Innovation & Design

Tapping the Wisdom of the Crowd


While not a new phenomenon, crowdsourcing is really growing as a business trend. Here are five successful collaborative communities

The term "crowdsourcing" has the ring of a passing fad. But long before Wired contributing editor Jeff Howe put a name to mass Web collaboration in pursuit of economic reward, entrepreneurs and big businesses alike were starting to explore methods to tap the wisdom of the crowds to produce goods and services. "Is it jargon?" says Howe. "The phenomenon itself predates my article—it's the application of open-source principles to fields outside software. There doesn't need to be a profit motive, but it is a mode of economic production."

And the trend is building. Six months ago, BusinessWeek's Inside Innovation brought readers the lowdown on crowdsourcing, highlighting several of the more interesting projects (see BusinessWeek.com, 9/25/06, "Crowdsourcing"). Since then, several new crowdsourcing experiments have emerged. Here are five recent efforts that you should know about:

A Swarm of Angels

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. Project founder Matt Hanson has written two separate movie screenplays that will be edited and refined based on feedback from the subscriber community.

Eventually, the community will vote to decide which film will be made. Community members will be paid to handle the production, and once finished, the film will be released free on the Internet under a Creative Commons license. Viewers will be invited to watch it, share it, and remix it. So far Hanson and his crew have 800 investors. Advisers include sci-fi writer Cory Doctorow and musicians The Kleptones. Stay tuned.

CrowdSpirit

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. As with software start-up Cambrian House, community members will submit and vote on product and design ideas. The winners will be funded by community members and they will go on to prototype and beta-test the products.

A core CrowdSpirit team, along with a subset of community members and distributors, will have a final say on decisions. The hope, however, is that the products will be extraordinarily focused on the customer because the ideas are coming directly from the people who will use the products. In development since last September, the site will formally launch at the end of June, 2007.

Marketocracy

Marketocracy.com

Marketocracy's Web site boldly announces a mutual fund that delivers higher return with less risk. Launched in 2000, Marketocracy aims to gather the collective knowledge of the best investors to create a highly successful mutual fund. Sign-up is free and anyone can run a virtual fund, starting with $1 million. So far, the site has more than 60,000 users. Based on the virtual investments of its 100 most successful members, the site launched the Masters 100 Index in 2001. The fund now has $44 million in assets and has outperformed the S&P 500 Index with an average annual return of 11.4% since inception. Five years in, that's a decent performance, though not worthy of Warren Buffett.

CafePress

CafePress.com

Barack Obama all but announced his intention to run as a candidate for the 2008 presidential election on Jan. 16 (the official decision will come on Feb. 10), and already CafePress.com is peppered with t-shirts sporting his name and election slogans. 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. The site got a big break in 2003 when Phil Collins, Jet Li, and Olympic Gold Medalist Tara Lipinski launched online stores through CafePress.com. Since then it has grown to 800,000 shopkeepers and 36 million products.

Gannett

news-press.com

Among the largest newspaper publishers in the U.S., Gannett has said it plans to change its newsroom to take advantage of crowdsourcing, putting readers to work as watchdogs, whistle-blowers, and investigators. Already last summer, the Fort Myers (Fla.)-based The News-Press (circulation 100,000) invited readers to help investigate ongoing concerns over price hikes in their utility assessments.

The response was hefty. Readers got involved—organizing their own investigations, poring through documents, and connecting to inside sources. As a result of the investigation, the city cut assessment fees by 30%.

Hempel is BusinessWeek's Innovation editor in New York.

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