How Freelancing is Changing

Freelancing is a time-worn practice. The first written mention of the word appears in the historical novel Ivanhoe by Sir Walter Scott, published in 1820 and set in 12th-century England:

The term freelance originated as a way of referring to a hired lance, a soldier who offered to fight for the highest bidder. Loosely, someone willing to offer their unique and much-needed skills to those willing to pay for them.

Next comes our modern definition of the freelancer. Until recently, this was a skilled professional who offered their services to bolster mainly local businesses and organizations. They’d take out classified advertisements, cold-call potential clients, send out direct mail campaigns and attend industry networking events in order to build up a client base. Word of mouth was king.

The dream was to establish an ongoing retainer with a client so that the endless marketing churn might, for a moment, stop, and allow the freelancer to focus on doing what they love. Most freelancers would work exclusively in their local area. The best might travel interstate, and a select few might work internationally, flying to different clients around the globe. For the most part, however, freelancing was an affair firmly grounded in the freelancer’s local community. This was freelancing up until the internet age.

The arrival of the internet immediately began to send waves through the freelancing industry. In 1998 Harvard Business Review published a prescient article titled “The Dawn of the E-Lance Economy”. It predicted many of the ways that the internet might change how work is done.

The theoretical idea of the “e-lancer” became a reality with the launch of Guru.com in 1998 and Elance.com in 1999. Clients from any country in the world could post a job and budget and receive proposals from freelancers and independent contractors everywhere. For the first time, clients and freelancers who’d never met in person or on the phone were working together to complete and deliver projects. Work was the universal language.

For freelancers, the widening market was coupled with fierce competition. One of the earliest business models for online freelancing was bid-based, with freelancers competing to offer the most value for the lowest possible quote. Clients from around the world could now access talent in places with a low cost of living, resulting in lower prices than they’d ever been able to receive locally. This marked the beginning of a global price war that is still a contentious issue among freelancers today.

A 1999 Fast Company article called “The E-Lance Economy” covered with excitement the story of Zerita Rodriguez, a Denver-based graphic designer who, with the help of Elance, was now sourcing at least 10% of her business online.

Thousands of freelancers joined the movement, and freelancing magazines and blogs would publish articles about cold-calling local businesses alongside lists of the top online job sites. The freelancing industry still had a foot firmly planted in the traditional world. Having an online presence was the mark of the most forward-thinking freelancers, rather than the norm.

The online freelancing space is more competitive than ever. Big players oDesk and Elance have merged, combining resources to tackle an even bigger share of the market. Freelancer.com has just lowered its minimum job budget from US$30 to US$10, explicitly positioning the website as a place people can go to get freelance jobs done dirt cheap by people living in the developing world, albeit wrapped in a narrative of empowerment.

For many freelance marketplaces, selling cheap labor to comparatively wealthy clients is the core of their business model. For some, this is the darkest side of freelancing, where hard-won creative and technical expertise is sold for $6 an hour. For others, this is a breathtaking opportunity for people in the developing world to lift themselves out of poverty by accessing a global market.

New business models have emerged in the online freelancing space. Fiverr continues to make waves, pushing the limits of what people will do for $5. The company just raised $30 million in Series C funding, bringing its total funding to $50 million. Fiverr has also redefined what it means to be a freelancer, opening up a market for previously under-appreciated skills like singing in a fruitman costume, or being smeared with chocolate while singing happy birthday.

The market for pre-priced services is also booming. Newcomer Envato Studio and old players like People Per Hour offer flat-rate services like logo design, illustration and PSD to HTML conversion. These allow freelancers to set their own prices and have clients come to them, rather than competing to offer the lowest price and best value on a job posted by a client.

More freelance transactions are happening online than ever before, and many freelancers now earn 100% of their income online, working with clients they have never met, and never will meet.

This new landscape opens up massive opportunities for freelancers in places where wages are comparatively low. A talented designer in India can work with clients willing to pay $30 an hour, rather than the local rate of $12 an hour. A freelancer in a rural area with a small base of potential clients locally can access thousands of clients around the world.

Freelancers with specialized skills finally have a large enough accessible market to make a living purely practicing their specialty. Fewer creatives and technical people are forced to be generalists to please a local client base. A freelancer can specialize in making typography from paper, or working with the GO programming language, and still run a bustling freelance business working remotely with clients in all five continents.

For many, this mostly-online way of freelancing has led to a reduction in time spent on marketing, cold-calling and pitching to clients. Freelancing platforms focus on advertising and marketing to bring clients in, so freelancers don’t have to. For many freelancers, the chance to focus on the work, rather than on self-promotion, makes the platform fees that many marketplaces charge worth it.

After all, clients are the primary value that freelance marketplaces offer to freelancers. Though each platform comes with its own bells and whistles, what matters most is how many clients they bring, and the budget they’re willing to spend on each project.

Yet, things aren’t all rosy. As with any disruption that creates opportunity, there is a dark side. Freelancers previously doing a thriving trade with local businesses have been forced to lower prices to compete in a global market. Instead of being judged on price and talent against freelancers in the same town, or the same city, freelancers are now competing with the world. To make a good living in Switzerland, a freelancer may need to charge $80 an hour. In places where the cost of living is low, a good living might only require $15 an hour. When a client compares two freelancers with the same talent, but one charges $80 and one charges $15 for the same work, it isn’t hard to see how the story ends.

Design competition websites are part of this changing freelance industry. On these platforms (and there are many), skilled creatives submit work in the hopes of being selected as the winning design and receiving payment. For some, this is an exciting way to work, with an addictive element of risk and reward. For others, this way of working is unfair to freelancers who end up doing work for free.

Freelancing’s migration online shows no signs of stopping, and the future will undoubtedly see this trend continue. More freelancers will find 100% of their clients online, and will work with people from all over the world.

Competition will continue to increase as more freelancers make the leap to a digital way of working. In some sections of the industry this will drive prices downward, and freelancers will need to find new ways to differentiate themselves from those charging less. With the freelancing market starting to get saturated, learning new skills is the only way to stay in the game. Having in-depth knowledge in programming gives freelancers an edge over others and acquiring sql skills is one way to stay relevant in the industry.

Remote freelancing will grow in popularity as a way for companies to deal with an overflow of work. As remote collaboration tools like Slack, Google Hangouts, Asana, Trello, Github and Dropbox (to name just a few) continue to become more powerful and more polished, working with remote freelancers will be easier than ever before. These freelancers can ‘plug and play’ into existing projects, and disengage once the project is complete, fluidly joining and leaving teams as their expertise is needed.

An online presence will no longer be something that places you at the cutting edge of the freelancing industry. Instead, it will be a requirement as fundamental as a phone line once was.

As more freelancers work remotely, there will be more and better tools to manage this workflow, and to increase the visibility of work being done.

There will be more unusual types of freelance work being sold. Fiverr has shown that there’s a market for selling skills that were previously too quirky, specialized or unique to be monetized. The future will see higher-priced marketplaces specialized around these unusual skills.

Freelancers will sell products in ever-increasing numbers. Envato Market’s author community is made up primarily of freelancers who also sell products on the side. Products magnify impact: they are, essentially, a chance to multiply your effort across hundreds or thousands of clients. Ever-more freelancers will supplement their client-based businesses by selling products like themes, templates, and stock.

Freelancers will increasingly band together to take on larger projects, each part of a distributed group of workers who haven’t met each other, yet collaborate every day through the internet. More and more agencies will go digital, bringing together freelancers through the internet rather than through a hip, shared office space. Fully distributed agencies like Modern Tribe are leading the way.

Today, we’re more likely to see a freelancer working alone in a coffee shop, tweaking her Dribbble account, or staying up late at her bedroom desk to meet a client deadline, than we are to see them meeting with a client in their office, making cold-calls, or organizing a letterbox campaign. In the last 10 years freelancing has undergone a shift as dramatic as any industry in the world. We can only continue to wonder what the next 10 years will hold for this rapidly changing industry.

With thanks to Jim Blackstock for sourcing the historical mentions of freelancing for his article The Origin of the Word Freelance and Why It Should Make Us Happy.

by Natasha Postolovski. Writer, programmer, traveler.