User:Guy Macon/Wikipedia has Cancer
Alternative Title: Just because you have some money, that doesn't mean that you have to spend it.
In biology, the hallmarks of an aggressive cancer include limitless multiplication of ordinarily beneficial cells, even when the body signals that further multiplication is no longer needed. The Wikipedia page on the wheat and chessboard problem explains that nothing can keep growing forever. In biology, the unwanted growth usually terminates with the death of the host. Ever-increasing spending can often lead to the same undesirable result in organizations.
Consider the following example of runaway spending growth:
|Year||Support and Revenue||Expenses||Net Assets at year end|
In 2005, Wikipedia co-founder and Wikimedia Foundation founder Jimmy Wales told a TED audience
So, we're doing around 1.4 billion page views monthly. So, it's really gotten to be a huge thing. And everything is managed by the volunteers and the total monthly cost for our bandwidth is about US$5,000, and that's essentially our main cost. We could actually do without the employee … We actually hired Brion because he was working part-time for two years and full-time at Wikipedia so we actually hired him so he could get a life and go to the movies sometimes.
According to the WMF, Wikipedia (in all language editions) now receives 16 billion page views per month. The WMF spends roughly $2 million USD per year on Internet hosting and employs some 300 staff. The modern Wikipedia hosts 11–12 times as many pages as it did in 2005, but the WMF is spending 33 times as much on hosting, has about 300 times as many employees, and is spending 1,250 times as much overall. WMF's spending has gone up by 85% over the past three years.
Sounds a lot like cancer, doesn't it? For those readers who were around three years ago, did you notice at the time any unmet needs that would have caused you to conclude that the WMF needed to increase spending by $30 million dollars? I certainly didn't.
From 2005 to 2015, annual inflation in the US was between 1% and 3% per year, and cumulative inflation for the entire decade was 21.4%—far less than the increase in WMF spending. We are even metastasizing the cancer by bankrolling local chapters, rewarding them for finding new ways to spend money.
Nothing can grow forever. Sooner or later, something is going to happen that causes the donations to decline instead of increase. It could be a scandal (real or perceived). It could be the WMF taking a political position that offends many donors. Or it could be a recession, leaving people with less money to give. It might even be a lawsuit that forces the WMF to pay out a judgement that is larger than the reserve. Whatever the reason is, it will happen. It would be naïve to think that the WMF, which up to this point has never seriously considered any sort of spending limits, will suddenly discover fiscal prudence when the revenues start to decline. It is far more likely that the WMF will not react to a drop in donations by decreasing spending, but instead will ramp up fund-raising efforts while burning through our reserves and our endowment.
Although this essay focuses on spending, not fundraising, it could be argued that the ever-increasing spending is a direct cause of the kind of fund-raising that has generated a storm of criticism. These complaints have been around for years, leading one member of a major Wikimedia mailing list to automate his yearly complaint about the dishonesty he sees every year in our fundraising banners.
No organization can sustain this sort of spending on a long-term basis. We should have leveled off our spending years ago. Like cancer, WMF spending is growing at an ever-increasing rate. Like cancer, this will kill the patient unless the growth is stopped. Some charities can safely grow without limits. If you are feeding 1,000 starving orphans per week, a ten times increase in revenue means that you will be able to feed 10,000 orphans per week. Wikipedia isn't like that. It costs a certain amount to have reliable servers, run a good legal team, maintain the core software, etc. But none of the things that the WMF needs to do require ever-expanding spending.
The reason I have so little faith in the WMF's ability to adapt to declining revenues (note that I specified the WMF; I think Wikipedia has shown an excellent ability to adapt to multiple problems) is the horrific track record they have regarding adapting to other kinds of problems.
In particular, their poor handling of software development has been well known for many years. The answer to the WMF's problems with software development is extensively documented in books such as The Mythical Man-Month and Peopleware: Productive Projects and Teams, yet I have never seen any evidence that the WMF has been following standard software engineering principles that were well-known when Mythical Man-Month was first published in 1975. If they had, we would be seeing things like requirements documents and schedules with measurable milestones. This failure is almost certainly a systemic problem directly caused by top management, not by the developers doing the actual work.
This is not to imply that decades-old software development methods are somehow superior to modern ones, but rather that the WMF is violating basic principles that are common to both. Nothing about Agile or SCRUM means that the developers do not have to talk to end users, create requirements, or meet milestones. In fact, modern software development methods require more communication and interaction with the final end users. Take as an example the way Visual Editor was developed. There are many pages of documentation on the WMF servers and mailing lists, but no evidence that any developer had any serious discussions with the actual editors of Wikipedia who would be using the software. Instead. the role of "customer" was played by paid WMF staffers who thought that they knew what Wikipedia editors need better than the editors themselves do. Then they threw the result over the wall, and the community of Wikipedia editors largely rejected it. Or Knowledge Engine, which was developed in secret before being cancelled when word got out about what the WMF was planning. Another example: The MediaWiki edit toolbar ended up being used by a whopping 0.03% of active editors.
After we burn through our reserves, it seems likely that the next step for the WMF will be going into debt to support continued runaway spending, followed by bankruptcy. At that point there are several large corporations (Google and Facebook come to mind) that will be more than happy to pay off the debts, take over the encyclopedia, fire the WMF staff, and start running Wikipedia as a profit-making platform. There are a lot of ways to monetize Wikipedia, all undesirable. The new owners could sell banner advertising, allow uneditable "sponsored articles" for those willing to pay for the privilege, or even sell information about editors and users.
If we want to avoid disaster, we need to start shrinking the cancer now, before it is too late. We should make spending transparent, publish a detailed account of what the money is being spent on and answer any reasonable questions asking for more details. We should limit spending increases to no more than inflation plus some percentage (adjusted for any increases in page views), build up our endowment, and structure the endowment so that the WMF cannot legally dip into the principal when times get bad.
If we do these things now, in a few short years we could be in a position to do everything we are doing now, while living off of the endowment interest, and would have no need for further fundraising. Or we could keep fundraising, using the donations to do many new and useful things, knowing that whatever we do there is a guaranteed income stream from the endowment that will keep the servers running indefinitely.
The above chart and graph have been updated to reflect the 2016–2017 results.
Observations as of July of 2018:
- It is difficult to derive a trend from one year's data, but it appears that the rate of spending is beginning to level off. How much influence this page (and the previous posting of the same argument on various pages) had on this is an interesting question.
- We still have a marked lack of transparency on spending. For example,  has numbers for "Grants and awards" and "Professional service expenses" but there is no obvious way of finding out the details of those expenditures (please note that this information may very well be in one of the many, many documents the WMF publishes each year).
- All efforts to persuade the WMF to enact any spending cap, even "limit spending to no more than double last years spending" have failed.
- We appear to be building up our endowment, but it is unclear whether the WMF has structured the endowment so that the WMF cannot legally dip into the principal when times get bad. Without this we have no protection from a sudden drop in revenue while the WMF maintains the current spending levels in the hope that revenue will recover. It is also unclear whether the endowment is legally protected against a large payout as a result of a lawsuit. The current management of the WMF appears to be committed to making immediate and drastic cuts to spending if revenue suddenly drops. Hopefully we will never have to find out.
The above chart and graph have been updated to reflect the 2017–2018 results.
Observations as of August of 2019:
- It turns out that the rate of spending is not beginning to level off. Not even close.
- The good news is that the donations have also continued to grow, but anyone who thinks that this will continue forever simply does not understand basic economics. I really ought to calculate how soon the present rates of increase will bring us to the point where donations to the WMF are larger than the amount of money in the world. Anyone willing to run those numbers is invited to discuss them on the talk page for this essay.
- As for the rest, absolutely nothing has changed. There has been zero actual effort by the WMF to increase transparency on spending. Spending caps are not even something that is being discussed. And it really does look like the WMF has structured the endowment so that they can raid it instead of reducing spending when times get bad -- so in essence it isn't substantively different from any other WMF bank account other than a bit of extra paperwork needed to start draining it. Or maybe not; in another example of the WMF refusing to be be financially transparent, despite repeated requests the WMF has never revealed the actual language of any binding rules (if there are any) on when they can and cannot grab the endowment and use it to keep spending should the rate of donations fall off a cliff.
From 2007–2008 to 2017–2018 donations went from $5,032,981.00 USD to $104,505,783.00 USD -- 20.76 times higher.
From 2007–2008 to 2017–2018 spending went from $3,540,724.00 USD to $81,442,265.00 USD -- 23 times higher.
In 2008 Wikipedia had over 5 million registered editors, 250 language editions, and 7.5 million articles. Wikipedia.org was the 10th-busiest website in the world. We had already started Wiktionary, Wikibooks, Wikinews, Wikiquote, Wikiversity and Wikispecies, we had already opened chapters in multiple countries, and we had already moved from Florida to San Fransisco.
I was here in 2008. I did not notice any pressing needs that were not funded because we were spending 4.3% of what we are spending now. What, exactly, are we doing now that we were not doing ten years ago that justifies us spending twenty three times as much money?
- Wikipedia Signpost February 2017 Opinion/Editorial (a version of this page as edited by the Signpost editors. The page you are reading is the original version, and is the version that I keep updated.)
- Financial Statements, June 30, 2006, 2005, and 2004 Wikimedia Foundation
- Financial Statements, June 30, 2007 And 2006 Wikimedia Foundation
- Financial Statements, June 30, 2008 Wikimedia Foundation
- Financial Statements, June 30, 2009 and 2008 Wikimedia Foundation
- Financial Statements, June 30, 2010 and 2009 Wikimedia Foundation
- Financial Statements, June 30, 2011 and 2010 Wikimedia Foundation
- Financial Statements, June 30, 2012 and 2011 Wikimedia Foundation
- Financial Statements, June 30, 2013 and 2012 Wikimedia Foundation
- Financial Statements, June 30, 2014 and 2013 Wikimedia Foundation
- Financial Statements, June 30, 2015 and 2014 Wikimedia Foundation
- Financial Statements, June 30, 2016 and 2015 Wikimedia Foundation
- Financial Statements, June 30, 2017 and 2016 Wikimedia Foundation
- Financial Statements, June 30, 2018 and 2017 Wikimedia Foundation
- Page views for Wikipedia
- Wikimedia Foundation Wikipedia page
- 1,400,000 x 11 ˜ = 15,400,000, 1,400,000 x 12 ˜ = 16,800,000
- ($5000 x 12) x 33.3... = $2,000,000
- ($5,000 x 12) x 1250 = $75,000,000
- $35,704,796 x 1.85 ~= $65,947,465
- Where does your Wikipedia donation go? Outgoing chief warns of potential corruption The Daily Dot
- Wikipedia Foundation exec: Yes, we've been wasting your money The Register
- Wikipedia has a ton of money. So why is it begging you to donate yours? The Washington Post
- 2015–2016 Q1 fundraising update sparks mailing list debate Wikipedia Signpost
- Wikipedia fundraising drive: Should you donate money to the Wikimedia Foundation? International Business Times
- The Wikipedia Fundraising Banner: Sad but Untrue Wikipediocracy
- Wikipedia Has Millions In The Bank – Why Beg For More? MakeUseOf
- Wikipedia – keeping it free. Just pay us our salaries. Wikipediocracy
- Should you donate to the Wikimedia Foundation? Effective Altruism
- Why does Wikipedia ask for donations even though it has a huge reserve? Quora
- Top 10 Reasons Not to Donate to Wikipedia MyWikiBiz
- A Modest Proposal for Wikimedia’s Future The Wikipedian
- Wikipedia doesn't need your money - so why does it keep pestering you? The Register
- Fundraising banners (again) Wikimedia-l
-  Wikimedia Foundation