How $35 Million Energized A Killer Debate About Crowdsourcing Pros And Cons
Crowdsourcing. Dirty word? An industry bubble? A new marketplace that’s with us for good? Some would say that the $35 million in venture capital funding 99designs received from Accel Partners last year sounded the last word. For other proponents and naysayers, the debate keeps raging on as fiercely as ever. So what’s the deal?
For the uninitiated, crowdsourcing is a process by which a business outsources tasks to a large group. Online sites (there are offline sites, too) offer a marketplace where a business posts projects along with a budget (or reward payment). The site’s users submit their ideas. The business chooses the winning entry, and the site collects a handling fee.
Freelancer.com, oDesk.com, Elance.com, Shutterstock… the field to create marketplaces for outsourcing various components of a business has cluttered quickly. A relative newcomer, Squadhelp, for example, hosts contests for creating taglines and slogans, logo design, website and usability testing, article writing, and SEO analysis. The crowdsourcing model represents projects ranging from video to advertising, to photography, and now design.
The Case of 99designs
99Designs is a marketplace that crowdsources graphic design. Founded in 2008, the company was bootstrapping their way along until last year. Angel investor Michael Dearing noted he was attracted to the company as “…a marketplace that is easy for companies to get on board with, and also a boon for designers who can go after any of the hundreds of jobs open at any one time.” 39% of the contests hosted on 99designs involve Internet, tech, or computer-focused companies.
The success of 99designs still has everyone talking. Traffic on the website demands consideration. Here are some figures posted onsite:
- 110 designs per contest
- 1,596 open contests
- 147,031 contests to date
- $493,790 currently on offer
- $1,480,405 designer payouts last month
Yes, that’s over $1.4 Million to designers just last month. So, if businesses find solutions to problems and everyone gets paid, why is the model so polarizing?
The strongest argument in favor of crowdsourcing is that it allows businesses to accomplish tasks otherwise unaffordable. For startups, this might mean the difference between launching or stalling. By appealing to large groups, more minds are put to work on a problem than say in the more traditional model of contracting a single company. Circumventing more “normal” pathways allows for outsider input that often yields fresh and creative solutions. What’s more, freelance workers have access to highly flexible and variable collections of projects to choose work from.
A loud camp decries a loss of intellectual capital. Many say the crowdsourcing model promotes a race to the bottom–driving costs and quality down, while putting skilled workers on unemployment. Another complaint is that the still burgeoning model leaves gaps for copyright disputes and stolen ideas. Informal contact between business and “freelanced” crowds might also lack the intense involvement and comprehensive approach that more traditional businesses offer.
Well, the debate will not be settled overnight. That’s for sure. If the crowdsourcing model is here to stay, perhaps the system can be improved, or made to address inherent deficiencies.
A Future Path?
Feedback from businesses using crowdsourcing is essential. Commentary on submissions will help current and future entrants hone and improve their crafts. Perhaps the model will become the go-to for fast solutions for low-budget projects. More exacting and complex projects might be best kept with well-established, professional companies. The best solutions might require investments of time and energy that demand a more intimate relationship between businesses.
crowdSPRING presents an interesting bridge between the crowdsourcing model and more traditional service providers. crowdSPRING facilitates contests that let businesses choose submissions of logo designs, website designs, and writing. What distinguishes them is that they offer three project levels: economy, standard, and Pro. Businesses that need cheaper solutions on the fly can shop economy. Those that can’t skimp corners can go Pro, ensuring that top talent doesn’t have to sacrifice the integrity of work or a rewarding salary.
Debate settled? Doubtful, but surely both sides of the crowdsourcing debate have ideas and improvements to glean from one another.