100. Discussion about Business Aspects

Mark Choate:

"Wikipedia is a living example of how network effects can confer sustainable competitive advantage in a market mediated by an open platform even though Wikipedia (on the surface) does not seem to act in accordance with the resource-based view of sustained competitive advantage.

 

The editing process taking place at Wikipedia is transparent. Not only can just about anyone participate, but the history of all the edits and who made them is available. At the same time, Wikipedia makes available all of its content. You can download every article and photograph and import it into your very own Wikipedia clone if you would like to.

 

Given the transparency of the process and the easy transferrability of resources, once might conclude that Wikipedia does not have a sustainable competitive advantage in the online encyclopedia market. One would be wrong, however.

 

While I can replicate the content on Wikipedia, I can never replicate the overall value of Wikipedia, for two reasons. The first is that there is a network of users who regularly monitor and update Wikipedia articles and they will continue to do so on Wikipedia's site, and not mine. Of course, I can continue to copy Wikipedia's content and maintain a site very close to the original, but with a slight delay and a modest degradation in quality. Even if I were able to make the transfer all but instantaneous, I still will not have replicated the value of Wikipedia because I also need to consider all the other sites on the Internet that link to Wikipedia as well.

 

It is the degree to which Wikipedia is entrenched in the network itself, the degree to which it is woven into the web that provides its greatest competitive advantage and one that, I suspect at least, will prove to be sustainable because that network is difficult to replicate. Clearly, network effects are still relevant, even with an open platform. The technology is readily replicable and the process by which the content was produce is entirely transparent. As it turns out, it is the weave of the data as woven into the network itself that is nearly impossible to replicate. Much in accordance with the old resource-based view of sustained competitive advantage, Wikipedia has secured it by making the value of its offering very hard to imitate."