The merger did precisely what they wanted it to do:
Give a single player a dominant market-share. This single player will then engage in price-flooring practices until they've snatched up the largest market-share. They will then enforce their gradual fee and upselling strategies.
This is no different to any other market where a monopoly exists. Internet companies like to claim they aren't monopolies by saying "just visit another site for their services" but entrenchment of the market is exactly what makes them monopolies.
If a large-enough competitor came along (with big funding backing it), you'd soon see Upwork change tack and go back to price-flooring.
What is needed a simple, decent service, with reasonable rates ( from 1% to 3% from a transaction ) and keeps up with the requests. Such a service could be run by a max 5 person company and I believe everyone could profit.
I worked with Upwork and I liked the concept, but the implementation was a bit to complicated. With this changes, I really hope new such services will come up and fill this decency "void". The strategy of Upwork eludes me, since their strenght lies in the participants and alienating them is the last thing you want to do.
Such levels of pricing is not sustainable unless you're burning money to provide the service at a loss while you gain market share and network effects.
I agree that 20% fee seems excessive, but as soon as you're handling other people's money, 1-3% are not reasonable rates, they are unrealistically low, not feasible even for a non-profit that has all volunteer workforce.
It may be feasible to have a very low fee business model if you expect everyone to pay each other directly, but that still means managing all kinds of nonpayment and fraud issues, which takes a lot of time and thus expenses.
BTC is a possibility for settling particular purchases, but it's not the best way to receive your main income, it's like getting paid in an obscure foreign currency.
Last month I was at a sheep and wool festival (yeah just what it sounds like) in central MD, visiting a merchant in a straw floor awning tent at the county fairgrounds. He had a sign up saying he preferred BTC because card fees kill him. My wife whipped out her Mycelium app and the transaction went through in seconds.
It's not Macy's or Amazon yet, but it's getting there. Overstock takes it.
If you can leave that aside and just charge the freelancer with that 3%, let's say. If this doesn't make sense, you can always set a minimum charge, like 5 euros or 3% of the transaction, which ever is bigger.
That may be ok, but is definitely far less sustainable, as you have to keep creating new matches (as opposed to being paid for an existing match continuing).
However, the most freelancers get short jobs and many clients, as in the original article is specified, so this just simply works.
EDIT: it seems that as currently implemented, even Upwork is bumping in a search the ones with many hours/money earned. So cheating would be a bad decision, since it may drastically affect your visibility on the site
And may be one of the primary reasons for this "feature". I don't blame them, they are a marketplace and should encourage transactions on their platform.
I guess the small-jobs-for-new-clients-each-time take up a disproportionately large amount of support work for Upwork.
Freelancers are also numerous and cheap and Upwork definitely can afford to lose some of them, or even a lot of them, as long as keep the clients. But, as in the case of Ebay, the problem is that small contractors are also potential clients. Moreover, small clients add an interesting and very desirable collateral effect to the platform: A big increase in job diversity. If you alienate those people, you risk to lose some money, but also the outliers, very specialized freelancers interested in solving rare problems or offering less common experiences in many fields.
As Ebay before promoting big asian sellers with a lot of transactions, It seems that Upwork is mostly interested in big clients with lots of work that needs to be done, posting again and again the same type of jobs. This could lead to:
1) The same few stablished freelancers being hired again and again. New freelancers eventually will lost interest and leave the platform, or will be swallowed by the sucessful freelancers, now stablished as agencies or farmers, and forced to work for less money.
2) ... Or there is always a different freelancer hired. This would point to a problem with quality of freelancers or clients (can't keep any freelancer for much time and need to repost the same job each month).
3) ... Or nobody is hired. A red flag that could be seen also as a worrying symptom of "ashley-madisonization" of the platform.
I hope the best for the company, but it is unclear currently to me if this will be a smart move or a big mistake.
Remenber, once you fragment this market ( maybe 10s of such online freelancing services ), the market rules apply and prices will be kept down.
For example, if someone else feels the potential is underutilized, they could offer to buy it and then bump up rates.
How do you structurally make sure that the motive is different?
Some kind of collective idea might work. The model should be the stock market. Trading costs are getting lower, transparency is going up etc.
If bumping up rates would benefit the community, why not?
You can adopt the Wikipedia style and ask for donations, or just make a company behind it, with decent people ( as opposed to a corporation, with stakeholders, etc).
Anyone who is interested in marketplaces, whether their implementation, management, or value, should read "The Middle Man Economy" by Marina Krakovsky: http://marinakrakovsky.com/books/
This book was very helpful to me in understanding concretely how marketplaces and middlemen can actually have real tangible benefits (though, working for a marketplace startup now, and having worked for a real estate brokerage in the past, I have more than a passing familiarity with the value propositions of several types of middlemen).
Alternatively, here's a podcast with the author: http://www.econtalk.org/archives/2016/03/marina_krakovsk.htm...
Thanks for sharing those links
Here is a simpler example for a Uber-like implementation:
* Taxis would be advertising their current position and whenever they they are free or not with their phone.
* Potential customers would advertise their current location and where they want to go with their phone.
* Broker services would match taxis with customers
Obviously it's more complicated than that, there could be a reputation service associated to an account for example and your own algorithm running on your phone that chooses the combination of trust and pricing that you want.
If the developer had it's own service (like his personal website) that hold the list of services that he provides, his availability and general price. Then brokers could connect to this and match it with customer requests. Same on the other side, a customer should be able to submit his project proposal and let the various brokers pick it up and match the appropriate developers.
I don't believe this violated the ToS at the time, and Elance never said there was anything wrong with it. But once I posted it to the forums, my account was suspended within a day for a couple of silly things like having a reference to my personal website in one of my example images.
I quit putting much faith in the company after that.
That's just baloney.
We are also looking for freelancers to participate in market research interviews to help guide our build out.
Okay, it is a hyphenated word.