http://www.businessweek.com/innovate/content/jan2007/id20070118_768179.htm

Swarm of Angels

URL = http://www.Aswarmofangels.com

"This British open source film project takes on Hollywood's traditional business model, aiming to create cult cinema for the digital age. Subscribers—the "angel" investors that "swarm" to create the site's name—pay roughly $50 (£25) each to join. The site aims to draw 50,000 angels to create a film with a $1.8 million budget. Eventually, the community will vote to decide which film will be made." (http://www.businessweek.com/innovate/content/jan2007/id20070118_768179.htm)

CafePress

http://www.CafePress.com

"This Foster City (Calif.)-based online retailer lets members create, buy, and sell merchandise. Entrepreneurs Fred Durham and Maheesh Jain founded the site in 1999 to let members—the site reports 2.5 million—transform their artwork and ideas into new products and sell them through an online storefront with no up-front costs or inventory to manage. Members can also personalize their own gifts by adding touches to one of 80 available products. CafePress.com sets a base price on products and takes care of printing, packaging, processing payments, and customer service; sellers decide how much to charge for their products." (http://www.businessweek.com/innovate/content/jan2007/id20070118_768179.htm)

Crowdsourcing Platforms

CrowdSpirit

http://www.Crowdspirit.org

"This French startup plans to use crowds to develop and bring to market tangible, inexpensive, electronic devices such as CD players, joysticks for video games, and Web cams. The community will handle all aspects of the product cycle—its design, features, technical specifications, even post-purchase customer support." (http://www.businessweek.com/innovate/content/jan2007/id20070118_768179.htm)

Freelancer

http://www.Freelancer.com

Freelancer was founded in Sweden as getafreelancer.com in 2004. I first wrote about it in 2005 in an overview of the space. For many years it was the dominant online services exchange in Europe, and one of the top three globally. In May 2009 it was bought by Australian company Ignition Networks, which also acquired the domain Freelancer.com. The company is run by veteran tech entrepreneur Matt Barrie, who most recently founded and ran specialty processor firm Sensory Networks Inc.

99designs

http://99designs.com/

99designs has clients set a design brief and budget, and then provide feedback to designers during the design phase, ultimately selecting a winner who is awarded the full budget. It has been very successful though its model has many detractors in the design community. I wrote a post titled 9 practical steps to getting great outsourced design on 99designs reflecting on my experiences using the site.

DesignCrowd

http://www.designcrowd.com/

DesignCrowd began life as DesignBay, using a similar prize-driven model to 99designs. Late last year it acquired the US company DesignCrowd and adopted its name. DesignCrowd is using more nuanced approaches to awarding prizes, including giving second place prizes and participation payments.

Others

Commentary of last three from http://rossdawsonblog.com/weblog/archives/2010/02/australia_is_be.html

See also: Cambrian House; and Kluster

More examples

The article mentions Innocentive as an example of the process.

"YourEncore, for example, allows companies to find and hire retired scientists for one-off assignments. NineSigma is an online marketplace for innovations, matching seeker companies with solvers in a marketplace similar to InnoCentive."

Rent A Coder [3]

From http://www.bnet.com/2403-13068_23-52961.html:

Netflix, the online video rental service, uses crowdsourcing techniques to improve the software algorithms used to offer customer video recommendations. The team or individual that achieves key software goals will receive $1 million.

Eli Lily and DuPont have tapped online networks of researchers and technical experts, awarding cash prizes to people who can solve vexing R&D problems.

Cambrian House lets the public submit ideas for software products, vote on them, and collect royalties if a participant's ideas are incorporated into products.

iStockphoto.com allows amateur and professional photographers, illustrators, and videographers to upload their work and earn royalties when their images are bought and downloaded. The company was acquired for $50 million by Getty Images.

Threadless.com lets online members submit T-shirt designs and vote on which ones should be produced.

Specialized Crowdsourcing Examples wiki: "Anjali Ramachandran, a strategist at London-based digital agency Made by Many, posted a wiki with 135 companies currently engaging in some form of crowdsourcing. It's a great start, and Anjali is asking us all to help expand it. Such efforts are crucial to the maturation and understanding of crowdsourcing." [4]

Case Studies

Examples from an article at http://www.bnet.com/2403-13068_23-52962.html

Proctor & Gamble

"During a 2002 Proctor & Gamble brainstorming session, a company manager had a flash of inspiration: Why not print text or images on Pringles potato chips? Great idea, but there was a catch: no one at P&G knew how to do it. To find the expertise it needed, P&G tapped into RTC North, a network of European scientists, and found a small bakery in Bologna, Italy, run by a professor who had invented a technology that uses ink-jet techniques to print pictures on pastries. By licensing the technology, P&G was able to launch the new Pringles Prints chips in less than a year—and at a fraction of the cost of doing it in-house. Indeed, after decades of rarely looking outside its own walls for ways to improve brands like Pringles and Crest, P&G now taps the brainpower of scientists around the world by using crowdsource research networks like Innocentive.com and YourEncore.com. The result: 40 percent of the company's new innovations now come from outside P&G, up from 10 percent in 2000."

O'Reilly Media

How do you know if your products receive adequate placement on store shelves? Executives at O'Reilly Media, a privately held company best known for publishing technical manuals, heard anecdotal stories that its books were difficult to find in big chain bookstores. Sending teams of market researchers from store to store would have been prohibitively expensive, so the company instead turned to an online user group devoted to its books. O'Reilly sent email to members of the group, soliciting volunteers to visit local booksellers and submit monthly reports of what titles were on the shelves. Some 500 people volunteered, and 75 of those happened to live near bookstores that were of particular interest to O'Reilly execs. For three months, the volunteers submitted spreadsheets to the company, along with anecdotal impressions of their experiences inside the stores. In return, O'Reilly gave the volunteers free books. "It answered our question: Are bookstore chains doing a decent job getting our books on the shelves?" says Sara Winge, O'Reilly spokeswoman. "Turns out, the stores were doing a pretty good job, but that was a very hard question to answer without having volunteers who were willing to actually go see for themselves."

Failures

Graham Hill:

"The first of these is Dell with its Ideastorm programme. Anyone can come up with a computer-related idea, post it on the Ideastorm website, vote for the best ideas, comment about them and hopefully, see them implemented. Sounds great. Why not harness ideas from customers? And why not get customers to vote for them to cut programme staff costs. Unfortunately, crowdsourcing has a number of serious problems. The first problem is that customers, even large numbers of them, typically produce average, unremarkable, incremental innovations, rather than the step-change innovations that companies hope for. Although 12,483 ideas have been posted on the website since Ideastorm started in February 2007, only 366 have been implemented to-date, a miserly 2.9% of the total. And most of the implemented ideas provide only incremental improvements to Dell's business. To its credit, Dell says that Ideastorm is intended as an extension of its relationship with its customers, rather than just as a source of product ideas. Just as well, as Ideastorm is a failure as a source of winning new innovations.

The second example is Starbucks with its My Starbucks Idea. Similar to Ideastorm, My Starbucks Idea allows any registered customer to post an idea, vote for the best ideas, comment on them and see them implemented. Or not as the case may be. My Starbucks Idea, despite receiving over 75,653 ideas, has only implemented 315 ideas to-date, an even more miserly 0.4% of the total. You wouldn't think that having ideas to improve a coffee-house chain would be all that difficult to implement. But the low rate of implementation illustrates the second problem with crowdsourcing; that customers have no idea of how the business works, what business capabilities it has and thus, no idea whether even the simplest of ideas can realistically be implemented, (let alone whether they will turn a profit)." (http://www.customerthink.com/article/how_understanding_customer_jobs_turns_crowdsourcing_into_smartsourcing/)

Key Books to Read

• Crowdsourcing: How the power of the crowd is driving the future of business. Jeff Howe. Random House, 2008.

Review:

"Crowdsourcing poses a profound challenge to the conventional notions of the structure of the firm as a fundamental economic unit. It suggests that the traditional demarcations between suppliers, contractors, employees, distributors and customers are breaking down.

The ideas in this book are not all new. But it does bring the concept alive with rich and detailed case histories. It is the product of a well-connected and talented journalist. It is carefully researched and crisply written, and the phenomenon it describes is here to stay." (http://www.managementtoday.co.uk/search/article/842430/books-collectivism-capitalism/)

More Information

Related concepts:

1. Co-Creation
2. Co-Design

Also:

1. Guide to the Crowdsourced workforce: mentions different projects, especially in the field of design]
2. See our entry on the FLIRT Model of Crowdsourcing
3. The trend will be monitored here, at http://www.crowdsourcing.com/ and here at http://crowdsourcing.typepad.com/cs/
4. Microstock Photography is often mentioned as an example of the process.
5. Crowdsourced Advertising

Blogs

1. Crowdsource This
2. Crowdsourcing Directory

Podcasts/Webcasts

1. Podcast interview with Jeff Howe on Crowdsourcing
2. Video trailer of his book
3. Webcast presentation of Don Tapscott on Crowdsourcing