= Service marketplaces that match clients and providers of services: "freelance marketplaces also allow companies to assemble teams quickly, find specialized expertise, begin new initiatives and drop everything when it’s no longer needed".

Introduction

1. Ross Dawson, Getting Results from Crowds:

"Some argue that service marketplaces are not true crowdsourcing, as work is done by individuals or small teams rather than distilling the wisdom of many. However the use of service marketplaces is today the primary way in which the power of crowd work is having an impact.

All of the major service marketplaces emphasize their work management processes and structures, including communication, collaboration, project management, structured payments, and reporting. As such their role is not just one of matching buyers and sellers of services, but more broadly that of facilitating global distributed work."

2. Thomas Malone:

"“This is one more step in the path to leveling the playing field between small and large businesses,” said Thomas W. Malone, a professor at the Sloan School of Management at the Massachusetts Institute of Technology and author of “The Future of Work” (Harvard Business School Press, 2004). “A small-business person in a company of one can look to the world like a very large company and have access to all kinds of services — and that’s largely because of this kind of model.” (http://www.nytimes.com/2009/06/25/business/smallbusiness/25freelance.html)

Description

1.

"Recent times have witnessed the emergence of large-scale, web-based service marketplaces where many small service providers (agents) compete among themselves on catering to customers with diverse needs. Customers who frequent these marketplaces seek quick resolutions for their tem- porary problems and thus usually trade-off prices with waiting times. These marketplaces are typically operated by an independent firm, which we shall refer to as the moderating firm. The moderating firm establishes the infrastructure for the interaction between customers and agents. In particular, it provides the customers and the agents with the information required to make their decisions. These moderating firms vary with respect to their involvements in the marketplace. They can introduce operational tools which specify how the customers and the agents are matched together. For instance, while some of the moderating firms allow the customers to choose a specific service provider directly, others allow customers to post their needs and let service providers apply for the job. Moreover, moderating firms can introduce strategic tools which allow communication and collaboration among the agents. These different involvements result in different economic and operational systems, and thus vary in their level of efficiency, and the outcomes for both customers and service providers." (http://www.kellogg.northwestern.edu/FACULTY/allon/htm/Research/Service_MatketPlace.pdf)

2.

"The dynamism of the information economy, the internet, and the recession have forced and allowed the flowering of labor-as-a-service marketplaces. Individuals can self-direct their professional activity with greater empowerment, and service-consumers can be more selective and focused in their purchase of labor services through crowdsourcing. More productive use of time can occur for both service-providers and service-consumers.

The big shift is to labor-as-a-service generally, where in the past marketplaces were more focused on software coding and other vertical markets. The new labor marketplaces include oDesk, CloudCrowd, CrowdFlower, ClickWorker, crowdSPRING, LiveOps, and editLift. These startups broaden the existing affinity marketplace landscape of companies such as 99designs, Justmeans, TopCoder, RentACoder, Elance, and Guru.

You know an industry has arrived when Freelance Camps and conferences (CrowdConf2010) start happening!

Thought-leadership provided by Dan Pink’s Free Agent Nation, the ROWE (ROWE (Results Oriented Work Environment) concept, and Tom Malone’s The Future of Work is finally coming to greater fruition." (http://futurememes.blogspot.com/2010/09/crowdsourcing-labor-as-service.html)

Typology

"These sites include general freelance marketplaces (Guru, Elance, oDesk) and others offering specialties like software (Rent A Coder), personal assistants (virtualassistants.com), graphics (99designs), or creative services (CrowdSpring)." (http://www.nytimes.com/2009/06/25/business/smallbusiness/25freelance.html?)

Characteristics

See Chapter 13 of Ross Dawson's Getting Results from Crowds.

How they work

"Charges: Service marketplaces make their money by taking a commission – usually somewhere between around 7% and 10% - on every job. Sometimes the cost is added on to whatever you bid so effectively is passed on to the employer, or is taken out of what you bid. Some marketplaces have subscriptions you can pay to lower the commission rate they take.

Receive payment: Payments are usually held using an escrow system so that money is held by the marketplace and then released when the project or milestones towards it are completed, though the process can vary slightly from site to site. Some marketplaces also have guaranteed payments for hourly jobs, usually if parties agree to use a monitoring tool which shows when a provider has logged in, and may take snapshots of their desktop. Finally many marketplaces allow flexibility in withdrawing money to a foreign bank, PayPal, or other facility. The cost and ease of doing this varies."

(Getting Results from Crowds, pp. 198)

Status

1.

"The five largest global service marketplaces are Elance, Freelancer.com, Guru.com, oDesk, and vWorker.com, with many others including some just below this top tier. Collectively these companies have paid over $1 billion to workers around the world." (Ross Dawson, Getting Results from Crowds)

2.

2009:

'In the first quarter of this year, oDesk freelancers logged 830,000 hours, more than double the figure for the same period the year before and five times the rate in 2007. Nearly 234,000 jobs were posted at Elance last year, an increase of 64 percent over the previous year.

...

The research firm IDC says homeshoring is growing by 18 percent a year.

...

Fabio Rosati, chief executive of Elance, said his clientele was shifting from an earlier wave of technology-oriented companies toward more traditional small businesses, which now represent about 80 percent of his clients, including mom-and-pop retail stores, manufacturing companies, real estate agencies and physicians. “We’re shifting from early adopters to mainstream,” he said. " (http://www.nytimes.com/2009/06/25/business/smallbusiness/25freelance.html)

Examples

oDesk, CloudCrowd, CrowdFlower, ClickWorker, crowdSPRING, LiveOps, and editLift.

"A typical example of such a marketplace is oDesk.com where around 250,000 programmers compete on providing software solutions. oDesk.com allows for two types of interaction between customers and service providers. Customers can go directly to a programmer and ask him to provide the service. The customers are then queued for this specific agent. In this type of interaction, most of the time is spent waiting for the agent to complete his previous jobs (36% of the waiting time is spent from the moment the customer chooses the agent until the agent begins working.1 ). On the other hand, oDesk.com also allows customers to post jobs and wait while agents apply for the job. In this type of interaction, a negligible amount of time passes until more than 10 agents apply, leaving the decision at the hands of the customer.

Another large-scale, online service marketplace is ServiceLive.com, which is a start-up owned by Sears Holding Company. ServiceLive.com (with the slogan of “your price, your time”) caters to time and price-conscious customers and service providers in the home repair and improvement arena. ServiceLive.com allows customers to choose among multiple agents after naming their price and describing their project. This type of interaction between customers and service providers is equivalent to the second one described for oDesk.com. Both oDesk.com and ServiceLive.com receive 10% of the price of the project at service completion. In both marketplaces, the moderating firms allow the customers to browse among tens of thousands of agents and communicate with different providers to make the service transaction “one-click- away.” (http://www.kellogg.northwestern.edu/FACULTY/allon/htm/Research/Service_MatketPlace.pdf)

Rent A Coder connects businesses with a global freelance market of programmers, and today, an astonishing 136,837 buyers and 285,700 coders from all over the world make up the Rent A Coder marketplace. Posting of work requests is free, but Rent A Coder takes a 6-percent to 15-percent cut of the final transaction. In 2008, the most recent data available, revenue was $2.4 million--more than double what it was in 2004. This year, Ippolito expects $3 million and will rename the site vWorker.com--for virtual worker. Ironically enough, Rent A Coder has become a company that hires its own employees. For now, it has 12.

99Designs.com:

'Here’s how it works. Business owners post what type of design they want and how much they’ll pay. Contenders submit designs within seven days. The quality and quantity depend on the size of the cash prize the customer will pay (many bids fall in the $500 range). The average customer receives 95 designs from across the globe. The customer gets the design, the designer gets paid and 99designs takes a cut ala Ebay and Etsy. Don’t like any designs? The customer gets the money back.

99designs currently taps a talent pool of 100,000 designers that now submit an idea roughly every 4 seconds. This huge market makes it simple and cheap for business owners and individuals to get custom sites and logos quickly and on the cheap. “Rather than getting bids and proposals, you’re getting actual concepts from designers all over the world” Mickiewicz says.

Customers can get quality too. Artists from the 99designs community created the book cover for Tim Ferriss’s 4-Hour Body, the Website for the Queen of Jordan, and the T-shirts for SXSW and the San Francisco marathon." (http://www.forbes.com/sites/stevenbertoni/2011/04/28/facebook-backer-accel-bets-35-million-on-crowdsourcer-99designs/2/)

Discussion

Typology of platform intervention

"We distinguish between three degrees of involve- ments of moderating firms in such markets:

(1) No-Intervention: the moderating firm restricts its involvement to providing the facility for agents to advertise their services, set their prices, and for customers to compare among the different agents.

(2) Operational efficiency: the moderating firm provides additional mechanisms which facilitate efficient matching between customers and service providers. These mechanisms aim at reducing the inefficiency associated with having the right agent with the right capability (with the right price in mind) idle while a customer with similar needs waiting in line for another agent. As we will discuss, a system in which customers post their needs and name their price is an example of such a mechanism.

(3) Enabling Communication: the moderating firm may allow providers to communicate among themselves and exchange information on prices and job requirements."

(http://www.kellogg.northwestern.edu/FACULTY/allon/htm/Research/Service_MatketPlace.pdf)

Source

Large-scale Service Marketplaces: The Role of the Moderating Firm. By Eren B. Cil, Gad Allon et a. [1]

Service Marketplaces

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