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CROWDSOURCING


Crowdsourcing is a business model that involves the process of collaboratively completing concepts, work, or funding, with the assistance of a crowd of people, typically online. The word is a amalgation of the words 'crowd' and 'outsourcing' and suggests that by relying on the wisdom of a swarm of individuals, a project can reach the critical mass necessary to complete it.[1] Crowdsourcing usually includes people working for a common goals. Although the term was not coined by him, Jeff Howe, a contributing editor at Wired magazine in 2006 was the first to lend it this meaning. [2] However, before Howe developed this idea, the etymologists of the Phrasedick Brigade used the word crowdsourcing for three decades referring to a form of the financial systematic risk. What is meant by this is that 'systematic risk' is one type of crowdsourcing. Furthermore, the term crowdsourcing came a lot later than the actual process. In other words, Crowdsourcing was used long before the term was invented. [3]


Crowdsourcing.jpg

History of Crowsourcing

During the period when James Surowiecki wrote his book "The Wisdom of Crowds," innovating dot coms started making a name for themselves with the process not yet termed crowdsourcing. The crowdsourced T-shirt online retailer Threadless launched. Wikipedia crowdsourced knowledge, and YouTube crowdsourced video entertainment. Freelancer.com was born. Amazon’s Mechanical Turk microtask platform launched and put into place a system that would continue to grow, evolve and revolutionize the way work gets done, from categorizing to outsourcing content marketing.[4]

The Rise of Crowdsourcing

In 2006 Wired’s editor Jeff Howe coined the term crowdsourcing with his “Rise of Crowdsourcing” article.[5] In his article, Howe describes four trending crowdsourcing platforms existing at that time: iStockphoto, iFilm, InnoCentive and Mechanical Turk. iStockphoto and InnoCentive are labor markets for specialized talents. iStockphoto supplied firms with desired preexisting photographs for $1 each, while InnoCentive helped Research&Design departments iFilm was a popular repository of video clips purchased by Viacom in order to license huge amount of videos fast and for much cheaper. The last mentioned platform was web-based marketplace Mechanical Turk created by Amazon. It helped companies find people to perform tasks computers are generally lousy at - identifying items in a photograph, skimming real estate documents to find identifying information, writing short product descriptions, transcribing podcasts.[6]

Combined with the rapid growth of e-commerce, the age of the consumer, mobile technologies and social media in the last seven years, crowdsourcing has revolutionized just about any industry smart enough to utilize it. The world’s best global brands have increasingly used crowdsourcing to get things done, and as this interactive timeline shows, the year-over-year growth speaks for itself.[7]

Types of Crowsourcing

Crowdsource Design

If you’re looking for a logo design, you can tell a crowd of designers what you want, how much you will pay, and your deadline. All interested designers will create a finished design specifically for you. You’ll receive 50-300+ different finished logo designs, and you can keep whichever design you like the best. By doing design this way, crowdsourcing actually increases the quality & decreases the price, compared to online freelancing.

Crowdsourcing can also be used to get designs for furniture, fashion, advertisements, video, & product design. Just about anything that can be designed can be crowdsourced.

Crowdfunding

Crowdfunding involves asking a crowd of people to donate money to your project. For example, if you want to raise $10,000 to pay for studio time to record a new CD, crowdfunding can help you raise that money.. You find a crowdfunding platform, set the goal amount, deadline, and any rewards offered to donors. You must raise 100% of your goal before the deadline, or all the donations are returned to the donors. Deadlines are typically less than 60 days.

Crowdfunding is mostly used by artists, charities, & start-ups to raise money for projects such as filming a documentary, manufacturing an iPod watch, cancer research, or seed money. Read more about crowdfunding or browse crowdfunding sites.

Gofundme

One popular form of crowdfunding is done through a website named Gofundme. According to the website,"GoFundMe makes it incredibly easy to raise money online for the things that matter to you most. In less than a minute, you'll be able to personalize your fundraising campaign and share it with the people in your life. In fact, over $1 Billion has been raised by GoFundMe users just like you." [8] It is free to set up but they charge a 3% service fee.

Kickstarter

Another popular form of crowdfunding is Kickstarter. Kickstarter is an online platform that aims to bring visions and concepts to life through voluntary donations. Launched in 2009, Kickstarter has helped artists, filmmakers, musicians and inventors alike. Similar to Gofundme, Kickstarter generates revenue by applying a 5% fee to the total amount of funds raised. To this date, over $2.3 billion has been granted to over 103,000 projects.[9] Some examples of widely successful Kickstarter projects are the Pebble Watch, Ouya gaming station, and Twine.

Microtasks

Microtasking involves breaking work up into tiny tasks and sending the work to a crowd of people. If you have 1,000 photos on your website that need captions, you can ask 1,000 individual people to each add a caption to one photo. Break up the work and decide the payment for each completed task (typically .01¢ – .10¢ per task).[10] Some individual microtasks can take just a few seconds and pay a few cents per task. More complex writing or transcription tasks might pay $10 or $20 per job, while some highly skilled work, such as writing programming code, commands higher rates.[11] With microtasking, you can expect to see results within minutes. Microtasking can involve tasks such as scanning images, proofreading, database correction and transcribing audio files.

Work is done faster, cheaper, and usually with less errors (when validation systems are in place). Additionally, microtasks can often be performed by people in less fortunate countries, including those with SMS capabilities but without computers. Read more about microtasks or browse microtasks sites.

Open Innovation

If you are unsure of where to begin with an idea for a business opportunity, whether it’s product design or perhaps a marketing firm, crowdsourcing can help through open innovation. Open innovation allows people from all aspects of business such as investors, designers, inventors, and marketers to collaborate into a functional profit making reality. This can be done either through a dedicated web platform to gain outside perspective, or used with only internal employees.[12]

Crowds are becoming the partner of choice to answer the most vexing innovation and research questions. Apple has turned to large numbers of users and developers distributed around the world to propel its growth by creating apps and podcasts that enhance its products. Biologists at the University of Washington used crowds of external contributors to map the structure of an AIDS-related virus that had stumped academic and industry experts for more than 15 years.[13]

Open innovation brings together people from different parts of the world and different sectors of business to work together on a project. This is effectively a collection of different fields and levels of expertise that would not otherwise be available to any budding entrepreneur. It also elevates previously considered uninvolved parties, such as investors, to roll up their sleeves and impart their knowledge, essentially becoming more than just a cash cow.[14]

Worksource

Worksource is a crowd of people that completes repetitive tasks or piecework projects. Amazon's Mechanical Turk is a worksource initiative for tasks (such as sorting or classification) that are best served by human oversight.[15]

A recent survey of 1,046 active U.S. based Mechanical Turk workers found that about 25% of respondents said that their crowdsourcing work comprised more than 10% of their annual income, according to research conducted by CrowdControl, which manages crowdsourcing projects. More than half of these workers are women, and most are between age 26 and 35, the survey found.

However, professor at Harvard Law School, Jonathan Zittrain, is concerned that crowdsourced labor risks creating so-called "digital sweatshops," where workers who may be underage work long hours on mind-numbing tasks for very little money—or, if the work is structured as a game, for no money at all. Crowdsourcing sites often pitch their work to stay-at-home moms or students who can pick up a few tasks to do during short breaks.

Projects outsourced to the crowd can be used to help support workers with few other options. Crowdsourcing firm Samasource, a San Francisco nonprofit, specializes in assigning microtasks, such as verifying business addresses, to workers in the developing world. Samasource says it promises to pay workers a living wage.[16]

Pros & Cons

The Strong Points

Crowdsourcing’s biggest benefit is the ability to receive better quality results, since several people offer their best ideas, skills, & support. Crowdsourcing allows one to select the best result from a sea of ‘best entries,’ as opposed to receiving the best entry from a single provider. When crowdsourcing is used, there is a lot more efficiency. Results can be delivered much quicker than traditional methods, since crowdsourcing is a form of freelancing. One can get a finished video within a month, a finished design or idea within a week, and microtasks appear within minutes.[17]

Crowdsourcing can improve productivity and creativity while minimizing labor and research expenses. Using the Internet to solicit feedback from an active and passionate community of customers can reduce the amount of time spent collecting data through formal focus groups or trend research, while also seeding enthusiasm for upcoming products. By involving a cadre of customers in key marketing, branding, and product-development processes, managers can reduce both staffing costs and the risks associated with uncertain marketplace demand.[18]

Crowdsourcing allows organizations to have a wider access to ideas, more interactivity with consumers, and allows people to work collaboratively. It gives contributors the chance to share ideas and work together to create original content. Unlike other business models, where a single professional is given a task that only they will work on, crowdsourcing allows for the ideas to come from multiple people with different beliefs, attitudes and backgrounds, which in turn brings about richer content. [19]

The Weak Points

Crowds are not employees, so executives can't expect to control them. Indeed, while they may not ask for cash or in-kind products, participants will seek compensation in the form of satisfaction, recognition, and freedom.[20] Crowds, research shows, are energized by intrinsic motivations—such as the desire to learn—that are more likely to come into play when people decide for themselves what problems to attack. The opportunity to burnish one’s reputation among a large community of peers is another strong motivator.[21] They will also demand time, attention, patience, good listening skills, transparency, and honesty. For traditional top-down organizations, this shift in management culture may prove difficult. Besides proving difficult for management, the fact that the crowd is not an employee means that they are possibly not the best talent that could be found. Perhaps this is because the best talent is getting paid for by companies. [22]

Moreover, clear instructions are essential in crowdsourcing. You could potentially be searching through thousands of possible ideas, which can be painstaking, or even complicated, if the instructions are not clearly understood. Some forms of crowdsourcing do involve spec work, which some people are against. Quality can be difficult to judge if proper expectations are not clearly stated.[23]

Crowdsourcing can also be problematic in terms of confidentiality. To take advantage of the process means to put a company's name out for everyone to see, which could include the competition. The competitors will then see what the company is up to and what their plans are. This problem is hard to fix because if a company's solution is to offer less information, then the crowd will not have enough to go on to provide meaningful and productive ideas. [24]

References

  1. http://dailycrowdsource.com/training/crowdsourcing/what-is-crowdsourcing
  2. http://www.cbsnews.com/news/what-is-crowdsourcing/
  3. http://www.nytimes.com/2009/02/08/magazine/08wwln-safire-t.html?_r=4&ref=magazine&
  4. http://www.crowdsource.com/blog/2013/08/the-long-history-of-crowdsourcing-and-why-youre-just-now-hearing-about-it/
  5. http://www.crowdsource.com/blog/2013/08/the-long-history-of-crowdsourcing-and-why-youre-just-now-hearing-about-it/
  6. http://archive.wired.com/wired/archive/14.06/crowds.html?pg=4&topic=crowds&topic_set=
  7. http://www.crowdsource.com/blog/2013/08/the-long-history-of-crowdsourcing-and-why-youre-just-now-hearing-about-it/
  8. https://www.gofundme.com/questions/
  9. https://www.kickstarter.com/help/stats
  10. http://dailycrowdsource.com/training/crowdsourcing/what-is-crowdsourcing
  11. http://online.wsj.com/news/articles/SB10001424052970204409004577157493201863200
  12. http://dailycrowdsource.com/training/crowdsourcing/what-is-crowdsourcing
  13. http://hbr.org/2013/04/using-the-crowd-as-an-innovation-partner/
  14. http://dailycrowdsource.com/training/crowdsourcing/what-is-crowdsourcing
  15. http://www.cbsnews.com/news/what-is-crowdsourcing/
  16. http://online.wsj.com/news/articles/SB10001424052970204409004577157493201863200
  17. http://dailycrowdsource.com/training/crowdsourcing/what-is-crowdsourcing
  18. http://www.cbsnews.com/news/what-is-crowdsourcing/
  19. https://crowdsourcingweek.com/what-is-crowdsourcing/
  20. http://www.cbsnews.com/news/what-is-crowdsourcing/
  21. http://hbr.org/2013/04/using-the-crowd-as-an-innovation-partner/
  22. https://www.yudkin.com/crowdsourcing.htm
  23. http://dailycrowdsource.com/training/crowdsourcing/what-is-crowdsourcing
  24. https://www.yudkin.com/crowdsourcing.htm