Startup and commercialisation expert
In my previous article ‘Decentralised Freelance Platforms are Coming After the Large Incumbents’ I highlighted the size of the global freelancing economy — over one hundred million freelancers and counting. Moreover, the large super-platforms have millions of users apiece.
The many freelance platforms are a magnet for both freelancers and clients seeking jobs to be done, the reason, traffic generation (a work supply for freelancers).
In this article I will explore how and why freelancers may be trapped on the super-platforms, and where they may be able to save themselves.
So on the surface, everything looks rosy for both the clients and the freelancers. The freelancers can find work and clients can quickly post a job/project for completion by a global workforce.
Do not get me wrong, these super-platforms (such as Freelancer, Upwork, Fiverr, and TaskRabbit) provide work for millions of independent workers, however the platform fees levied by these corporations are not paid for by the clients!
Freelance platform fees are absorbed by the freelancer.
One could argue without such platforms the consistency of work for a freelancer to undertake may/will diminish. Yes. But, the truth of the matter is that the vast majority of freelancers have little choice.
To mitigate an inconsistent pay-check, freelancers are drawn to the super-platforms.
I dare to say that the choice to be a freelancer in the modern economy is not a choice at all. Furthermore, the cost of living pressures required to keep food on the table, and pay your rent, is not a seldom struggle.
What if I were to tell you that all the power is actually in the hands of the client? Think about it, it’s the client (a freelancers de facto employer) who makes the market. Freelancers are coming to the platforms to get paid by the client. It is the client who posts the project/job. No clients mean freelancers with no food on the table.
As long as there are hungry freelancers the super-platforms can charge what ever they wish.
How did we get here?
I would argue that the growth of the super-platforms is a spawn of the VC market, the global casualisation of the workforce, and the adoption-rate of internet usage.
Obviously global technology businesses have capital and operational costs that only increase with growth and scale. And any risk-taking entrepreneur should be able to be rewarded for his/her endeavours. I have zero issue with platform innovators being successful.
So why are the super-platforms charging such large fees? Simple — VC money demands a return on investment higher than inflation, plus the risk premium self-assigned by the king makers.
Mira Muurinen has written an interesting article, interviewing Fabrice Grinda (co-founder of venture fund FJ Labs) talking about what VC’s look for when investing in marketplaces. With investment being contingent on such large unit cost metrics it is no wonder the platform fees for the super-platforms are so high.
I am not advocating for a freemium system, just a more even-handed power balance.
What if freelancers had the power to direct their clients to an unchartered nirvana? A place where the super-platforms do not ‘tax’ them with high fees.
What if clients could recognise the hardships of inconsistent work, including the mental health anxieties, and venture over to said freelance nirvana?
I have two magical words for you — ‘decentralised freelance’.
the market still needs to grow to find a larger variety of services asked and offered
Freelancers need to jump-ship and explore the decentralised world. Then once there, they need to invite, talk, beg, and plead their clients to join them. Clients need to start making some ethical choices when it comes to how and where they engage with the freelance talent they rely upon.
We now have a zero marginal cost solution to the super-platform fee problem, we just need a freelance mutiny en masse to pull clients over.
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