Just as eBay long ago turned from more than just an auction site for odds and ends into a platform where people have built entire businesses, crowdsourcing sites are also growing into marketplaces where serious transactions are taking place.
Far from its roots as a pseudo-utopian ideal of collective work, crowdsourcing has come to represent highly competitive marketplaces, where hundreds or thousands of people bid for assignments. It’s real, it’s here, and it might work for you.
Here are five points to consider as you survey this new market of marketplaces:
Think beyond graphic design
Online marketplaces first became well-known for low-overhead, communication-oriented services, like translation and graphic design. But as general-purpose marketplaces gain acceptance and trust, more and more professions are finding niches there – ranging from application design for mobile devices to marketing and project management tasks to personal assistant positions to the manufacture of tangible objects.
Matt Barrie, chief executive officer of Freelancer.com, likes to tell a story about having bet his staff he could find a lion tamer on the service. He says he found two – one at a zoo, and one working in a circus.
Embrace the free market (carefully)
The prospect of sending work out to a contractor overseas – who may well be charging a seemingly absurdly low fee – can be daunting. Much like eBay, large marketplace websites like Freelancer use client-feedback reviews and ranking mechanisms to give prospective clients a sense of who they’re dealing with before they take the plunge.
Moreover, Mr. Barrie says, the competitive pressure in such a large marketplace gives top performers incentive not to let their ratings slip. Large marketplace like Freelancer.com, with more than three million users (of whom about 10,000 are said to be logged in at any given times), use market forces to keep quality in check. Bidders don’t just bid on price alone: The more well-received the work their contractors do, the more prominent they become in the site’s rankings.
“If they drop down one ranking, it can mean tens of thousands of dollars of lost income,” Mr. Barrie says.
Don’t be overly price-focused. Sites like Freelancer use an escrow system, in which the client pays the website, which holds the money in check until the work has been completed to the client’s satisfaction. To be safe, don’t pay upfront.
Similarly, choosing a bid on the basis of price alone isn’t the best way to get a job done; work from the contractor’s track record, and the experience of previous clients.
Find the level of mediation that’s right for you
Not all crowdsourcing sites are as hands-off as Freelancer. As you move into more specific fields, other crowdsourcing sites actively insert themselves into the process.
For instance, Poptent, a video production site where many teams compete to produce a winning video for a clients, uses its in-house expertise to run interference between video creators who might be technically skilled, but aren’t experienced with the administrative process of working with big brands.
On the one hand, this makes the process more expensive, but it also relieves both clients and creators of overhead. The result is that clients can feel more comfortable working with creators who’d never otherwise have a shot – and those creators can practice their craft without having to hire a legal department.
Put it in perspective. Hopping onto a crowdsourcing marketplace requires taking a leap of faith, in the same way that buying something for the first time on eBay might have. But Poptent’s CEO, Andy Jedynak argues, crowdsourcing isn’t a brave new experiment any more.
“It’s not a strange new concept that they need to be worried about,” he says. “Crowdsourcing has been around since the 1990s. The world’s largest companies do it every day.”
In fact, he says, businesses might compare it to outsourcing – once anathema, now all but expected. The difference, of course, is that an outsourced contract goes to one company, elsewhere, that you may or may not have extensive experience with.
In that sense, crowdsourcing is really just a competitive online bidding process for an outsourced contract. Its brave new world isn’t as new as it seems.
Special to The Globe and Mail
An earlier online version of this story incorrectly identifed the name of Freelancer.com CEO Matt Barrie. This online version has been corrected.
Join The Globe’s Small Business LinkedIn group to network with other entrepreneurs and to discuss topical issues.
Our free weekly small-business newsletter is now available. Every Friday a team of editors selects the top picks from our blog posts, features, multimedia and columnists, and delivers them to your inbox. If you have registered for The Globe's website, you can sign up here. Click on the Small Business Briefing checkbox and hit 'save changes.' If you need to register for the site, click here.