A recent Screens Around Town post prompted a healthy debate about crowdSPRING and designers working on spec. We invited crowdSPRING’s Ross Kimbarovsky to write more about the issue. Below is his response.

For those who haven’t heard about us: crowdSPRING is the creative marketplace, where buyers post creative projects (logos, websites, print design, illustrations, marketing materials, etc.) and instead of receiving bids and proposals, designers from around the world submit actual designs. Buyers choose the design they like. Since our launch in May 2008, 700 buyers from 30 countries have posted creative projects. Today over 6,100 designers from 130+ countries work on crowdSPRING. We’re in Chicago, a few blocks from 37signals. We make products we like (we used our own marketplace to design our site – the designer was a 20 year old student from the Netherlands) and we believe others will like them too.

Our business model differs from offline and online design shops and from other marketplaces. Because buyers on crowdSPRING select from actual designs, designers on crowdSPRING submit work on spec. “Spec” is a short name for doing any work on a speculative basis, without a prior agreement that you’ll be paid for your work.

Some in the design community object to work on spec. AIGA, the U.S. professional association for design discourages designers from doing work on spec. A few years ago, the NO!SPEC campaign was founded to organize people who object to work on spec.

When we started working on crowdSPRING in 2006, we noticed that some companies (iStockphoto, Threadless) were succeeding with business models that allowed professionals and non-professionals to fairly compete against each. Today, we believe even more strongly than we did in 2006 that there is an underground, underdog community of creatives that is shaping the Internet. They are the future. They’re writers and inventors, photographers and designers, musicians and coders. They post videos to YouTube, photos to iStockphoto, t-shirt designs to Threadless. They write great code.

The establishment has long held that these ‘amateurs’ – students and stay-at-home moms, freelancers and fed-up corporate refugees – are nothing more than a novelty and are not capable of competing with the ‘professionals.’ The establishment is wrong. The Internet has blurred the boundaries between professionals and non-professionals. The underdogs are challenging tradition in industry after industry. They are risk takers. They are true entrepreneurs. The underdogs compete on their ideas and their work, not education, training, and fancy offices. They make things they like and they hope that other people will like them too.

The underdogs are a threat to AIGA and the NO!SPEC campaign. There are millions of them. They demand that a level playing field be created to allow them to compete. They demand the democratization of the design industry.

The NO!SPEC campaign has offered a number of arguments suggesting that work on spec is wrong. Let’s talk about the arguments and what crowdSPRING has done to address them:

Most professional-level designers won’t participate in work on spec. Some suggest that designers who participate in spec projects are typically less experienced. This is sometimes true. Yet a less experienced designer is capable of great work while a more experienced designer is capable of poor work. Experience does not always translate into great design. Education doesn’t guarantee great design. Fancy offices don’t ensure great design. Great design is about great ideas. Great ideas can come from anywhere, from anyone, and at anytime.

It is true that experienced designers bring much value beyond their ability to create graphical elements and typography. We’ve never intended that crowdSPRING replace experienced designers or design shops. We welcome them with open arms (many professionals work on crowdSPRING) but do understand that crowdSPRING is not for everyone.

Ironically, even though nearly 500,000 new businesses are started in the U.S. every single month, most “experienced” designers won’t work for such new businesses because most of those businesses don’t have sufficient budgets to afford such designers. While we can debate whether our business model helps or harms the industry, we should be able to agree that alternatives driven by price (where the designers submit bids in an effort to be the least expensive) are far more dangerous and damaging to the design profession.

For those who question whether crowdSPRING represents professional level design – let me offer this: many criticize our business model because much of the design on crowdSPRING represents professional level design.

But we do understand that it’s important to deliver great services to clients. We’ve created a level playing field where experience doesn’t matter. The only thing that matters is your work. Buyers pick from actual designs, not bids and proposals. Good designers do very well in this model because, very simply, they are good designers. We’ve also continued to iterate. Last week at the DEMOfall2008 conference, we introduced crowdSPRING Pro. Almost from the day we launched, brands and agencies have asked us if we can give them privacy features and greater control over projects. We responded by building crowdSPRING Pro. Minimums in all projects start at $1,000. In addition to the features we offer in all projects (escrow, legal agreements, etc.), designers must agree to non-disclosure, and clients have full control over privacy in the project. Clients also have full control over who participates in their project. We’ve partnered with Tribune Interactive and Omnicom’s Element79 on crowdSPRING Pro.

No Guarantee. Designers sell ideas and time. When designers work on spec, there is no guarantee that they will be compensated for their time. This is true. But there rarely is a guarantee. Traditionally, institutions take on the risk. Companies make products in the hope that customers will buy them. 37signals invested time and ideas to create software products they thought were great in the hope that others would like them too. Movie studios spend millions on movies in the hope that people will buy tickets and DVDs.

The growing creative movement –millions of people around the world – is changing the risk/reward model in remarkable ways. The underdogs have a high tolerance for risk because they have few alternatives. They develop great software that challenges conventional thinking – before a single customer agrees to pay to use that software. They do this with eyes wide open and hearts exposed. They understand the risk and embrace it. They create not just for the money, but because they have a need to create. Novelists write books before they have a publisher. Painters paint before they have gallery representation or a single commission. Musicians and bands record songs long before a label deal is in sight.

But this doesn’t mean that we should ignore the fact that designers who work on spec take on risk. Here’s what we’ve done to minimize the risk: First, we have a strong user agreement that expressly protects the work of all designers working on crowdSPRING. We recognize this is not nearly enough. Second, we escrow the award(s) offered by clients by requiring them to pay in full before their project is posted. We make no exceptions to this. Clients cannot simply abandon their projects like they do on other marketplaces. Third, we give clients a simple guarantee: they’ll receive 25 entries to their project or they can ask for a full refund (including our commission). This is a two-way guarantee. If clients receive more than 25 entries, we require them to select a winning designer, and if they don’t, a panel at crowdSPRING does and assigns the awards (we’ve done this in about 8 projects so far). Fourth, each project on crowdSPRING is protected by a customized written legal agreement that client and designer receive when the client picks the designer at the end of the project. That agreement specifically states that once the designer provides the final deliverables, we will pay them. All file transfers take place on crowdSPRING, to protect both sides.

Spec work undervalues and commoditizes the design profession. Some argue that work on spec reduces design to a commodity and ultimately undervalues the profession. Design is not like pork bellies or wheat. Design is about ideas and creativity.

Can there ever be too many ideas?

Here’s what we’ve done to address this issue: First, we’ve established minimums in all project categories. Logo projects must be for at least $150. Most are much higher. Uncoded website design (typically single page) must be for at least $400. Most are much higher. Our overall average across all projects is about $350. We’ve had thousand dollar logo projects and multiple-thousand dollar uncoded website design projects. Second, we’ve spent a great deal of time and effort to educate clients about design, including the value of good design. You can see this for yourself by reading our blog. Third, we’ve worked very hard with our entire community to educate designers – about good design, about good communication with clients, about professionalism, etc. Fourth, we’ve given real people real opportunities to find real clients. Half of the designers who’ve received awards are U.S. designers. Some are earning thousands of dollars per month working part-time on crowdSPRING.

Work on spec is often done without contracts. This is true. In fact, we were absolutely stunned when we talked to hundreds of designers and buyers around the world in 2006 about this issue. Every single person with whom we talked said that they thought the protection of intellectual property was very important (we expected this). Fewer than 40% of the people actually protected intellectual property in their transactions (we did not expect this). When intellectual property is not protected, both the client and the designer lose. Here’s what we’ve done to address this issue: First, as mentioned above, we have a strong user agreement that expressly protects the work of all designers on crowdSPRING. Second, we’ve created a unique system of written legal agreements that protect the intellectual property of all designers working on crowdSPRING. These agreements are customized for each project and reflect the relevant law that would apply to the transaction between the client and selected designer. The agreements provide that the intellectual property is owned by the designer at all times until the designer is paid. After payment, the rights to the IP are transferred to the client.

The tension between the growing creative movement on the Internet and centuries of tradition will disrupt and define the creative industries for years to come. It’s a polarizing topic, but an important one because individuals and companies who ignore this creative movement will fail. Those who find ways to leverage this creative movement (iStockphoto, Threadless) will evolve and succeed.

We thank 37signals for the opportunity to start the conversation and we look forward to engaging with you in a further discussion.

Ross Kimbarovsky, co-Founder, crowdSPRING