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What is Crowdsourcing?

Updated on November 8, 2014
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Heidi Thorne is an author and business speaker specializing in sales and marketing topics for coaches, consultants and solopreneurs.

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Crowdsourcing versus Crowdfunding: What's the Difference?

There's a lot of talk these days about crowdsourcing and crowdfunding. Though the terms are often used interchangeably, they are are two different concepts.

  • Crowdsourcing solicits input and participation from interested parties in order to accomplish some goal or to facilitate decision-making. In exchange for their donation of time, talent, thoughts or effort, participants may be entitled to some form of compensation or perks such as free passes to events, although that is not always a requirement. Many crowdsource participants merely wish to be part of the project for emotional or intellectual benefits or even bragging rights. The call for help is usually broadcast to the target community through online means (e.g., social media, online forums and chats, websites, blogs).
  • Crowdfunding solicits financial donations from interested parties to accomplish a project, goal or build a business. Depending on what the funding platform allows, funded projects could be creative endeavors, new products, charities, personal endeavors and more. Unlike stocks or other investments, investing donors do not receive a stake in the project or business, nor do they share in the resulting returns (or losses). However, donors may receive a variety of perks for their donations such as first chance to receive a new product when it is produced or a special experience. Currently popular crowdfunding sites include Kickstarter.com and Indiegogo.com.

So while crowdsourcing may be a no cash effort, crowdfunding is all about the cash.

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Crowdsourcing Fun Facts

  • The term crowdsourcing was coined in 2005 by the editors of Wired magazine.
  • An early example of a crowdsourcing project was the Oxford English Dictionary in the mid-19th century.

Source: Wikipedia

Uses for Crowdsourcing

How can crowdsourcing be used?

  • Problem Solving. Using the "two heads are better than one" philosophy, collaborative or multiple solutions can often be accomplished through crowdsourcing.
  • Collaborative Works. Ever visit Wikipedia? Who hasn't? Wikipedia is a free online encyclopedia written by its users for its users. This project makes use of a platform called a wiki which makes it easy for people to participate.
  • Events. An event may solicit participation from people in the communities they serve. These folks are usually committed to the brand, business or cause hosting the event and are willing to volunteer their time and talent for it. This is common for nonprofit events. In exchange for volunteering, these volunteers may be given special perks for participating such as a limited edition promotional T shirt or be invited to an exclusive party.
  • Research. Research projects may be crowdsourced to: 1) Gain expanded or diverse viewpoints; 2) Offload a massive volume of work to accomplish a goal more quickly and efficiently (or even make it possible to accomplish!); or, 3) To engage a population of ideal research study participants.
  • Open Source. Generally refers to open source software programs which are freely distributed with participants collaborating to continually improve the code.
  • Preference Polling. When an organization wants input on a new design or idea, they may allow a target community to vote on their favorites. For example, if restaurant wants to figure out which new dish to add to their menu, they may post choices in a community forum to see which ones would be winners with that crowd.

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Crowdsourcing Don'ts

While crowdsourcing sounds like an ideal way to get valuable input and participation for very little dollar outlay, there is some etiquette that should be observed:

  • Don't Overask. Asking the same people over and over again and/or asking for a huge investment of time and talent can brand an organization as a beggar. As well, it narrows the type of input received, which may make it less valuable.
  • Don't Use Crowdsourcing Just for Cheap Labor. Sure, an organization's crowd may be emotionally or personally invested in the brand, cause or effort. But to expect them to always work for free in the name of crowdsourcing could brand the business as cheap and uncaring. Plus, an organization may be liable for actions of crowdsourced help. Consult a legal professional and commercial liability insurance provider for advice on protections and precautions.
  • Don't Overpromise. Especially when it comes to soliciting feedback, do not promise that any specific action will be taken as a result of the feedback given. This will set up the crowd for disappointment and disenchantment.

Disclaimer: Any examples used are for illustrative purposes only and do not suggest affiliation or endorsement. The author/publisher has used best efforts in preparation of this article. No representations or warranties for its contents, either expressed or implied, are offered or allowed and all parties disclaim any implied warranties of merchantability or fitness for your particular purpose. The advice, strategies and recommendations presented herein may not be suitable for you, your situation or business. Consult with a professional adviser where and when appropriate. The author/publisher shall not be liable for any loss of profit or any other damages, including but not limited to special, incidental, consequential, or other damages. So by reading and using this information, you accept this risk.

© 2014 Heidi Thorne

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    • billybuc profile image

      Bill Holland 2 years ago from Olympia, WA

      I'm sorry, my friend, but I'm on the run today....just enough time to say hello, and tell you I had no idea what crowdsourcing was, so thanks for the information. Have a great Saturday.

    • heidithorne profile image
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      Heidi Thorne 2 years ago from Chicago Area

      Hey billybuc! Glad you stopped by and that you found it informative. Go and have a great weekend!

    • Iris Draak profile image

      Cristen Iris 2 years ago from Boise, Idaho

      I've written a crowd funding pitch, but I didn't know about crowd sourcing, at least not by that term. Interesting.

    • AliciaC profile image

      Linda Crampton 2 years ago from British Columbia, Canada

      Thanks for sharing this information, Heidi. It's all interesting, as always, but I found the crowdsourcing section especially useful.

    • Venkatachari M profile image

      Venkatachari M 2 years ago from Hyderabad, India

      Good and informative. I had no knowledge but now I am very clear about both these terms. Thanks for sharing information.

    • profile image

      GreenPrince 2 years ago

      In times like this, we all need each other to prosper in mind and things. No one is an island. Thanks for such a brilliant hub.

    • Eiddwen profile image

      Eiddwen 2 years ago from Wales

      Very interesting ;a great read.

      Eddy.

    • heidithorne profile image
      Author

      Heidi Thorne 2 years ago from Chicago Area

      You're right, GreenPrince! Thanks to social media and the Internet, none of us needs to be an island today. Thanks for commenting!

    • heidithorne profile image
      Author

      Heidi Thorne 2 years ago from Chicago Area

      Hi Eddy! Glad you found it interesting. Hope all is good with you. Have a great week!

    • heidithorne profile image
      Author

      Heidi Thorne 2 years ago from Chicago Area

      Hello Venkatachari M! I had to do a little research to make sure I was clear on the differences, too. :) Glad you found it helpful. Have a great week!

    • heidithorne profile image
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      Heidi Thorne 2 years ago from Chicago Area

      Thanks, AliciaC! Crowdsourcing is a brilliant and useful concept if used properly. If you run across any especially good crowdsourcing examples, let us know here in the comments. Cheers!

    • heidithorne profile image
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      Heidi Thorne 2 years ago from Chicago Area

      Hi again, Iris! Writing a crowdfunding pitch had to be an interesting project. Sometimes crowdsourcing can be just as valuable crowdfunding. :) Thanks again for stopping by and commenting! Have a great week!

    • teaches12345 profile image

      Dianna Mendez 2 years ago

      Thanks for definining this for me. I didn't know the meaning. Your write very well and with great interest.

    • heidithorne profile image
      Author

      Heidi Thorne 2 years ago from Chicago Area

      Hi teaches12345! Crowdsourcing is one of those newer terms that is still working its way into our vocabulary. Glad you found it informatiave. Thanks for stopping by and have a great weekend!

    • ologsinquito profile image

      ologsinquito 2 years ago from USA

      I didn't know what crowdsourcing was until just now. My children told me about crowdfunding a few months ago. Thanks for the clarification. :)

    • heidithorne profile image
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      Heidi Thorne 2 years ago from Chicago Area

      Hi there, ologsinquito! Glad to provide some clarification. So many new terms in our vocabulary these days. Thanks for stopping by and have a delightful week ahead!

    • FlourishAnyway profile image

      FlourishAnyway 2 years ago from USA

      If you ever want some really good chuckles go to the Wikipedia "Notes" section where people discuss inappropriate edits. The Janet Reno biographical entry (bless her heart) is a real hoot. It shows how crowdsourcing can go off the rails and then get back on. The process is interesting to witness.

    • heidithorne profile image
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      Heidi Thorne 2 years ago from Chicago Area

      True that, FlourishAnyway! Precious little oversight is one of the true downsides of crowdsourcing. I'll have to check out the "inappropriate edits" when I need a chuckle. Thanks for adding your insight to the conversation. Have a great day!

    • FatBoyThin profile image

      Colin Garrow 22 months ago from Kinneff, Scotland

      Just goes to show you shouldn't make assumptions - I thought crowdsourcing and crowdfunding were the same thing. Thanks for the enlightenment. Voted up.

    • heidithorne profile image
      Author

      Heidi Thorne 22 months ago from Chicago Area

      Hi FatBoyThin! You're not alone! Many people use the terms interchangeably. Glad you found it helpful. Thanks for stopping by and have a great week ahead!

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