Don’t Learn to Serf with Fiverr

FiverrFive years ago Fiverr.com launched. So Happy Birthday you piece of shit! Lauded as revolutionary by clueless pundits this online services marketplace quickly disappointed both actual buyers AND sellers. So what are the origins of Fiverr, what has it evolved into today, and what does it presage for the future of cloud-based services marketplaces for creative entrepreneurs? Keep reading…

Brief History of Fiverr

First some background on Fiverr. Founded in February 2010 by Micha Kaufman and Shai Wininger the site styles itself as the “eBay or Amazon of professional services”. Built on the marketing conceit that $5 is some magical price point at which buyers get something of value and sellers get about $3.76 for their trouble (after 20% Fiverr commission and 0.24 Paypal charges). The company has grown from 2 employees to 130 and raised $50M in venture funding including a recent Series C Round of $30 Million (only 600,000 $5 Gigs!).

What has Fiverr Become Today?

Initially sellers helped buyers with simple, useful chores such as proofreading your resume, spotting errors in your javascript code, or shopping for a birthday gift. However about two years ago Fiverr started allowing experienced sellers to charge more than $5 by adding on “extras” (new sellers must still start out by offering only $5 services). This has allowed the site to target offerings for creative work in graphic design, creative writing, songwriting, video production, voice acting, and web design to name a few. Which raises several questions about Fiverr that we will now seek to answer.

Does Fiverr Drive Down Prices?

Not according to the founders: It just drives down quality. I am paraphrasing founder Shai Wininger whose exact disingenuous quote is, “The claim that marketplaces in general drive prices down is false. It means that there is a wide spectrum of quality you can buy.”  There are many problems with this view, not the least of which is that it is just not true.

First of all, according to the U.S. Federal Reserve, e-commerce marketplaces lead to “downward pressure on inflation through greater competition, cost savings, and changes in price-setting behavior of sellers.” So online marketplaces do in fact drive down prices.

Second of all, the idea of Anchoring and Adjustment in modern game theory suggests that by setting the first price at a low $5, Fiverr influences all subsequent pricing. This leads to faulty decision making (price setting) for both buyers and sellers on the Fiverr site.

Finally, a significant component of Fiverr is outsourcing work to countries with lower wages. For example, of the Gigs reported for Top Sellers for Book Cover Design less than 25% are from providers in the United States and Western Europe. And studies show that outsourcing did in fact limit wage growth in the United States. Read more about that here.

So it is clear that Fiverr does drive down the prices for the work of creative entrepreneurs. As Winiger hints it may also enable a race to the bottom on quality for those buyers who want that.

Is Fiverr a Good Place for Creatives to Get Work?

Certainly lots of people have tried Fiverr, many have made some money, and some have made big money. It is a popular site based on the number of sellers who have setup profiles on the site.

  • Graphics & Design: 21,020 Sellers, 1048 Top Rated Sellers
  • Online Marketing: 16,029 Sellers, 503 Top Rated Sellers
  • Writing & Translation: 12,454 Sellers, 342 Top Rated Sellers
  • Video & Animation: 7,533 Sellers, 476 Top Rated Sellers
  • Music & Audio: 3,848 Sellers, 349 Top Rated Sellers
  • Programming & Tech: 9,183 Sellers, 161 Top Rated Sellers
  • Advertising: 2,998 Sellers, 182 Top Rated Sellers
  • Business: 3,733 Sellers, 135 Top Rated Sellers

Since individual profiles may offer services in more than one category it is impossible to determine if these are unique users. It is also difficult to determine how many of these users are still active on the site. Nonetheless, these are respectable numbers.

But there are also many horror stories from users of the site. Buyers complain about cons/scams, fake feedback scores, copyright violations, failure to deliver on-time, lack of recourse for shoddy work. And Sellers complain about cons/scams, high commissions, their work being resold for more money elsewhere, not being able to rate or provide feedback on buyers, accounts closed without notice. Some of the stories are just sad, such as this one, about a U.S. Veteran whose account was suspended for no valid reason.

Defenders of Fiverr, including some successful sellers/buyers on the site, are quick to point out the following tired cliches such as: “You get what you pay for”, “Caveat Emptor (Buyer beware)”, “What the market will bear”, and my favorite, “Everyone knows it won’t cost $5”. OK. Cliches have kernels of truth.

So the answer to this question is an emphatic IT DEPENDS. If the site works for you as a seller GREAT I wish you well. If you are a buyer check out these TIPS. If you want alternatives there are larger, more highly rated, general freelance sites (with lower commissions) such as freelancer.com and eLance. There are also category-specific so-called pay-to-play sites such as Voices.com for voice actors. One advantage of a pay-to-play site is that, because they are paying to be there, it weeds our the scammer, the dilettante, and the generally incompetent.

The Future of Freelance Work for Artists

More than a third of U.S. workers are now freelancers according to Forbes. The freelance, contingent, adjunct economy continues to grow. So what does the future of freelance creative work look like?

Several sunny, glass-is-half-full Fiverr blog posts describe the future of work as the “Gig Economy Lifestyle” pointing out that, while some extra money is great, the flexibility of working at home, gaining experience to add to your portfolio, and the ability to follow your passion is what really matters. They should have also mentioned how freelance workers are able to forgo economic benefits (e.g. unemployment insurance, social security), avoid legal protections (e.g. discrimination, minimum wage), and bypass union participation (e.g. SAG/AFTRA). Sounds nice, huh?

The sad truth is that to be an artist starting out today is becoming less about talent and more about wealth. Many creative entrepreneurs have invested heavily in college or art school, purchased expensive and specialized tools, and worked at internships for free. So are some jobs becoming possible only for those with the economic means to pursue them? This is the view of Sarah Kendrizor who has written extensively on the exploitation of adjuncts in higher education. She notes that “The contingent labor market is marked by two paths: one of low-status, low-paying jobs emblematic of poverty; another of high-status, low-paying jobs emblematic of wealth.” Online marketplaces have the potential to allow creatives to put food on the table, but only if they promote and enhance the value of creative work and offer a fair deal to the artists.

Income inequality is an above the fold topic of our time, and informs the debate about the future of work. Thomas Picketty chronicles how, over the past decades, financial rewards for the skilled worker have transferred to the skilled manager.  See his TED talk here. I bring this forward, in reverse of a conservative trope, to point out that the “Makers” in this story are the Artists who, you know, actually make things, not the “Takers” (Executives) of some shitty website like Fiverr.

I will leave Kaufman and Wininger with this quote from Taylor Swift responding to Spotify:  “Congrats on your new business model, but you can’t build it on the backs of the artists.” 
Full Disclosure: My passion for this topic is because I am a serial entrepreneur having founded three companies, a former and current freelancer, I studied economics (and computer science) at University, and I firmly believe technology should make peoples lives better.
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