Crowdsourcing faces ethical, legal risks

As the practice of tapping the crowd for ideas gains traction, there is also potential for companies to exploit this for their own benefits. Allocation of ownership rights also remains unclear.
Written by Ellyne Phneah, Contributor on
Firms may exploit crowdsourcing for their own benefits, and questions remain over rightly IP owners.

SINGAPORE--As crowdsourcing gains traction, risks also will emerge from companies that exploit the public for their own benefit and questions remain over which is the rightful owner of the resulting intellectual property (IP).
Sean Moffitt, managing director of Wikibrands, said at Crowdsourcing Week conference here Tuesday that the crowdsourcing market was growing 80 percent year-over-year. He defined crowdsourcing as the practice of harnessing collaboration--internally or externally--to solve problems, attain innovation, and efficiency on many different levels across various industries.

However, panelists in a discussion during the event noted that such practice might face ethical and legal issues.

One panelist, Ross Dawson, author of "Getting results from crowds" said crowdsourcing was, after all, a practice of "tapping the minds of many" and one that could be exploitative in nature. 

Citing an example, Sean Moffitt, managing director of Wikibrands, said a company may use a crowd to design a logo instead of his agency for purposes of saving money which would otherwise be spent on the agency, and getting more ideas from the public as compared to the agency.

People are passionate about being in the community, and will willingly contribute and may not realize they are being exploited by the company, Moffitt explained.

Dawson also pointed to questions over intellectual property rights and which party should have ownership of the resulting content or product built. At the moment, most companies that engage in crowdsourcing have a contract with participants which gives IP rights to the company, he explained, while in some contracts, certain users are able to retain IP rights.

Here, he said the challenge is in the allocation of shares by their value to the crowd and dealing with the lack of laws protecting and distributing ownership of ideas of users participating in crowdsourcing.

Do what is right, have structures for shared distribution

To address this, Dawson advised companies to design crowdsourcing with the ability to create value, as wekk as understand and do what "feels right".

Most brands that crowdsource are mostly inexperienced in a particular aspect so, moving forward, brands should take a more consultative approach to crowdsourcing or risk running into ethical issues with their audiences, noted Shelley Kuipers, founder and CEO of crowdsourcing consultancy firm, Chaordix.

Before laws are established to protect individuals participating in crowdsourcing, she said companies can come up with structures to allocate ownership. Citing an example, Kuipers said in the virtual world Second Life, users can vote which of their peers should receive points from the crowdsourcing company.

Crowdsourcing regulation body not necessary

The panelists did not agree a governance body should be formed to maintain ethics as crowdsourcing gained traction.

Dawson noted crowdsourcing was very transparent so people already would be able to self-govern and be accountable to one another.

Kuipers added there were already organizations such as crowdsourcing.org and people in this space for almost 10 years that could try to make sense of the landscape.

A crowdsourcing company or model that takes advantage of its crowd will not last for long because the crowd as a whole will "call them out" due to the level of transparency, she pointed out.

"It is intrinsic in who we are as humans [to point out any wrongdoing] so I don't know if a government body will be a good idea," she added.

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