📚️ Ultimate Freelance Guide: Talent Platforms

Your "marketplace" is probably a network and your "community" is a database.

Author

Eryn Peters
July 21, 2024

Freelancing is an increasingly popular option for both professionals and businesses. The world of Freelance Platforms is booming.

Based on what I’m seeing in the market, platforms are popping up every day with counts in the thousands let alone agencies in the hundreds of thousands.

Reports suggest the U.S. Freelance Platform market will reach $500 billion in 2024 and there will be 90.1 million freelancers by 2028.

Whether you're a freelancer looking to expand your client base or a company seeking flexible talent solutions, understanding the landscape of these platforms is crucial for navigating the future of work.

So what even are freelance platforms? Let’s go over a few important aspects.

  • Marketplaces vs. Networks vs. Agencies

  • Verticalized vs. Horizontal

  • Platform Pros and Cons

Marketplaces & Networks & Agencies, oh my!

Much to my chagrin, these terms are often used interchangeably. Your "marketplace" is probably a network and your "community" is likely a database.

There are some subtle differences between freelance marketplaces and networks.

Marketplaces

Networks

🚦 Openness

Do not gate interactions between companies and freelancers - they can see each other and interact freely

Act as a matching intermediary between companies and freelancers - they cannot see each other and interact freely

🙅 Screening

Allow anyone to join either side of the marketplace - neither companies nor freelancers have to go through screening

Have a screening or assessment process for one or both sides of their network - ex. talent must pass tests to be accepted

💰️ Revenue

Marketplaces are inherently multi-modal - they have many revenue streams offering products and services to both clients and freelancers

Networks typically only make money when a match occurs between clients and freelancers - this is usually a “rake” (% markup on services)

🤝 Trust

Quality and trust are owned by the users - “social proof” like star ratings and reviews appear publicly to vouch for service providers. If anyone is unhappy, that’s on you - you chose that person.

Since the network controls the screening and match functions, ownership of quality and trust is with the network. If anyone is unhappy, they have to fix it.

So what about agencies? These often look and smell a lot like talent networks but there are a few differences there, too.

Networks

Agencies

🪑 Bench

Talent are freelancers and contractors in a network - if they are not working, they are not getting paid

Talent are employees of the agency - if there is no client work, they are still getting paid (they are on a “bench”)

📈 Size

Networks scale more easily as they are not cost-constrained with talent-side growth - liquidity is still important but not as costly

Agencies have to manage their employee utilization rates really carefully - if they don’t, they have ongoing costs to maintain salaries

⚖️ Classification

Because freelancers and contractors are independent workers, there may be employment classification risk for companies hiring workers through the network

Because workers are employees at the agency, hiring companies don’t experience the same employment classification risk that networks and marketplaces do

🤑 Pricing

(pricing terms breakdown here)

Networks are known to operate on time and materials models - hourly rates marked up

Agencies have typically operated on a project and milestone model or a retainer-based model

Bonus - What is a freelance community?

While we’re nitpicking on terms, if your talent-side members cannot see and interact with each other it is not a community it is a database.

  • Communities have many-to-many relationships (members to members).

  • Databases have one-to-many relationships (platform to members).

Here’s a visualization of what I mean.

Verticalization

Large horizontal marketplaces are being disrupted by vertical marketplaces. Verticalization means honing in on an inefficient category and enhancing the quality of the user experience.

Verticalization typically solves user experience issues by tailoring the experience to the nuances in that particular subcategory.

Examples of verticalization 

  • Craigslist > Airbnb - Enhanced trust, information sharing, and assurances that relate specifically to apartment rentals

  • UberEats > Slice - Specific to pizza, customers can search for more enhanced topping and dough selections

  • LinkedIn > Behance - Designers have a more comprehensive way of showcasing their talent and expertise

Pros and Cons of Platforms

Why do platforms exist and why might companies or workers choose to use them? In reality, companies and freelancers really don’t need platforms - they can and do find each other directly already.

Platforms for Workers

✅ Pros

  • Access to a larger pool of potential clients

  • Built-in tools for project management and payment processing

  • Potential for building a reputation through reviews and ratings

  • Some platforms offer additional services like skills validation and training

❌ Cons

  • Platform fees can cut into earnings

  • Competition can be fierce, especially on larger platforms

  • Less control over client relationships and terms

  • Potential for commoditization of services

For Companies

✅ Pros

  • Access to a diverse talent pool

  • Simplified hiring process and contract management

  • Built-in systems for payments and dispute resolution

  • Ability to quickly scale workforce up or down based on needs

❌ Cons

  • May be more expensive than hiring freelancers directly due to platform fees

  • Less control over the vetting process (though some platforms offer extensive screening)

  • Potential for inconsistent quality or reliability

  • May be challenging to build long-term relationships with freelancers

TLDR?

Online freelance platforms and marketplaces are reshaping the way work gets done. 

As the industry evolves, we're seeing a trend towards more specialized, vertical marketplaces that can offer tailored experiences for both freelancers and clients.

Whether you're a freelancer looking to expand your client base or a company seeking flexible talent solutions, understanding the landscape of these platforms is crucial for navigating the future of work.

Hey Talent Platform Leaders! Are you going to forward this to your teams?

(I know you will you silly goose, you do it all the time lol I can see when you do 😉 )

🙏 Please ask them to subscribe when you forward it.

Lets shape and educate your workforce together.

That’s all for now, pals. See ya next week.