LinkedIn is entering the gig economy.
The professional-oriented service popular with bothersome recruiters is reportedly building a marketplace for freelancers to find gigs.
The news: The product, dubbed Marketplaces, will allow LinkedIn’s 740+ million users to hire and pay freelancers on the platform. Marketplaces will be similar to Upwork and Fiverr, wherein users can find, hire and pay freelancers for a cut of about 10 to 25 percent of the gig. The platform will first focus on offering jobs for consulting, marketing, and writing, The Hustle reports. LinkedIn’s Marketplaces does not yet have a release date.
The background: Despite LinkedIn's waning revenue, Microsoft shelled out $27 billion in 2016 to reinvigorate the platform. According to The Information, LinkedIn’s revenue growth declined from 86 percent in 2012 to 20 percent in 2020.
Why it’s important: In building Marketplaces, Microsoft hopes to accelerate LinkedIn’s slowing growth by targeting the creator economy that’s worth about $10 billion. And with a giant like Microsoft entering the gig economy, it’s likely that the broader market for freelancers and indie hackers will grow even faster. Thanks to the pandemic, already more than one in three working Americans are freelancing — an increase of two million since 2019.
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Rising tide for gig marketplaces? Fiverr and Upwork notched about $550 million in combined 2020 revenue. That’s only about 6.2 percent of LinkedIn’s $8.8 billion in 2020.
While that’s comparably tiny, Microsoft and LinkedIn are investing in the idea that more people will enter the creator economy in coming years. That investment should ultimately benefit Upwork and Fiver.
While in the long run Marketplaces may lend a boost to the creator economy, investors in Upwork and Fiverr appear to be initially concerned with their enormous new competitor. Fiverr down about 12 percent and Upwork is down 7 percent as of 3:30 p.m. EST.
Was it worth it? Even though LinkedIn’s 8.8 billion in revenue dwarfs that of Upwork and Fiver combined, it is paltry compared to Microsoft’s $143 billion in 2020. If Microsoft wants to realize the value it saw in LinkedIn, the company’s Marketplaces tool must create real value for freelancers and attract more talent to the platform.
While it has a stodgy reputation and is widely mocked for spammy recruiters, LinkedIn is the most trusted social network, and its share of users between 25 and 34 years old has grown to about 60 percent.
Indie impact: LinkedIn’s investment in a gig marketplace once again validates the creator economy’s appeal to big tech companies and investors. If Marketplaces is successful, it will have a transformative effect on the creator economy and further incentivize tech companies to create revenue opportunities for freelancers.
What do you think about LinkedIn’s move to create Marketplaces? Please share your thoughts.