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After the Web · Era 4 · Dot-coms and the crash

2001–2006alive; the nonprofit Wikimedia Foundation (since 2003), revenue…

Wikipedia

A free encyclopedia written by volunteers. It began in January 2001 as a side project of the paid and slow Nupedia, and by 2026 it runs on donations: with zero revenue from users, the foundation received $185.4 million in FY2024 and $205.4 million in FY2025.

Founders Jimmy Wales · Larry Sanger
Domains wikipedia.org · wikipedia.com · nupedia.com · wikimedia.org
volunteersdonationsnon-profitugc

In brief

Wikipedia is an encyclopedia written by volunteers that sells neither advertising nor subscriptions. It was born on January 15, 2001, as a side experiment inside the company Bomis, because the main project, Nupedia, with its seven stages of review, was producing only a handful of articles. Today it is supported by a nonprofit foundation: in fiscal year 2024 the foundation received $185.4 million, and in 2025 $205.4 million, mostly in donations. The story is interesting not for the encyclopedia but for the economics: how a project with no revenue from users grew from $1.51 million in FY2006 to $205.4 million in FY2025.

How it started (the founders)

Jimmy Wales owned Bomis, a small internet company, and put its money into a project for a peer-reviewed encyclopedia, Nupedia. In early 2000 he hired Larry Sanger as editor-in-chief: according to Sanger, Wales was looking specifically for a philosopher, and the very idea of an open encyclopedia, Sanger also says, was entirely Jimmy's. Nupedia worked on a strict scheme: articles were written by experts and went through seven stages of review. The first article to pass through the whole process came out in June–July 2000.

The pace was far too slow. On January 2, 2001, according to Sanger, an old acquaintance, Ben Kovitz, explained the idea of a wiki to him over dinner. On January 10 Sanger sent the Nupedia mailing list a message titled "Let's make a wiki": he wrote that a wiki could be set up in literally ten minutes, and that Wales, as he put it, thought many people would dislike the idea. A week later, on January 17, he asked colleagues to go to wikipedia.com and add a little article in five to ten minutes. Sanger gives January 15 as the launch date.

The domain was .com because, according to Sanger, Bomis saw advertising as a way to pay for Sanger's salary, the servers, and the programmers. But the advertising never appeared: by the end of 2001 Bomis was laying people off, and Wikipedia was bringing in no money at all; Sanger describes the advertising market of early 2002 as almost at rock bottom, and Bomis did not sell a single ad.

Year-by-year timeline

Lesser-known but significant facts

  1. By his own account, Sanger heard the wiki idea over dinner on January 2, 2001, and eight days later wrote to the mailing list, while Wales, according to Sanger, expected objections. The "Let's make a wiki" message arrived on January 10, five days before the launch.
  2. Wikipedia was on .com because of the planned advertising. Sanger links the move to .org in 2002 to Wales's assurance that there would be no advertising.
  3. The first announcement of Wikipedia on the Nupedia mailing list was not a launch announcement but a request to humor him: to go there and add an article in five to ten minutes. The big waves of new contributors came later, after Sanger's pieces on Kuro5hin were featured on Slashdot (July and September 2001).
  4. At its creation, the foundation did not accept money. In a message dated June 20, 2003, Wales asks people not to donate yet: there is no tax status and no bank account.
  5. In FY2005, PayPal fees ($11,091) came to two-thirds of the payroll ($16,930): donations were taken through PayPal. In FY2006, the fees were $45,617 against $107,122 in salaries.

Legend vs. the record

The first growth lever

The first lever was the format itself: editing after publication instead of review before it. In a year Nupedia produced a handful of articles estimate; over 2001 Wikipedia reached 13,000 by October and 20,000 by its first anniversary. The outside push came from Sanger's pieces "Britannica or Nupedia?" (July 25, 2001) and "Wikipedia is wide open…" (September 2001), which Slashdot put on its front page; search traffic grew in their wake, since the more pages there were, the more often Google indexed the site, and the more contributors arrived. It cost almost nothing: a Bomis server, the paid time of one editor, and an open license.

The paired story

The pair is Encarta (history-encarta): Microsoft's paid encyclopedia versus a free volunteer one.

Parallels today (projects from the catalog)

What a builder can take from this in 2026

  1. A side experiment can overtake the main project. In a year Nupedia produced a handful of articles, while Wikipedia produced thousands over 2001; set up a "wiki version" of your idea, the cheapest version that launches in ten minutes.
  2. Don't lose sight of who pays. Bomis funded the project as long as it could, and in 2001–2002 it shrank from 10–12 people to 4–5 at the bottom of the advertising market. If you fund an open project from your main business, decide in advance what will happen when the main business slumps.
  3. A decision on monetization is better announced publicly and in advance. The announcement about advertising at the end of February 2002 became the trigger: the Spanish contributors left for the Enciclopedia Libre fork. If you have a community, do not discuss monetization in passing.
  4. Donations are a separate payment product. As early as FY2005, PayPal fees ($11,091) came to two-thirds of the payroll ($16,930); if an open project asks for money, check the cost of accepting payments before you launch the fundraiser.
  5. Accumulated traffic is an index. Growth in 2001 came from Google, which indexed more and more pages, not from advertising. For a project built on user-generated content, every new page is an entry point from search.

Discrepancies and what we could not verify

Sources (primary first)

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The same thing, about today

The same breakdowns, but of projects launching right now: what the product is, where the first users came from, how they charge. The card is free, the full dossier is $5 (the dossier itself is written in Russian).

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