Leak-o-nomy: The Economy of Wikileaks

Stefan Mey from Berlin talks to Julian Assange, the spokesperson of the whistleblower platform Wikileaks.org. The interview took place during the 26th Chaos Communication Congress where Assange and his German colleague Daniel Schmitt gave a lecture on the current state and the future of Wikileaks.

Julian Assange

Julian Assange (photo: flickr.com by Esthr, cc-by-nc-2.0)

At the moment Wikileaks.org has an unusual appearance. The website is locked down in order to generate money. The locking-down of the website was first planned until Jan 6, then Jan 11 and now it has been announced that it will last “until at least Jan 18”. How did you decide in favor of this tough step?

In part, this is a desire for us to to enforce self-discipline. It is for us a way to ensure that everyone who is involved stops normal work and actually spends time raising revenue. That’s hard for us, because we promise our sources that we will do something about their situation.

So, you strike?

Yes, it’s similar to what unions do when they go on strike. They remind people that their labour has value by withdrawing supply entirely. We give free and important information to the world every day. But when the supply is infinite in the sense that everyone is able to download what we publish, the perceived value starts to reduce down to zero. So by withdrawing supply and making our supply to zero, people start to once again perceive the value of what we are doing.

Do you urgently need money?

We have lots of very significant upcoming releases, significant in terms of bandwidth, but even more significant in terms of amount of labour they will require to process and in terms of legal attacks we will get. So we need to be in a stronger position before we can publish the material.

In mainstream media as well as in non-commercial media there are two important questions. What does it cost? And how is it financed? Would you please first describe the cost side …

By far the biggest cost is people. That’s also a cost that scales with operations. The more material we go through, the more the management and labour costs are. People need to write summaries of the material and see whether it’s true or not. In the moment everyone is paying himself, but that can’t last forever.

How big is the core team of WikiLeaks?

There are probably five people that do it 24 hours a day. And then there are 800 people who do it occasionally throughout the year. And in between there is a spectrum.

How do you and the other four guys who work full time without salaries finance living costs?

I have made money in the Internet. So I have enough money to do that, but also not forever. And the other four guys, in the moment they are also able to self-finance.

Was Wikileaks your idea as many assumed?

I don’t call myself a founder.

Nobody really knows about the founders, says Wikipedia …

Yes. This is simply because some of the people in the initial founding group are refugees, refugees from China and other places. And they still have family back in their home countries.

So at the moment the labour costs are still hypothetical, but the big costs that you really have to pay bills for are servers, office, etc.?

On the bandwidth side, the backing is costly as well when we get big spikes. Then there are registrations, bureaucracy, dealing with bank accounts and this sort of stuff. Because we are not in one location, it doesn’t make sense for us to have headquarters. People have their own offices across the world.

What about cost for lawsuits?

We don’t have to pay for our lawyer’s time. Hundred of thousands or millions dollars’  worth of lawyer time are being donated. But we still have to pay things like photocopying and court filing. And so far we have never lost a case, there were no penalties or compensations to pay.

So all in all, can you give figures about how much money Wikileaks needs in one year?

Propably 200 000, that’s with everyone paying themselves. But there are people who can’t afford to continue being involved fulltime unless they are paid. For that I would say maybe it’s 600 000 a year.

Now let’s talk about your revenues, your only visible revenue stream is donations …

Private donations. We refuse government and corporate donations. In the moment most of the money comes from the journalists, the lawyers or the technologists who are personally involved. Only about ten percent are from online donations. But that might increase.

At the bottom of the site is a list of your “steadfast supporters”, media organisations and companies like AP, Los Angeles Times or The National Newspaper Association. What do they do for you?

They give their lawyers, not cash.

In other words: If Wikileaks.org goes down as a result of a legal action, the same precedence can be used to take down nytimes.com the next day or the German Spiegelonline.

Why do the they help you? Probably not out of selflessness.

Two things: They see us as an organisation that makes it easier for them to do what they do. But they also see us as the thin end of the wedge. We tackle the hardest publishing cases. And if we are defeated, maybe they will be next in line. In other words: If Wikileaks.org goes down as a result of a legal action, the same precedence can be used to take down nytimes.com the next day or the German Spiegelonline.

My explanation was that maybe they do it because they know that what you do is actually their job, but they don’t have the money to do it.

Maybe. The cost per word in investigative journalism is high. We make it a little bit cheaper for them. If you can bring these costs per word down you can get more words of investigative journalism and publish even in a company that wants to maximize profit, because we do some of the expensive sourcing. And there is another really big cost, namely the threat of legal action. We take the most legally difficult part, which is not the story, but usually the backing documents. As a result there is less chance of legal action against the publisher. So we help them to bring their costs per word in investigative journalism down.

You need to motivate two groups of people, in order to make the site run, the whistleblowers and the journalists. What are the motivations for whistleblowers?

Usually they are incenced morally by something. Very rarely actually they want revenge or just to embarrass some organisation. So that’s their incentive, to satisfy this feeling. Actually we would have no problem giving sources cash. We don’t do that, but for me there is no reason why only the lawyers and the journalists should be compensated for their effort. Somebody is taking the risk to do something and this will end up benefiting the public.

But then the legal problem would become much bigger.

Yes, but we’re not concerned about that. We could do these transfer payments to a jurisdiction like Belgium which says, that the authorities are not to use any means to determine the connection between the journalist and their source. And this would include the banking system.

On the other hand, you experiment with incentives for journalists. This sounds weird at first. Why do you have to give them additional incentives so they use material you offer them for free?

It’s not that easy. Information has value, generally in proportion to the supply of this information being restricted. Once everyone has the information, another copy of the information has no value.

That produces the counter-intuitive outcome that the more evidence there is of some scandal and the more important the scandal, the less likely it is that the press will write about it. If there is no exclusivity.

But nearly every journalist in the US has daily access to the material of a news agency like AP.

The material of AP is ready to go straight into the newspaper. Our material requires additional investment. So when we release an important leak, it requires an important, intelligent journalist who is politically well connected. Those journalists have significant opportunity costs. Okay, they want to spend their time on 200 pages. In order for that to be profitable they need to make sure that they will come out with an exclusive at the end. But if it is perceived to be something of interest, it is probable that also other people will be working on it at that moment. And when they publish is unpredictable. That produces the counter-intuitive outcome that the more evidence there is of some scandal and the more important the scandal, the less likely it is that the press will write about it. If there is no exclusivity.

In Germany you made an exclusivity deal with two media companies, with Stern and Heise. Are you satisfied with these kind of deals?

We have done this in other countries before. Generally we have been satisfied. The problem is that it takes too much time to manage. To make a contract, and to determine who should have the exclusivity. Someone can say, oh, we will do a good story. We are going to maximize the political impact. And then they won’t do it. How do we measure this?

You want to make sure that if you give them the exclusivity that they really do what they promise to do …

Yes. One thing that can’t be faked is how much money they pay. If you have an auction and a media organisation pays the most, then they are predicitng, that they will benefit the most from publishing the story. That is, they will have the maximum number of readers. So this is a very good way to measure who should have the exclusivity. We tried to do it as an experiment in Venezuela .

Why Venezuela?

Because of the character of the document. We had 7 000 e-mails from Freddy Balzan, he was Hugo Chavez’s former speech writer and also the former ambassador to Argentinia. We knew that this document would have this problem, that it was big and political important, therefore probably no one would write anything about it for the reason I just said.

What happened?

This auction proved to be a logistical nightmare. Media organisations wanted access to the material before they went to auction. Consequently we would get them to sign non-disclosure agreements, chop up the material and release just every second page or every second sentence.That proved to distracting to all the normal work we were doing, so that we said, forget it, we can’t do that. We just released the material as normal. And that’s precisely what happened: no one wrote anything at all about those 7 000 Emails. Even though 15 stories had appeared about the fact that we were holding the auction.

The experiment failed.

The experiment didn’t fail; the experiment taught us about what the burdens were. We would actually need a team of five or six people whose job was just to arrange these auctions.

You plan to continue the auction idea in the future …

We plan to continue it, but we know it will take more resources. But if we pursue that we will not do that for single documents. We will instead offer a subscription. This would be much simpler. We would only have the overhead of doing the auction stuff every three months or six months, and not for every document.

So the exclusivity of the story will run out after three months?

No, there will be exclusivity in terms of different time windows in access to the material. As an example: there will be an auction for North America. And you will be ranked in the auction. The media organisation which bids most in the auction would get access to it first, the one who bids second will get access to it second and so on. Media organisations would have a subscription to Wikileaks.

They would have timely privileged access to all Wikileaks documents that are relevant for North America …

Yes. Let’s imagine there are only two companies in the auction. And one pays double what the other one pays. And let’s say the source says they want the document to be published in one month’s time. So there is a one month window where the journalists have time to investigate and write about the material. The organisation that pays the most for it gets it immediately, so therefore they would be able to do a more comprehensive story. Then the organisation that pays half as much gets it half the time later, they get the documents two weeks later. And then after one month they both publish.

That sounds promising. Wouldn’t then the financial problem be solved?

It depends on how many resources the auction itself takes. And media themselves don’t have so much money at all. But all in all I think we only would have to have a few bid cases per year, that would be enough to finance it.

The interview is a cross-posting from the German Medien-Ökonomie-Blog.

Watch and listen to this interview as Xtranormal-Video.

About the author: Stefan Mey has studied Journalism and Sociology at the FU Berlin, his thesis being about the economy of blogs. Since the beginning of his thesis he has been blogging about digital media economy. At the moment he is CMO of the Onlinedating Startup Loverty. With a freemium modell and an advanced matching technology, including collaborative filtering, they want to become the upcoming Facebook of Onlinedating . They will start with the German dating market and then target the international market. The site will go online at the beginning of 2011. The Loverty dating blog has already been launched.

Advertisements

9 thoughts on “Leak-o-nomy: The Economy of Wikileaks

  1. Pingback: Leak-o-nomy: The Economy of Wikileaks « Medien-Ökonomie-Blog

  2. Pingback: QotD #12 « Seeing Beyond the Absurd

  3. Pingback: Leak-o-nomy: Die Ökonomie hinter Wikileaks « Medien-Ökonomie-Blog

  4. Pingback: WikiLeaks, le cadeau de fin d’année « KKmG – Hebdo

  5. Pingback: Leak-o-nomy: Die Ökonomie hinter WikiLeaks (Interview mit Julian Assange) | Medien-Ökonomie-Blog

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.