A Crowded Space

The Contest Model Doesn’t Work

One of the common models for some marketplaces consists of the contest. 

The most well-known contest marketplace is 99Designs.   As I’m sure most of you know, it’s a marketplace for brands to get logo designs (primarily) — a typical contest is $299 and gets as many as 99 submissions.  Hence the name 99Designs.  There are also many similar marketplaces, such as Crowdspring that boasts a whopping 140 entries per contest.

Seems great for the buyer, right? They just put up a creative brief and within a day they can review many different design options from freelancers all around the world.  Once they have one they like, they simply pick the winner and contest is closed.  

How about for the provider? Well, here’s the thing:  People like to be paid for their work.  It’s really not that complicated.  Nobody wants to work for free or do a lot of work with no guarantee of any payment.  

There’s a lot more detail on spec work here: http://www.nospec.com/faq

Since the contest model doesn’t work well for the freelancers, it creates a vicious cycle of quality.  Quality declines over time despite the best efforts from the marketplace to rate and filter.  This is the exact opposite of what a marketplace needs to be successful in the long term.  I can’t stress enough how important it is to design a virtuous cycle of quality into your marketplace.  Quality will naturally trend up or down, so make sure that you’ve designed your marketplace to make it go up.

Let’s compare two different models.  The contest model and a supplier-picks model (where the freelancers choose jobs on a first-come, first-served basis).

Contest model: Contests come in —> Good freelancers participate —> Some win —> Move long-term clients off the platform.   Or —> Some lose —> Get frustrated —> Go elsewhere.  You are left with only bad freelancers.   Quality declines. 

Supplier-picks model: Work comes in —> Good freelancers claim jobs —> Get good reviews —> Get more work.  Or —> Bad freelancers claim jobs —> Get bad reviews —> Get kicked out.  You are left with only good freelancers. Quality improves. 

I have a lot of respect for 99Designs.  They are one of the pioneers, but I believe they have the model wrong.  I only write this piece because I still receive pitches for marketplaces using the contest model.   I want to share with all marketplace entrepreneurs out there that the contest is a flawed model.  It inevitably creates a vicious cycle of quality that cripples the business.  Please stop pursuing contest models and create a better work environment for freelancers everywhere.  That’s the only way that we can all realize the dream of a global meritocracy where anyone with the appropriate skills can work how and when they want.