Playing to the crowd: Pooling ideas from online design community drives revenue and creativity

Every week Techvibes republishes an article (or two) from Business in Vancouver. This article was originally published in issue #1073 – May 25 – 31, 2010.

A Vancouver-based website operator is proving that the crowd-sourcing model of content creation can generate substantial revenue and brilliant ideas from the online community.

Since its launch in February 2008, 99designs has paid out more than $12 million to amateur and professional graphic designers who create everything from logos to banner ads to T-shirts for businesses that post design projects on 99designs.com.

The website is profitable and has never required external funding.

According to the company, it generates seven-figure revenue every month and has created a community of nearly 200,000 designers that’s completed 45,000 design projects.

Businesses that post design projects on the site usually pay between $100 and $600 in prize money to whoever creates their ideal design based on a brief project outline.

“It’s an open marketplace,” said 99designs co-founder Matt Mickiewicz. “You as a business owner determine how much you want to pay within minimum guidelines.”

And that transaction occurs only after businesses receive dozens, sometimes hundreds, of design submissions to choose from.

A money-back guarantee means that businesses that aren’t satisfied with the designs don’t have to commit to them.

The website charges $39 to post a project and collects a 10% commission on the prize money. The more prize money a company offers, the more designers are encouraged to participate in its project.

Mickiewicz said the site is democratizing design by allowing anyone – from the professional to the hobbyist – to compete for projects.

“It doesn’t matter if you have a fancy office in mid-town Manhattan and an impressive portfolio and client list, you’re only being judged on [99designs] on the work that you created in that one point in time.”

While 99designs primarily targets small businesses and entrepreneurs who may be reluctant to spend much on graphic design, members of 99designs’ online community have created designs for larger brands like Adidas and Dish Network.

99designs evolved from a community forum for designers and web developers that its founders created more than a decade ago called SitePoint.com. A handful of designers who frequented that site began playing “Photoshop tennis,” in which they would hold mini-design competitions using fictional brands.

As participation in the contests grew, businesses took note and began offering small prize money for real design projects. SitePoint’s founders then spun the contest into 99designs.

99designs’ momentum is maintained, in part, by the passion many designers have for doing design work.

SitePoint is a success in its own right. It receives 2.5 million visitors per month.

Advertising revenue from that site allowed Mickiewicz to buy a BMW in cash on his 16th birthday and his first home when he was 19.

Mickiewicz and business partner Mark Harbottle also founded Flippa.com, an auction website for web development projects.

The three websites employ 55 people in offices in Vancouver, Melbourne and San Francisco. There is a handful of older players in the crowd-sourced design space, including Elance.com, which is a website where freelance designers submit resumés, sample work and other credentials to get hired for projects.

However, businesses that post projects on Elance must select the candidate before the finished product is designed.

That’s similar to the traditional designer-client relationship in which businesses pay designers upfront.

“Hiring someone before you see their work is kind of intimidating for small-business owners and entrepreneurs especially,” said Mickiewicz.

“You might end up paying $5,000 or $10,000 for something you aren’t happy with. You’ll have no choice but to go to a different designer or pay another $75 an hour for more revisions. We remove all that risk.”

The 99designs team is flying to New York this month to accept a Webby Award – a top honour in the web development world – in the web services and applications category.

Last September, Vancouver’s Crowdsource Networks Inc. launched Designtourney.com. The beta site uses a crowd-sourcing model that has more in common with 99designs than Elance.

Designtourney has a community of about 1,500 developers in 120 countries that have completed 60 design projects in total.

Crowdsource is pitching its website on Dragon’s Den this fall and is trying to raise seed capital from other investors as well.

Crowdsource has four other crowd-sourcing websites that it’s attempting to launch: jobtourney, viraltourney, ideatourney and soundtourney.

On the latter, businesses would be able to find audio programmers who could create jingles, music or website sound effects.

While more businesses are recognizing the power of the crowd in creating ideas and content, Arash Afrooze, CTO of Crowdsource, said that there is still room for new entrants like designtourney.

“If you walk down the street and ask 10 people what crowd sourcing is, eight wouldn’t have a clue,” he said.

“It’s very important for us to get into this now so that we can expand to be one of the major players when crowd sourcing becomes a very huge concept.”