Our exponentially increasing costs (was Re: [Foundation-l] Re: Answers.com and Wikimedia Foundation to Form New Partnership)

[Daniel Mayer]

--- Jimmy Wales <jwales at wikia.com> wrote:
> Robin Shannon wrote:
> > Mav, for those of us not involved with finance, what are the costs
> > assosicated with our growth? Is the only expense that is growing
> > hardware/hosting etc, or are there other rising costs?
> 
> I'll let mav answer this in detail, but suffice to say, the primary
> growing cost is hardware/hosting, but some administrative costs are
> growing as well, although at a slower pace.

Robin, see for yourself: http://wikimediafoundation.org/wiki/Budget/2005

Increases in hardware/hosting costs drive overall increases in budgeted costs.
Overhead costs have been pretty much increased as a percentage on top of that
by approximately 20-30%. 

The major factor increasing the percent share of overhead expenses over the
last year has been the need to hire some people to help run things (the part
time amateur volunteer model can only scale so much in some areas). Of course,
further increases in that budget item is something that needs to be kept in
check by doing as much as possible with volunteers. But if we can keep that
item at ~10% of the overall budget, then I at least will be happy. 

Also note that the *total* amount spent during the entire year of 2004 was less
than $125,000 while the total spent this year will top $700,000. IIRC, the
total spent in 2003 was less than $20,000 (~$15,000 of which I know was for
hardware). Forget linear growth, that is exponential (which is to be expected
due to our strongly exponential increases in traffic).

http://wikimediafoundation.org/wiki/Bank_history/2004

Next year.... Well I'm working on that. But the total budget for all of next
year will certainly not be a linear projection from past spending. 

Just for fun let's look at the last 3 years worth of page view growth for
wikipedia.org according to Alaxa:

http://www.alexa.com/data/details/traffic_details?&range=3y&size=large&compare_sites=answers.com+about.com+britannica.com+reference.com&y=p&url=wikipedia.org#top

The blue line is wikipedia.org. Notice that it is a J curve with no sign of
plateauing (<- is that a word?). If we continue on pretty much the same
exponential curve then my hardware cost growth model predicts we will need to
bring online between 2 and 4 million dollars worth of new hardware next year
(Kate predicts it will be closer to 5 million). And yep - I've already
accounted for Moore's Law.  

In short: We are growing insanely fast with no sign of slowing down. Of course
we don't want to erode the ideals that have brought us so far or otherwise
jeopardize our non-profit status. But at the same time people need to keep our
massively growing costs in mind as the board, officers and others explore ways
to diversify our funding channels.

--mav

PS - 

Note that the large degree of uncertainty in my hardware cost projection is due
to the fact that I need to update my model with new data (the last real traffic
data I put into it is a year old; the same time WikiStats stopped reporting
page views; yet the model has been pretty good at predicting what we needed to
spend for 2005 so far). 

The other big problem with my model is that is only tracks spending vs page
views from wikipedia.org. In the past the amount of traffic from the other
Wikimedia domains was so small that it could safefly be ignored. This is no
longer the case for wikimedia.org thanks to Commons and will soon not be the
case for wiktionary.org and wikinews.org:

http://www.alexa.com/data/details/traffic_details?&range=3y&size=large&compare_sites=&y=p&url=wikimedia.org
http://www.alexa.com/data/details/traffic_details?&range=3y&size=large&compare_sites=&y=p&url=wiktionary.org
http://www.alexa.com/data/details/traffic_details?&range=1y&size=large&compare_sites=&y=p&url=wikinews.org


	
		
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