Crowdsourcing

Crowdsourcing:

Why the Power of the Crowd Is Driving the Future of Business

On the road to $1M rating:

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Crowdsourcing, the fascinating first book of Wired writer Jeff Howe, analyzes the transition currently taking place online from content created by professionals to that created by the community -think, for instance, of the thousands of user-generated videos populating YouTube.

A very recent phenomenon, crowdsourcing is the result of the expansion of Internet, together with the ongoing democratization of the means of content creation: the wide availability and falling prices of digital cameras and blogging or editing software means that an amateur photographer, journalist, or film director can produce content sometimes rivaling professional quality. Moreover, through the Web they can reach an audience of a size previously only dreamt of by the most successful and prestigious authors.

Through sketches of real-life conversations, success stories of Internet companies, and a wealth of data, Howe takes us on an enthralling trip through the origins, the present, and the future of crowdsourcing, raising many thought-provoking issues on the way: will the rise of the amateurs make professionals redundant?; will amateurs be able to maintain the same standards of quality?; does the crowd need a benevolent dictator to organize it?

Crowdsourcing and businesses

Howe is optimistic about amateurs’ ability to coexist with professionals in the long-run and to deliver high-quality products. He reviews several business models that prove that it’s possible to employ what the crowd has to offer -from content-creation to expertise in obscure fields- to create a union that is valuable for all parties involved:

  • Sites like YouTube, Digg or Flickr rely on users not only to provide all the content, but also to organize it -whether by adding tags or voting on its quality or relevance.

  • The website InnoCentive posts projects from Fortune 500 companies such as P&G to a network of 140,000 amateur scientists. This diverse scientific community has sometimes been able to solve problems that had got the companies’ R&D departments stumped for months. Those who come up with a valid answer to a problem are rewarded with prizes ranging from $10,000 to $1,000,000.

  • Established companies with a business model unrelated to the crowdsourcing concept -such as Dell, Heinz, or Amazon– are finding ways to both capitalize on and engage the crowd, from organizing contests to create their TV advertisements to relying on users to rate the products they offer.

  • While the book doesn’t cover this type of businesses, I’d have been interested in an analysis of sites like Zopa, were members of the community lend money to each other, therefore sidestepping the banks as providers of borrowing and investement products.

When the crowd is not so wise

Howe’s optimism is partly justified by the mere existence of the businesses mentioned above, which show that crowdsourcing can be a mutually beneficial exercise for them and the community as a whole. The book, however, doesn’t dwell on the potential problems of delegating decision power to the crowd, two of which I think are particularly important:

  • 10 minutes browsing the videos posted in YouTube are enough to realize that much of the content created by the crowd is of very poor quality. Howe argues that the community itself is best suited to sort through the masses of mediocre videos and come up with the best, but I’m not so convinced. While YouTube has delivered a couple of pop music hits, very often the most popular videos involve naked celebrities or clips of animals doing funny things -amusing but hardly of any artistic value. The same can be said of some of the articles that make it to the front pages of Digg or Reddit.com.

    There is a danger, articulated by Andrew Keen in The Cult of the Amateur -tellingly subtitled “How blogs, MySpace, YouTube, and the rest of today’s user-generated media are destroying our economy, our culture, and our values”-, that we’ll enter an “age of mass mediocrity where the mob replaces experts and we all become collectively dumber”.

  • A related, more dangerous problem occurs when the crowd is manifestly wrong. The housing bubble that started to burst in 2007 is a good example: Most people shared the utterly unreasonable expectation that housing prices would continue to grow forever. The role of the crowd was to reinforce such beliefs, leading to escalating home prices and the eventual collapse of the whole housing market.

Despite some misgivings about Howe’s blind face in the community, Crowdsourcing is the book I’ve enjoyed most this year. It made me think about where the Internet revolution is going, and the consequences it will have for the way we do businesses, in ways I’d never considered in the past. If you’re lucky to be looking for an entertaining holiday book, I definitely recommend it.

TALKBACK

  • Have you read this book?

  • The new collaborative creativity opens up many possibilities for businesses and individuals. Do you think these outweigh the problems? What could be done to avert or minimize the risks?

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