Dirt cheap labour

When Jeff Howe, contributing editor to Wired magazine, first coined the term “crowdsourcing” in 2006 he heralded a “new pool of cheap labour” where ordinary people used their spare time to work collaboratively with companies to create content, solve problems, and “even do corporate R & D.” Three years later, crowdsourcing has evolved from a novel Internet experiment to a legitimate corporate tool used by businesses ranging from Netflix to Britain’s Guardian newspaper.

Crowdsourcing is gaining popularity because it allows cash-strapped companies to outsource time-consuming drudgery and decision-making to the masses—who do it for free. In a recent high-profile case, the Guardian unleashed the power of the crowd to upstage a rival newspaper, and tackle the largest British political scandal in years. The Guardian was racing to catch up with the Daily Telegraph, which published a damning report in early May showing that British MPs had charged millions of dollars worth of frivolous expenses—for everything from clearing moats to building duck houses—to the public purse. The story was a huge coup, the result of months of toil by several journalists at the Telegraph who sifted through MPs’ expense claims to find the evidence.

Shortly after the Telegraph’s report came out, the British government was forced to release details of all the MPs’ expenses on the official Parliament website to comply with the U.K.’s Freedom of Information Act. It was the Guardian’s chance to jump on the story—but there were almost half a million documents to go through, and the Telegraph already had a huge head start. To catch up, the Guardian hired a team of software developers and developed a user-friendly platform that the public could use to categorize the documents. It took a week to get the site off the ground, and an estimated out-of-pocket cost of just $90 to rent temporary servers. Within the first 80 hours, 170,000 documents were reviewed, with a visitor participation rate of 56 per cent. Already, approximately half of the 456,000 documents have been read. “It’s really easy for people to see the original documents because they can be posted online,” says Paul Owen, a reporter for the Guardian who worked on the project. “It would have been almost impossible for us to do the same thing without the readers.”

In the U.S., National Public Radio journalists Peter Overby and Andrea Seabrook used a similar method to get free help from the public in an investigation examining the role of lobbying and money in Congress. They were having trouble identifying who the lobbyists were, so they took a couple of panoramic pictures of lobbyists watching a senate committee dealing with health care legislation, and asked their listeners for help in identifying them online. Even though they were asking for very specific information that only a limited audience could provide, the project was a big success. In addition to obtaining the identities they were looking for, the story was picked up by popular political blogs Talking Points and the Huffington Post, and it was met with a flurry of activity on Twitter. “There is a hunger for new ways to encourage political engagement,” Seabrook says. “There’s an appetite from the public to get dirty with the numbers.”

Crowdsourcing yields particularly good results when a cash prize is dangled as an incentive. In September, online DVD and Blu-ray Disc rental service Netflix will announce the winner of its foray into crowdsourcing, the million-dollar Netflix Prize. The prize will be awarded to the ad hoc programming team that comes up with the best algorithm for improving the accuracy of the site’s movie recommendations. Since Netflix announced the competition in 2006, nearly 50,000 entries have been submitted. (An international team of programmers called BellKor’s Pragmatic Chaos was the frontrunner until recently, when they were edged out by a super-team formed by merging three other teams.) When the contest ends, Netflix will be on the hook for the prize, but it considers that a bargain compared to the cost of hiring an in-house team of software developers.

Crowdsourcing is expected to become more and more popular in the business world over the next few years, says Claudia Moore, vice-president of marketing at crowdsourcing technology company Cambrian House. It’s not hard to see why: the technology that makes it possible is getting cheaper, and as budgets are tightened, the free labour and pools of fresh ideas that crowdsourcing offers are becoming more attractive. Already, it’s estimated that crowdsourcing achieves project cost reductions ranging from five per cent to 30 per cent, when you take into account the new revenue streams it can generate, and savings it can deliver. Because of those savings, Moore predicts that almost all companies will eventually use internal crowdsourcing to tap employees for ideas, and she says organizations such as governments, health care companies, and consumer products companies will adopt new crowdsourcing models to engage the public. “We hear from all levels of government in Canada about making the old-fashioned, open-house process more accessible and more meaningful to how people can contribute and collaborate,” says Moore. “And we will see more and more instances where that is the case.”