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User contribution systems started before the internet.  For example, in 1979 Tim and Nina Zagat began publishing Zagat guides whose restaurant guidebooks are "written" not by paid experts but by the contributions of regular diners. Zagat's Paris guide book now outsells Michelin's.

The success of the leading internet firms has admittedly been touted ad nauseam by the media and business experts. Yet for better and for worse, the internet is a reflection of society and the preferences of hundreds of millions of people around the world. Like book best-seller lists, rankings of the most popular websites reflect what’s winning the battle for people’s attention.

The companies joining the list of most popular websites in recent years include Wikipedia, YouTube, Facebook, Craigslist, and MySpace. They have joined such older sites as Amazon, eBay, and Google. At first glance, these sites seem to have little in common, targeting unrelated areas of human endeavor: the cataloguing of information, video entertainment, social interaction, office cubicles, classified advertising, retail shopping, anonymous surfing, and internet search. Some of the sites charge users; others are free. One’s a nonprofit; another has one of the highest profit margins among public companies.

Despite their differences, all these winning sites rely on – or are themselves – user contribution systems. Much of their success flows from inherent characteristics of contribution systems that create advantages, detailed here, of a magnitude rarely known in traditional business.

Cost advantage

What does Wikipedia pay the authors and editors of its articles? What does Facebook or MySpace pay those who painstakingly fill in and update the personal profiles that make the site so valuable? Nothing. These sites enjoy free “raw materials,” as users perform gratis work that companies typically have to pay for. People contribute for various reasons, some of them self-serving but all of them sufficient to make formal payment unnecessary. (See Why contributors contribute.)

Scalability advantage

Inexpensive does not mean incomplete. Quite the opposite: The contributions of countless people can be aggregated into vast compilations that surpass traditional offerings. Wikipedia has 10 times as many articles as Encyclopaedia Britannica. Craigslist’s free classified advertising sites feature more than 30 million new offerings every month, and eBay’s virtual shelves feature 120 million items, many times more than any other store on the planet can offer. Such scale doesn’t require broad or deep contribution: Only a small percentage of users may contribute (about one user in 1,000 for Wikipedia) and active contributions may require little effort (as with Flickr, the photo-sharing site). 

Competitive advantage

Some contribution systems give companies a structural advantage over rivals because of network effects. That is, the more people who contribute to the system, the more useful it becomes, creating an upward spiral in which increasingly more people choose to use and contribute to it. Network effects once drove the winner-take-all market-share gains of Microsoft’s Windows; today, they propel the success of sites like Wikipedia and Facebook.

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