Wikipedia is one of the most visited and popular websites in the world, pulling about 10B monthly traffic. Fandom, on the other hand, is one of the largest fan-based platforms on the internet, known to attract millions of unique visitors each month. 

The site hosts thousands of wikis across a wide range of topics, from movies and TV shows to video games and more, making it a popular destination for fans seeking detailed information and community interaction.

However, both Fandom and Wikipedia are “non-profit” and open-source websites run by a community of online writers and editors. It works on donations that are made to the “Wikimedia Foundation.” 

However, do you know how much donations this foundation receives every year? Remarkably, the sum amounts to an impressive $180 million. To put it another way, the donations collected in a single year could sustain Wikipedia for an estimated 150 years.

The question that arises is where that money goes. In this article, we will address questions like these and also discuss how websites like Wikipedia and Fandom utilize the power of open-source and community to make information-sharing more accessible and easy and drive a profitable “non-profit” that generates millions of dollars in annual returns. 

Early Days of Jimmy Wales & Wikipedia

Jimmy Wales: The Early Career

Jimmy Wales's early career did not immediately point to the revolutionary path he would eventually take. Born in Huntsville, Alabama, Wales earned a bachelor's and a master's degree in finance. 

Initially, he worked in the finance sector, trading options and futures in Chicago. However, his deep-seated passion for technology and the internet soon led him down a different path. 

By the mid-1990s, as the internet began to take shape as a new frontier for business and communication, Wales saw the potential not just for commercial gain but for something much more impactful.

The Idea of Building an Online Encyclopedia

Jimmy, as a child, was into encyclopedias a lot. However, he was well aware of its limitations. For one, they have to be updated with sticky notes every few years, and second, they aren’t accessible to everyone. One has to spend a lot of money to buy them. 

The idea of creating a free, accessible encyclopedia that anyone could contribute to stemmed from Wales's own love of learning and his recognition of the internet's potential to democratize information. 

The traditional encyclopedia model, epitomized by encyclopedias like Britannica, was costly and not easily accessible to everyone. Wales envisioned a platform where knowledge could be freely shared and continuously updated by a global community of volunteers.

Nupedia: The Precursor to Wikipedia

Before Wikipedia, there was Nupedia. Launched in March 2000, Nupedia was Wales's first attempt at creating a free online encyclopedia. He co-founded the project with Larry Sanger, a philosopher with a background in epistemology and a keen interest in internet technology. 

Nupedia had a rigorous, seven-step review process involving experts and scholars, which, while ensuring content accuracy, proved to be incredibly slow and cumbersome. In its first year, Nupedia only published 12 articles, a pace far too slow for the ambitions Wales and Sanger had.

The realization that Nupedia's highly formal, peer-reviewed process was too restrictive led to a pivotal shift. Inspired by the emerging concept of wikis, which allowed internet users to add and edit content collaboratively and in real-time, Wales and Sanger decided to create a supplementary project. This project would use wiki software to allow more open participation and faster content development.

The Birth of Wikipedia

On January 15, 2001, Wikipedia was officially launched as a side project to Nupedia. It was conceived as a more open and quickly evolving platform where anyone with internet access could write and edit articles. 

The wiki model was revolutionary: it democratized the creation and dissemination of knowledge, relying on the collective intelligence and vigilance of its users to self-regulate and improve content.

The growth of Wikipedia was explosive. Within its first year, it boasted over 20,000 articles in multiple languages, showcasing the global community's eagerness to contribute and collaborate. 

Unlike Nupedia, Wikipedia's model emphasized transparency, inclusivity, and community governance, which resonated deeply with users around the world.

Finding Fandom

Fandom, originally known as Wikia, was founded by Jimmy Wales and Angela Beesley Starling in 2004. The platform was conceived as a complementary project to Wikipedia, focusing instead on fan-created content and communities around popular culture, like movies, video games, and television series.

Jimmy Wales saw an opportunity to apply the collaborative, user-generated approach of Wikipedia to a broader range of topics, particularly those related to entertainment and pop culture, which were not suitable for the encyclopedic format of Wikipedia. 

Angela Beesley Starling, who was heavily involved in the early stages of Wikipedia and served on the board of the Wikimedia Foundation, shared this vision. Wikia quickly grew as users began to create wikis on a diverse array of subjects, from mainstream topics like "Star Wars" and "Harry Potter" to more niche interests.

In 2016, Wikia was rebranded as Fandom powered by Wikia and later simply as Fandom.

Wikipedia Business Model

How do Wikipedia & Fandom make money?

Wikipedia and Fandom operate purely based on donations. There are no investors and no concept of profitability, as it is an open-source website where millions of web pages are written and edited in collaboration. 

So here’s how it works. 

Easy Operation & Digital Infrastructure 

You might assume that maintaining Wikipedia's tech infrastructure requires a team of skilled engineers, but that's not the case due to the site's simplicity. Unlike platforms hosting complex videos or developing algorithms, Wikipedia primarily hosts text.

In reality, excluding additional media, all of Wikipedia can be compressed into just 22.14 GB. To put it simply, Wikipedia's entire content can fit on an $8 SD card. Serving this information to 9.8 billion monthly visitors is more manageable than it sounds. In fact, that is also how the Pirate Bay operates in 2024.

On-Going Expenses Estimation

Jimmy Wales, the co-founder of Wikipedia, proudly highlights the site's low operational costs. To emphasize, it only costs $5,000 monthly to support 1.4 billion monthly page views without requiring a full-time employee. 

Even with Wikipedia receiving seven times more visits, the monthly cost remains at just $35,000. Let's consider the possibility that cloud expenses have doubled since Jimmy's statement. 

Even then, the monthly cost would only amount to $70,000. If we factor in three full-time engineers, each earning $10,000 monthly, the total monthly expense would reach $100,000, or $1.2 million per year. 

It's truly astounding to realize that the world's 5th most visited website can remain operational for slightly over a million dollars annually.

Division of Donation: Putting Numbers Into Perspective

Have you ever wondered how much the Wikimedia Foundation brings in annually through donations? Well, the figure is a staggering $180 million. To put it into perspective, one year's worth of donations could keep Wikipedia running for around 150 years, assuming basic operations.

Even with a more generous annual budget of $10 million, a single year's donations would be sufficient to sustain Wikipedia for 18 years. But where do all the additional donations go? Interestingly, most of it doesn't directly support Wikipedia.

About 32% goes towards providing direct support to communities, which includes grants and various projects Wikimedia is involved in, like Wikimedia Commons. Another 13% is allocated to administrative costs, and 12% goes towards fundraising efforts. 

Only 43% actually contributes to website maintenance, and Wikimedia oversees multiple other websites beyond Wikipedia using these funds. The surprising part is that the content part of Wikipedia actually costs them nothing. 

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It's worth noting that the foundation, while nonprofit, accumulates excess donations. In fact, they currently hold a quarter-billion dollars in excess funds. 

Even with a $10 million annual budget, Wikimedia could sustain Wikipedia for another 25 years without additional donations. Moreover, Wikimedia invests these excess funds.

Now, that’s the power of open-source media and a dedicated community tied into a valuable publication. 

As of two years ago, their investments included $46 million in corporate bonds, $21 million in mortgage-backed securities, and $73 million in treasuries for short-term investments. They also had $3.9 million in long-term corporate bonds, $25 million in stocks, $5.9 million in long-term mortgage securities, and $4.8 million in long-term treasuries.

With a total of $180 million in investments, Wikimedia is likely able to consistently generate around $10 million in annual returns.

Final Thought

Jimmy Wales has proven that if you can run a valuable community-driven business, you do not need the big cash from VCs, and neither do you need the pressure of profitability. If you are purely driven by cause, problem-solving, and entrepreneurship, the sky is the limit! 

Wikipedia, in this capitalistic and profit-driven world, is no less than a dream come true. Its decentralized model is nothing short of revolutionary and is something that most internet companies may converge toward in the future. 

Of course, it’s unknown to the public how the Wikimedia Foundation utilizes the excess capital that it has accumulated in donations, but what’s publically known is that Wales could have easily been a billionaire if Wikipedia had resorted to ads. 

However, he kept the intent and value of the organization pure and delivered a business that grants a smooth and knowledgeable experience to its users without any hassle. The content machinery of Fandom and Wikipedia is smoothly operated by the public, and over time, it has become quite accurate. 

This decentralized and forward-looking model demonstrates that a platform built on openness, transparency, and community engagement can thrive without relying on traditional business models driven solely by profit motives.

Moreover, the commitment to ad-free content underscores a dedication to preserving the user experience and ensuring that information remains the primary focus. 

This approach not only fosters trust among users but also reinforces the notion that public benefit and knowledge dissemination can be achieved without compromising principles or integrity for financial gain.

Undoubtedly, Wikipedia is one of the most resourceful websites on the internet. How Jimmy himself makes money off Wikipedia is also not known, but with a powerful operation like this, you can derive a lot as a founder.