Wired’s Rose-Colored Glasses and Crowdsourcing: The Risks They Overlooked

In “The Rise of Crowdsourcing,” Wired Magazine examines and celebrates the growing ability of companies to use distributed labor networks to exploit the power of multiple  contributors and create efficient and low-cost solutions. This is not necessarily something that has happened very recently. We see companies engaging in crowdsourcing everywhere we look. Wikipedia engages in crowdsourcing by having enthusiasts both create and monitor the content of individual entries for the online encyclopedia. Other companies that use crowdsourcing are E-Bay and Amazon.  These companies use the internet and our highly connected world to harness solutions, content or ideas created by hobbyists, enthusiasts, or even spectators.  The article shows how this potential has been captured from media companies like VH1 to pharmaceutical manufacturer Eli Lilly.

The article mainly focuses on the benefits and future possibilities of crowdsourcing. Crowdsourcing has enabled companies to slow the rising costs of R&D and offered individuals the opportunity to engage in new ventures through an unconventional course and collaborative process. Now tasks that cost thousands of dollars for companies to outsource can be completed for literally five bucks by an enthusiast or hobbyist.

While Wired’s contributing editor, Howe, and the interviewee suggest that this opportunity is an amazing opportunity with a promising future, Howe overlooks the existence of an equitable relationship and various legal implications that are attached to crowdsourcing and can create liability for the company and harm the independent contractor.  In any business relationship, there are legal issues that exist regarding equity and fairness.  While companies are able to achieve minimal costs for previously expensive services through crowdsourcing, how can we ensure that the relationship and payment system set up are truly equitable to the business and independent contractor? For example, using Innocentive, Ed Melcarek was able to solve a problem that stumped in-house researchers at Colgate-Palmolive involving the injection of fluoride powder into a toothpaste tub. Melcarek provided a very simple solution to Colgate-Palmolive and was given $25,000 for his efforts. While this payment may seem generous, does the $ 25,000 payment really represent the value of the solution for Colgate-Palmolive. Additionally, what are there Intellectual Property rights at issue here? Can Colgate patent this technology that Melcarek happily provided and is Melcarek aware of his rights?



Amazon’s Mechanical Turk

In another example, Sunny Gupta from iConclude was able to solve a recent problem using Mechanical Turk. For the service the Turkers provided, Gupta usually had to pay 2,000 dollars. However, using Amazon’s Mechanical Turk, Gupta was able to hire a Turker who fixed the solution for only five dollars. While this may seem a steal for this company, it still remains a question if the Turker’s abilities were being taken advantage of through such a bargain-bin price. Are these Turkers really just jolly hobbyists happy to lend their services for such a low price or are they recently laid off employees looking for any opportunity to make end’s meet? With these crowdsourcing initiatives, Wired’s article fails to caution companies and individuals on the legal implications and fairness of crowdsourcing.


Upon further research, it appears that I am not the only concerned with the legal implications of crowdsourcing. In “Look Before You Leap: Legal Pitfalls of Crowdsourcing,” Stephen M. Wolfson considers key five legal issues that the crowdsourcing community needs to discuss to form the practice and future policy. Wolfson finds that legal implication of crowdsourcing exist in employment law, patent inventorship, data security and Federal Trade Commission,  copyright issues, and securities regulation of crowdfunding. Wolfson recommends that if a company engages in crowdsourcing, it needs to mindful of the law, define relationships in advance, and be open and honest with crowdworkers.


So if you considering crowdsourcing or are concerned about your current crowdsourcing, I will leave you with the advice my marketing professor gave me.  When considering the ethical implications or legal liability of a venture, always ask yourself how you would appear to the public if you were being interviewed by Andy Rooney on 60 minutes. If it would sound wrong on 60 minutes, chances are its not an ethical or legal practice.

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