When Julia Lee first heard of Tongal, she thought it was a scam. Tongal pays people—anyone with a good idea, really—to create online videos for companies such as Mattel (MAT), Allstate (ALL), and Popchips. Companies typically pay $15,000 to $20,000 for each project they post on Tongal's website. Tongal runs the projects like contests. Yet, instead of a winner-take-all approach, it breaks up the projects into stages, such as ideas and videos. The top-five ideas are rewarded with cash and then participants in the video phase can use any of those five ideas to create the video.
Lee's first submission, an idea for a 30-second commercial for a wine-related iPhone app won $1,000 and it only took three hours of work. When she created an animated video for a nonprofit, she earned $4,000. There have also been projects where her ideas or videos didn't make the top five, so she didn't make any money. Still, in the past year, Lee, 36, has earned more than $6,000 for about 100 hours of work, or $60 an hour on average. "It helped me pay off my credit-card bills," she says. In addition to supplementing her salary from her job at San Francisco nonprofit VolunteerMatch, Lee is finally able to put her Master of Fine Art degree to good use. She says she'd like to save money to make a film someday.
The idea of breaking up a job into small pieces and then using the Internet to find workers to do those tasks was pioneered by LiveOps about a decade ago and Amazon.com's (AMZN) Mechanical Turk in 2005. LiveOps lets call-center workers sign on for shifts in 30-minute increments and then uses the Web to route calls to them. Mechanical Turk pays per task—often less than 50 cents—for quick jobs like checking Web pages for errors or transcribing audio recordings.
The trend, which goes by many names—crowdsourcing, the human cloud, microwork—uses the Internet to access workers around the world for short-term projects that pay a few bucks to hundreds of dollars per hour. The tasks might require a few minutes or a few days to complete. Benefits to companies include finding large numbers of workers to complete projects quickly, finding niche expertise, saving money, and making better use of in-house resources. It also lets Western workers, in places with a high cost of living, compete directly with those in developing markets. For many freelancers, microwork gives them unprecedented flexibility to work almost anywhere at any time.
Microsoft (MSFT) turned to uTest in 2009 when it needed more than 100 testers around the world to find bugs in its security software and see how it would fare in places like China, India, Brazil, and Russia before being released. UTest has more than 33,000 testers in 172 countries, which means work can be done 24 hours a day, seven days a week. Companies pay only for the testing they need, rather than keep a team of testers on contract. At Santa Monica (Calif.)-based Tongal, companies such as Mattel and Robert Half International (RHI) are getting 30-second online videos for a fraction of the $500,000 it costs to create a 30-second TV spot, says Tongal co-founder James DeJulio.
In 2008, Pfizer (PFE) wanted to make employees more productive, so the company began letting them outsource certain tasks so they could focus on higher-value work. Employees can push a button on their desks and send out work like creating PowerPoint presentations or checking data in spreadsheets. The company contracted with several firms in the U.S. and abroad to do those tasks. In the first year, Pfizer estimated that the service freed up more than 66,000 hours for employees. That program still exists and Genpact, one of the providers, helps Pfizer with business intelligence work on demand.
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