Crowdsourcing Report by Fung Global Retail Tech July 12 2016 · Crowdsourcing.org conducted a study of 1,755 crowdsourcing sites in 2012 and classified the surveyed websites into
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D E B O R A H W E I N S W I G M a n a g i n g D i r e c t o r ,
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• Theideaofaskingone’scircleoffriendsandacquaintancesfor advice is timeless. However, “crowdsourcing” todayreferstoenlistingalargegroupofpeople(typicallyovertheInternet)toprovide informationorcompleteatask,eitherforpayorforfree.
• Nearly 2,000 crowdsourcing platforms have emerged thatspecialize in helping users acquire information andinformation tools, innovative and creative ideas, funding,andhumanorspecializedlaborinamultitudeofareas.
• Crowdfundingplatforms represent the largest subcategoryof crowdsourcing sites. These generated $34.4 billion infunding last year globally, eclipsing the $6.5-billion USenterprisecrowdfundingmarketbyalargemargin.
• Crowdsourcing is also a major enabler of the freelanceeconomy, as specialists (as well as a large pool of labor)fromaroundtheworldcanbeengagedviatheseplatformswith just the click of amouse. The labor available can bescaled up so as to enable the completion of enormoustasks.
Crowdsourcing: Seeking the Wisdom of CrowdsEXECUTIVESUMMARY
Humanshavebeenasking friendsandacquaintances for informationsincethey first started speaking, and the concept of crowdsourcing—asking alarge group of people to answer a question or complete a project—datesbackmore than 300 years, to a timewhen the British government askedcitizenstosubmitideastohelpmakeseatravellessdangerous.Theriseofthe Internet has expanded the range of questions and tasks that can becrowdsourced and the efficiency with which they can be answered andcompleted. Ithasalsoenabledhugetasks tobecompleted,sometimesbythousands of participants. Thus, crowdsourcing has splintered intocrowdsearching,crowdsolving,crowdvoting,crowdworkandcrowdfunding,amongothercategories,and the latterhasbecomea$34billionuniverse.Regular crowdsourcing constitutes a much smaller market, worth about$6.5billionthisyear.
Thanks to the Internet,manyquestions—ordinary and tough—canquicklybe answered by a knowledgeable person or an expert in a crowd, andexperts often share their knowledgeon crowdsourcing platforms for free.Researchonvariousgroups’preferencesandopinionscanlikewiseoftenbeobtainedfreeorforlittlecost.
Source:Shutterstock
Crowdsourcingisalsoamajorenablerofthefreelanceeconomy.Thepowerof the Internetenablespeopleand companies to solicitdesigns, creativityand ideas from a global pool of Internet users. Also, specialists andfreelancerscanoffertheirservicesfromwherevertheylivetoanyoneelse,anywhere in theworld. One interesting aspect of crowdsourcing is that a
largenumberofagentscanbeengagedtotakeonhugetasksthatwouldbetoobigforonepersontoaccomplish ina lifetimeortoperformtasksthathumans still do better than machines. With crowdsourcing, the world’slaborisavailableone’sfingertips.
Still,crowdsourcingisnotapanacea.DataobtainedforfreeviatheInternetmustbevalidatedandsorted,andthequalityoffreeworkcanbeunevenorlow.Moreover, nothing is truly free—quite a bit of labor is necessary tomanage the thousands to billions of agents whomay be acting on one’sbehalf,providinganswersorservices.
ThenetworkingpowerrepresentedbytheInternethasspurredtremendousvariation within crowdsourcing, and new categories with names thatcombinetheword“crowd”withanotherword(forexample,“crowdvoting”)arepoppingupeveryyear.Atthesametime,theInternethasenabledthecompletionofenormoustasksviacrowdsourcingandofferednewtypesofemploymenttospecialistsandpart-timeworkersacrosstheglobe.
WHATEXACTLYISCROWDSOURCING?
The idea of soliciting advice or ideas from friends or a group of people isnothing new. Crowdsourcing simply refers to enlisting a large group ofpeople (typically over the Internet) to provide information or complete atask,whichcanbepaidorunpaid.ThepoweroftheInternethastakenthisideatoanotherlevel,asasingleInternetusercanreachmillions(orbillions)ofotherInternetuserssimultaneouslyandimmediately.
The power of the Internet has also enabled completely new businessmodels,suchasfreelancersmakingtheirservicesavailableonline,and,inaflat world, creative people and specialists can be hired from anywhereacross the globe. Moreover, with billions of people connected to theInternet,massivetasksthataredifficultforcomputerstoaccomplishcanbesubdivided into manageable pieces that can be completed by a largenumberofindividuals,suchascollectinginformationfromphotographs.
One can argue that shared-resource platforms such as Airbnb and Uberhave crowdsourcing-like characteristics, as the consumer uses theseplatformstoselectaserviceproviderfromacrowdofserviceproviders.
InChina,aspecificformofcrowdsourcingaperson’s identityhasemergedthat is called the “human flesh search engine,” or doxing in theWest. Incontrast to traditional Internet search engines, which use computinghardware to search for information, this kind of search engine relies onhumanstoperformthesearchingfunction.Forexample, ifaphotoontheInternet shows an unidentified government official misbehaving or anindividualabusinganimals,thenacallforahumanfleshsearchenginecan
bemade,andhumansearcherswill leveragetheirpersonalnetworksinanattempt to identify the individual (andprovidehisorherhomeaddress—oftenwithnegativeconsequencesforthatindividual).
HISTORYOFCROWDSOURCING
The concept of crowdsourcing goes back to the 18th century, when theBritishgovernmentaskedpeopleforsolutionstothedangersposedbyseatravel.AccordingtoCrowdsourcing.org,therequestledtothedevelopmentofthemarinechronometer,whichsailorsusetodeterminetheirpositionbythelocationofthestars.
The first Oxford English Dictionary was also crowdsourced, beginning in1857,with thousands of experts enlisted over decades to draft entries intheirrespectiveareasofexpertise.Theprojectprovedmuchmoremassivethanoriginallyplanned,and the first sectionwasnotpublisheduntil1884(thelastvolumeofthefirstcompleteeditionwasnotpublisheduntil1928).
The term “crowdsourcing” derives from a pitch by Wired magazinecontributingeditorJeffHowein2005abouthowbusinesseswereusingtheInternet to replace amateurs with professionals. “It’s like they’reoutsourcing to the crowd,” he wrote. In June 2006, Howe published hisarticleinWired;itwastitled“TheRiseofCrowdsourcing.”
MARKETSIZE
Giventhemultitudeoftypesofcrowdsourcingandthefactthatmanytasksarecompletedforfree,gettinganexacthandleonthesizeofthemarketisa challenge. The largest and most measurable market segment by far iscrowdfunding,whichresearchandadvisoryfirmMassolutionestimateswasworth$34.4billion in2015.Basedon IBISWorldestimates, themarket forUS crowdsourced service providers is growing at a 45.5% CAGR during2011–2016,puttingitabout$6.5billionthisyear.
TYPESOFCROWDSOURCING
The number of crowdsourcing applications is virtually unlimited.Crowdsourcing.orgconductedastudyof1,755crowdsourcingsitesin2012andclassifiedthesurveyedwebsitesintosixcategoriesthatwedescribeindetailbelow:distributedknowledge,crowdfunding,crowdcreativity,openinnovation,toolsandcloudlabor.
• Seeking opinions—using the crowd to elicit opinions andsuggestions. Crowdvoting, which is what viewers of the TV showAmericanIdoldo,isoneversionofthis.
• Collectingdata—soliciting Internetusers tocollectdata ina largenumber of locations or to perform “channel checks” for financialresearch.
• Crowdwisdom—when large corporations post scientific ortechnicalproblemsinordertoseeksolutionsfromthecrowd.
Crowdfunding
One key development in crowdfunding was the passage of the JOBS(Jumpstart Our Business Startups) Act,which enabled small businesses tosellsecuritiestononaccreditedinvestors.ThelawbecameeffectiveonMay16,2016.
Theglobal crowdfundingmarket,whichMassolutionestimatedwasworth$34.4billion in2015, isdominatedby lending (whichaccounted for$25.1billion, or 73%,of themarket in 2015). Lendingwasdistantly followedbydonation($2.9billion,8.3%),reward($2.7billion,7.8%),equity($2.6billion,7.4%) and other types of funding ($1.2 billion, 3.5%) last year. NorthAmericaaccountedforslightlymorethanhalf(50.1%)ofthecrowdfundingvolume,followedbyAsia(30.6%),Europe(18.8%)andotherregions(0.5%).
• Funding a product, project or startup—platforms such asKickstarter.com enable the funding of products, projects,prototypesandnonprofitorganizations.
CrowdCreativity
• Design competitions—soliciting creative designs from the crowdandpayingafeetothewinnerofthecompetition.
• Human intelligence tasks—assigning tasks that computers areunable tocomplete.Thesecanbesmall (microwork)or requireavery long time and/or a specific set of skills to complete(macrowork).
BENEFITSOFCROWDSOURCING
In addition to the potential cost savings that leveraging access to freeinformation allow, crowdsourcing can provide other benefits in terms ofresources,scaleandrealdata.
Resources
Crowdsourcing offers the power of the Internet to identify and screencreativetalentandpeople’stechnicalskills,suchas invisualmedia,designor labor. Service providers can build profiles—complete with serviceofferings, customer feedback and credentials—in order to advertise theirskillsand solicitwork.Here, thenetworkeffectenables service seekers toaccess a larger base of skills than they could find through therecommendationsoffriends,colleaguesorregularInternetsearches.
Scale
According to Internet Live Stats,more than3.4 billion peoplewill use theInternetthisyear.So,individualsandcompaniesthatwishtoformateam,promoteabrandorevent,orperformresearchatmanydisparatelocations
have tremendous networking power at their disposal. Startups and smallcompaniespreviouslylackedaccesstoresourcesofthisscale.
RealData
Whenapartyconductsalargenumberoftransactionsonasingleplatform,itisquicklyrevealedwhethertheyhavegoodintentionsorbadones,andifthe quality of the informationorwork they provide is satisfactory. eBay’sratingsystem,whichallowsuserstorankotherstheyhavetransactedwithon a scale of one to five, is designed to encourage accuracy and goodservice among users. The system helps generate a reputation for users,whichservesasaproxyforotherkindsofverification.
While crowdsourcing offers solicitors of information or services nearlyunlimited cheap (or free) resources, managing a crowdsourced projectpresentsuniquechallenges,including:
• Quality control—the project organizer has little control over themethodsusedandthequalityofresultsproduced;astheoldadagesays,“Yougetwhatyoupayfor.”
• Time and financial cost of management—the scale of acrowdsourcedprojectcanmeananenormousamountoftimeandeffortisrequiredtomanageit.
• Managing the marketplace—in a crowdsourcing endeavor,processesandadherencetorulesmustbeconstantlymonitoredtoprevent users from cross-dealingwith eachother and tomanageandaccommodatelargenumbersofparticipants.
• Workers are not bound to the task—crowdsourcing participantsare generally free to drop out of a project; some might deliverfalse,intentionallywrongornonsensicalresults.
• Lackofconfidentiality—sincecrowdsourcingprojectsareopentoa segment of the public, their processes, and sometimes theirresults,canoftenbeviewedbyanyone.
• Missing the best talent—many of the people best qualified toparticipate inagivenprojectare likely to seekpaidopportunitiesratherthanvolunteertheirknowledgeorskillsforfree.
• Hidden costs—there are additional time and financial costs, suchas the need to screen all submissions for validity and intellectualproperty usage, depending on where and how information wasobtained.
CROWDSOURCINGCOMPANIES
A large number of crowdsourcing companies and websites are currentlyoperating, as evidenced by Crowdsourcing.org’s study of 1,755crowdsourcingsites.Below,welistarangeofthese,organizedbycategory.
Humans have been asking their friends and acquaintances for advice andinformationsincespeechwasinvented.However,theadventoftheInternethasenabledpeopletosolicitother Internetusersacross theglobetohelpwithamultitudeoftasksandserviceofferings.Whilecrowdsourcinghasitschallenges and limitations, it has put the knowledge and abilities of theworld’s3.4billionInternetusersatone’sfingertips,oftenforfree.