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Crowdsourcing: Not Yet a Game-Changer for Small Biz

Crowdflower, to take one example, operates by breaking down a client's huge projects into "microtasks" that can be performed quickly, remotely and cheaply. One specialty is "image moderation," which accesses a huge network of contributors who judge whether photos uploaded to a website are acceptable. While Crowdflower mostly works with large companies that have enormous data-processing needs, other crowdsourcing companies lend themselves to smaller businesses by providing access to talent needed for a specific project.

The design resource 99designs, for example, allows business owners or startups to solicit ideas for logos, signs, banner ads and website designs from the more than 100,000 designers around the world signed up with the site. Interested designers compete for the job by submitting (unpaid) samples. Elance works similarly by matching businesses with writers, marketing specialists and computer programmers. The advertising agency Victors & Spoils operates on the same general principle, with a full-time, in-house team of creative directors and account managers who work directly with clients, but who outsource the actual creative work to a team of thousands of freelance writers, designers and strategists.

The beauty of crowdsourcing is its potential to level the playing field between businesses in different parts of the country. While tech start-ups in San Francisco or New York are the most likely to have experimented with crowdsourcing, it's the entrepreneurs in Omaha or Charlotte or Milwaukee who could benefit the most in the long run because it allows them to temporarily "hire" a wide array of affordably priced talent. (Sadly, the recession has also helped, by increasing the number of workers who are willing to work freelance and compete against each other to be the lowest bidder.)

Still, crowdsourcing has yet to revolutionize the ways most businesses operate. "The spectrum of the type of work that can be done and the sophistication of that work is very broad," Allick says. But for the most part, crowdsourcing applications for small businesses are simply a new twist on traditional staffing companies: You go through a gatekeeper to access talent that you could not find on your own. A crowdsourcing site may help you reach many more potential workers than your local temp agency, but you still need procedures in place to protect the security of your business data and to provide some level of quality control.

Will crowdsourcing remain a niche resource or steadily grow in popularity? A lot depends on how the industry's trailblazers fare. For this month's CrowdConf, the organizers are using crowdsourcing to market the conference and book entertainment. "We want to show that we can use these resources to create a successful event," Allick says. "We're putting our money where our mouth is."

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.
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