Running a communications agency isn't easy. In addition to my journalism, I've done a lot of corporate work over the years, both direct and through agencies. It's unheard of for an agency not to make money from a client for a freelancer's work over and above what it passes on. And that makes perfect sense.
And the content platform Contently (disclosure: I've written for the company multiple times over the years) was the same. Since its early days, the company took a 15% cut of what the freelancer received (still the case) and then added subscription fees for corporations that used its platform.
Now the company wants more. I just received an email that read as follows (bolding theirs):
Contently has always been a place for freelancers to connect with the world's best brands and find opportunities for high-value work. Now, after nearly nine years delivering products and services to the freelancer community at no charge, starting April 2nd, Contently will institute a 4.75% fee on all cash outs.
Since Contently was founded, we've offered freelancers:
• Paid opportunities to work with the world's top brands • Instant payment to avoid chasing down invoices
• Free portfolios to showcase work
• Best-in-class features, such as the ability to pitch clients
This fee allows us to further develop our services for writers, photographers, videographers, and designers, and falls well below the service fees charged by other freelance marketplaces. We're excited to continue building a platform that makes Contently the best place to freelance.
I've contacted them and am waiting for answers to the following questions:
- Does Contently still get a 15 percent cut of the fees charged for freelance work? (I already heard back on this one question that the company determines the fee for a freelancer and then adds a 15 percent margin, which isn't exactly the same but conceptually close enough.)
- Does Contently still get subscription fees from corporations using the platform?
- Why frame this as a fee to get paid versus hiking the commission?
- Have per-piece fees in general been trending downward?
- Didn't the policy of paying on delivery recently change, with payments now split so freelancers (writers at least, as I'm uncertain how editors are paid) get some on delivery and the balance on final acceptance by the client?
- If a freelancer completes work and the client changes its mind or the project otherwise falls apart, does the person get paid?
Why add an additional fee, and one that takes place at the time of payment only? Is it the cost of using PayPal to deliver payments? The email doesn't explain other than saying that it wants to do more for freelancers. Looking through the list the company provided of what it offers freelancers, immediate pay (and I've seen that changing as well into a two-part payment between delivery and final acceptance) comes the closest to something that is a pure benefit.
The rest of the items are just as much, if not more, a benefit to Contently. Profiles make it easier for clients to choose writers. The ability to pitch ideas has turned content marketing into a frequently competitive sport, rather than assignments to writers. An assignment is not only writing something for a commercial client, but brainstorming ideas that may or may not be used--a strategic function that is expected for free.
If you are to get $100 for an assignment, the company receives $15 from the client and now now an additional $4.75 from you for a total of $19.75. That's nearly 20 percent and doesn't count whatever other fees they charge the clients. Plus, being told that you have to pay to receive money you've earned has a bad sound to it.
To be fair, agencies get a higher percentage for freelance work, but usually that's on much higher fees so the freelancers net significantly more. Agencies do take longer to pay, but typically the best ones do so within 30 days. But, on the whole, the move Contently is making is a net loss for freelancers and may cause some to reconsider the company as a client. And that will hurt the company in the long run.
[Update Feb. 27, 2019, 5:10 p.m.: I just heard back from Contently with answers to my questions. I'm showing questions in bold and full answers in italics below, with some commentary by me in a regular font where I think warranted.
Does Contently still get a 15% cut of the fees charged for freelance work?
Brands pay a variable fee based on the type of project, which is added on top of the agreed-upon 'price' for the project. To this point, we've asked them to shoulder the load on behalf of our freelancers who make Contently what it is. This is a transparent change to payment terms that is meant to help cover transaction costs historically footed by Contently. As you note in your article, agents fees tend to be larger, but just to clarify, the cut is from our customers, not the freelancers.
It still comes down to charging freelancers to get paid and asking them to invest money in Contently's technology and platform when they don't have a clear return on investment.
Does Contently still get subscription fees from corporations using the platform?
Many Contently customers use our software without sourcing freelancers from our network. For that, they do pay a fee, yes.
Why frame this as a fee to get paid versus hiking the commission?
We've tried to be as transparent as we can here. These fees are directly related to transaction costs for payment processing and other benefits we offer our network. This will help us continue investing in products and services that help our contributors.
Payment processing should be a cost that a company hiring help pays. It's not as if freelancers charge their clients for telephone costs, electricity, or other expenses. Should a freelancer expect the electric company to pay the cost of a check, envelope, and stamp to pay for the power running the office? Plus, transaction fees that don't involve credit cards tend to be fixed, like some amount for an incoming wire transfer. By charging a percentage, Contently gets more the higher the amount owed. If a freelancer did $10,000 in business with the platform, that would be an additional cost of $475.
Have per-piece fees in general been trending downward?
The opposite, actually. We've worked with brands to negotiate the highest payments in the market for our freelancers on average, which is why we're lucky to work with many of the best freelancers out there.
I can say categorically that Contently's fees are far from the highest payments in the market on average. I have many colleagues who would say the same.
Didn't the policy of paying on delivery recently change, with payments now split so freelancers (writers at least, as I'm uncertain how editors are paid) get some on delivery and the balance on final acceptance by the client?
A majority of contributors are paid everything upfront. For some projects, particularly larger-scale work that has a lot of steps, some compensation is split between upfront and completion.
If a freelancer completes work and the client changes its mind or the project otherwise falls apart, does the writer get paid?
Yes, the contributor always gets paid regardless of what happens. Contently has historically footed many of the kill fees for projects that go unfulfilled, in order to retain our best customers and prevent our freelancers from taking a hit when they did good work.
Let's note that kill fees are rarely a full contracted rate, even when freelancers provided in a professional manner and to professional standards exactly what was requested. Usually it is a portion of the payment.