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  • Sweatshop Blogging Economics 08 April 2008
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    guttervomit

    • 9

      Sweatshop Blogging Economics

      8 Apr 2008

      Over at WordPressPhilippines, Ia writes:

      The New York Times reports that “In Web World of 24/7 Stress, Writers Blog Till They Drop“. Drop dead, that is. They consider professional blogging a “digital-era sweatshop”, referring to a factory where its workers are sorely underpaid and unprotected.

      It’s an interesting analysis of how Filipino bloggers, unlike their American counterparts, are not getting proper benefits or even proper compensation. I like how this article tries to make a point to a very specific outsourcing niche, but I do think that it’s pretty much just describing the nature of outsourcing in any industry.

      Let’s not forget that the Internet is a free market just like most other offline industries, and that the main reason why Filipinos are getting paid peanuts to blog professionally is because they accept peanuts. Let’s disassemble that notion briefly.

      If Filipino bloggers are not getting paid enough, what will happen to the local professional blogging industry? The answer is really simple: either 1) blogging as a profession will cease to exist locally or 2) the market will readjust its prices to support a smaller number of higher-quality bloggers, essentially locking out the lower-end suppliers. Now because I don’t think people will ever stop trying to make bucks from blogging, let’s talk about option number 2.

      Notice that I said the market will "readjust its prices," and not "the market will increase its prices." To illustrate, here’s a really simple economic thought experiment:

      Sam in the US is paid $100 per post. Pedro in the Philippines is paid $20 per post. Using these numbers we can make the erroneous, simplistic comparison that Sam is 5 times more valued than Pedro, which is the mistake that most people make when they talk about outsourcing. We can, however, say that for every 1 Sam, a company hiring professional bloggers could alternatively look for 5 Pedros instead.

      Now let’s say Pedro decides that he’s not getting paid enough, and starts charging $50 per post (a huge, earth-shaking increase in any industry). Now the company looks at the numbers and thinks, "Hmm, so we can either hire 1 Sam, or 2 Pedros. Which option should we go with?"

      The answer will almost always be "Sam," and the reason for that is that there are issues intrinsic in outsourcing that make having two Pedros less appealing than just having one Sam. As a US company, outsourcing your writing to the Philippines carries with it many pitfalls: cultural differences are the biggest one, but you must also contend with incompatible work ethics, timezone differences, geographical costs, etc. The only way you can justifiably accept all of these problems is if you can get 5 Pedros for the price of your 1 Sam. At 2 Pedros for 1 Sam, however, that arrangement ceases to become cost-effective, and the correct thing to do is to either go back to Sam, or wait for China to start blogging in English and outsource your requirements there.

      Now, this thought experiment kind of sounds like I’m saying that Pedro is forever stuck at $20/post, but that’s not necessarily true in practical terms. If Pedro’s overall quality and work ethic improved, you might only need 4 Pedros to accomplish the work of 5, meaning they can now all get $25 per post, a 25% increase. (What happens to the 5th Pedro however? Well, he loses his job most likely. Creative Destruction is a powerful force indeed.)

      The lesson here is that you should never, ever forget that outsourcing is forever a price war, and will never be anything other than a price war. The reason why Filipino bloggers don’t have health benefits is because the added cost of health benefits will result in some Filipino bloggers losing their jobs, and at the moment, the market requires a certain number of available bloggers to fulfill the requirements of various businesses.

      The other thing to consider here is that as we become more progressively globalized, the costs of maintaining Sams and Pedros will become more and more similar (so it is totally possible — although I personally think it’s unlikely — to have Pedro earning a very similar amount of cash as Sam). However, remember that the available funds have not changed in this scenario. If 1 Pedro is making $80-100 per post, that means that 4 other Pedros will no longer be able to find work, and will either switch industries, or try to undercut that 1 brilliant Pedro. The former action just shifts the burden to somebody else, and the latter restarts the whole price-war process.

      9 Responses to “Sweatshop Blogging Economics”

      1. Ryan Says:
        April 8th, 2008 at 3:57 pm

        Dude seriously, how many Pedros have you met in the course of your entire life? Dapat Jhon. O Rhaymond.

        One other thing to consider is that the cost of living for Sam and Pedro is also vastly different, so much so that it’s entirely possible that Sam’s 100$ and Pedro’s 20$ actually amount to the same thing when considered in terms of food/electricity/rent. etc.

        So there’s less impetus for Pedro to want or even demand a raise, unless it’s to vocer costs like insurance or health care.

      2. luis Says:
        April 8th, 2008 at 5:18 pm

        That’s a good point, and you’re actually pretty close to the mark. The first-world-to-third-world cost-of-living ratio is about 4:1, so the $100 vs $20 fee is close to being the same “value” in both settings.

        Also, I went to a public high school so I knew quite a few Pedros, lol. Strangely, I don’t know any Sams though.

      3. Bill Hicks Says:
        April 8th, 2008 at 8:36 pm

        You forget that Sam in the USA can write four times as many articles in the same time as his Filipino counterpart.

        Most of Sam’s writing comes from knowledge, experience and well good old fashioned bullshit.

        Most off of the Filipino’s writing comes from research or god forbid, plagiarism.

        PS: Your pricing examples are laughable.

      4. luis Says:
        April 8th, 2008 at 9:56 pm

        Well, if you were right, I’d agree with you.

      5. Ryan Says:
        April 9th, 2008 at 11:29 am

        Wow, never has the name “Hicks” sounded more apt.

      6. David Says:
        April 22nd, 2008 at 8:09 pm

        Jobs are not only outsourced because of price. Some jobs are outsourced because no one wants to do them. Which is an opportunity to earn bigger bucks.

        As for blog writing there are various jobs at diverse rates. Country of origin of blogger does not count only the quality of work.

        Why, because on the internet no one can really know where you are….

      7. JC Smith Says:
        April 23rd, 2008 at 8:51 pm

        Actually, Hicks is wrong. Dead wrong. We are talking about price per article and not wages per hour.

        His generalization about sources of knowledge is also erroneous. We read the same books, watch the same TV programs, etc.. As for plagiarism, they have that in abundance too.

      8. Rachal Crouchet Says:
        February 7th, 2011 at 3:46 am

        Dieting is really hard! how come cant i lose the excess pounds? Any one got any ideas for simple excercise workouts?

      9. Kashish Mital Says:
        June 2nd, 2011 at 10:05 am

        Hey your site looks really weird in Opera on my laptop with Linux .

      Leave a Reply

     

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    Guttervomit v3 went online in January, 2008. It uses Wordpress for publishing, and was built largely with Adobe Illustrator and Textmate. Logotype and navigation is set with Interstate.