Valuating Wikipedia

With the latest .com deal making social networking staple Facebook worth a cool $15B, its about time we take a look at the last unsold Kingpin of the Internet.

Love it or hate it, Wikipedia is huge and still growing. The user-powered encyclopedia had at last count 2,065,000 articles in its English edition on just about everything. The site reaches millions of visitors daily, often through search engine queries - call it the Yahoogle-Wikipedia tandem if you want - with a behemoth of topics ranging from the aardvark to Zoloft.

Just imagine the lucrativeness of advertising served to people actually looking for information on a specific subject - people interested enough to read an encyclopedia article about it. It is not far fetched to assume that big spenders, the likes of Google, Microsoft, and Yahoo, would be willing to spend a reasonable amount of coinage to at least secure rights to advertise on the 8th most visited website in the world, and at most make it a sizable subsidiary. Plus on the bright side, Wikipedia doesn't know who you really are, as opposed to Facebook, with a collection of personal information that would get advertisers drooling for more. The only problem is Wikipedia is not for sale. In addition, advertising on the project out of St. Petersburg, Florida, is regarded as taboo within the Wikipedian community. But why is that? After all, professional sports leagues around the world thrive off of advertising. Does the Wikipedian community actually believe that at some level, they are better than NASCAR, the Premier League, or Major League Baseball? Besides, marketers have already penetrated the site, jazzing up articles on their own companies and products, with external links (spam) to boot. That being said, in the foreseeable future Wikipedia will continue to meet its operating costs and Utopian vision of spreading free information around the world from generous donations, with the latest fundraising drive launching in the last week.

Despite all of this, there still lies the question - what is the white elephant in the room worth? What is the wholesale value of such a project? To put it lightly, the Wikimedia Foundation, governing body of the free encyclopedia, has a portfolio which consists of a few hundred depreciating servers, an office in downtown St. Petersburg with a dozen underpaid staffers, and 187 shares in Google. Assets total a mere $1,000,000, which is definitely not much in terms of liquidity - if anything probably Google's candy budget for the year. But that's not what a potential buyer would be looking at. It is the web presence that they'd be looking at, which totals hundreds of millions of visitors each month and vast amounts of potential ad revenue.

The only way to really assess Wikipedia would be to gauge the sale of other Internet properties. Take HowStuffWorks.com - recently aquired by Discovery Communications for a neat $250M. As mentioned earlier, Facebook's deal with Microsoft - $240M for 1.6% - gives it a value of $15B. Not bad for 7th overall. Google acquired YouTube in 2005 for $1.7B, which at that point boasted a shoddy collection of viral videos, and was (until recently) losing money due to the massive technical costs associated with running such an operation. So where does Wikipedia lie in the mix? The site which has been around since 2001 meets its operating budget with donations alone, and is the de facto top result in most search engine queries, garnering millions of visits a day. The content, although filled with some recycled garbage and factoids, is improving thanks in part to bots which scan the pages for rubbish, and policies devised by the organization which are enforced by "administrators" (colloquially referred to as janitors) on the site. Unbeknownst to the critics of Wikipedia - mostly losers who couldn't fathom the deletion of their own article - the site has a vast array of policies and guidelines devised to maintain law and order, and ensure quality, factual content, contrary to popular belief that vandalism and 'crowd sourcing' prevail. For some, the project is something neat to do in their spare time, and for others, it is free content available at their finger tips. Such a project is prone to mistakes, but each mistake brings a wave of improvements.

Wikipedia - the free encyclopedia - a significant destination for information on the web, which takes the form of a user-generated online community. It attracts as many visitors - interested visitors - as Facebook. The demographic is wide, the potential for advertising is huge, and the reach is massive. So what is she worth? The Buck Nerd says a cool $8B. Not bad, not unreasonable. With that kind of money, Wikipedia (and Wikimedia for that matter) can surely move on to bigger and better things. Access to several resources and financing for years to come is just a start. As for the potential buyer, they would be making cash hand over fist.

Well that's just some crazy thinking, right? After all, it is just an idea, much like the altruistic vision of spreading free information around the world, which some might suggest becomes a little easier with a steady cash flow in hand.