Why Crowdsourcing Works

December 10th, 2009 | by LaSean Smith

There’s lots of talk about crowdsourcing these days. IMO, crowdsourcing works when the contributor believes they have excess capacity (e.g. time, brain processing cycles) AND will receive some sort of non-monetary compensation (e.g. recognition, purpose).

The formula that makes this work for many is perceived capacity (under) utilization plus (low) opportunity cost plus a belief in the project.

Contributors (many of them PhDs) in a recent Netflix-sponsored contest participated in a crowdsourcing project to help Netflix improve their rating system. In the end it was estimated that Netflix paid $0.10 per hour for the research they collected. So why would these contributors participate in this contest? Surely their time is worth more than $0.10 per hour. Right? The contributors may have felt that the non-monetary compensation (and potential prize) was worth the excess capacity they weren’t going to use in the first place. To that end, businesses/organizations who want to leverage crowdsourcing should focus on audience segments that believe they have a lot of excess capacity and/or place a high value on the non-monetary compensation that the business can deliver. Plus they have to believe in what you’re peddling.