How bad is Condé Nast’s new deal for freelancers?
It probably looks a lot like a pay-day loan
I imagine the meeting went something like a Jack Benny sketch. Some executive heard a freelancer mutter about being willing to earn slightly less in return for timelier payment. He turned away from the freelancer and smiled at an invisible audience. His eyebrows shot up to emphasize the point. In freelance writing, as in any of Jack Benny’s shows, one never vocalizes a willingness to take anything less than what is on offer.
That goes a long way towards explaining why almost every journalist I know is angry at Condé Nast tonight. This anger is a product of Fashionista reporting that media company will pay its freelancers more quickly in return for a ‘small’ cut off the top. “At the top of our project list is an accelerated payment option, which will allow you to get paid more quickly when a small discount taken off the invoice is accepted,” a statement from Condé Nast reproduced by Fashionista reads. “There will be more news coming out on this enhancement over the next few months.” Enhancement is a word that can cover all manner of sins.
The arc of freelance journalism bends towards outlets finding new and exciting ways to delay or avoid paying their contributors. That is the necessary subtext to Fashionista’s chosen headline: “Condé Nast will now charge its freelancers money if they want to get paid in a timely manner.” This, of course, depends on your definition of “timely.” If, for instance, Condé Nast were to pay all freelancers within two weeks free of charge, none of this would be so bad. That relatively generous assessment, however, comes with two glaring caveats: first, it is not clear that’s what Condé Nast has done or will continue to do in all cases; secondly, large media companies do not benefit from the good will of freelance contributors.
Freelancers may not all be economists, but pricing in a variety of costs is a basic part of the hustle. It is, for instance, entirely reasonable to charge outlets known to be slow at paying off freelancers a higher rate to make up for the inconvenience. Conversely, reliable outlets often benefit from an unspoken discount. This is a decent deal for all involved: freelancers get to manage risk across their various pitches and commissions while outlets that pay on time reap rewards in the long run. What Condé Nast appears to be doing, however, is renegotiating this dynamic so that publishers can dictate the terms of the deal and reap rewards for timely payment while freelancers are less empowered to price out risk.
Condé Nast is not wrong to note that freelancers’ recurring expenses often do not line up with publishers’ payment schedules. This lack of predictability is one of freelancing’s central challenges and the reason why those who take up this challenge are encouraged to have a few months of savings at any time. “We have and will continue to pay freelancers within 30 days,” Condé Nast told Fashionista, “but wanted to offer them some flexibility and have added this industry-standard option.”
What Condé Nast describes in this statement, to be clear, is more commonly understood as a pay-day loan.
Freelancers, both due to the nature of their work and many publishers’ repeated failures to pay on time, do often need short-term loans. It is, however, far more awkward when the publisher is effectively a lender. Whereas traditional lenders make their cut for assuming the risk of giving you their money in the short run, Condé Nast is not assuming any risk; it is simply incurring a small administrative cost for giving freelancers their money. [If anything, freelancers front the cost of reporting in these situations; while waiting for repayment, they, more than companies, come closer to resembling traditional lenders.] Here’s where the details provided are insufficient and we have to make some assumptions. Condé Nast argues its cut is merely a way of recouping administrative costs. If it’s a few cents—maybe even a dollar—that math sounds plausible. But what if the cut is something like ten dollars?
Let’s imagine for a second that you have agreed on a $500 fee for a piece. Rent is coming up and it would make your life easier if the money came in two weeks sooner than planned. In this hypothetical, Condé Nast offers to solve that problem for ten dollars. This, at first glance, appears like a small price to pay for solving your cashflow problem. Maybe it is. But getting your $490 two weeks early with ten dollars going to the lender is roughly the same deal as a lender giving you a short-term loan with a 52% APR. The deal looks less appealing in that light. It may still be a deal our hypothetical freelancer must make—rent needs to be paid—but there may be a local loan shark who offers better rates.
The beauty of this sort of deal, at least from the company’s standpoint, is that it taps into all sorts of human weaknesses when it comes to understanding value—or, if you prefer the nom d’art, behavioural economics. People tend to prefer a smaller amount of money today than a larger amount tomorrow. This sort of hyperbolic discounting works nicely for companies that want to get away with lopping a bit off the top of pay-outs. Moreover, a deal that is functionally a pay-day loan but not described in those terms is unlikely to be understood as a loan. That, too, is a boon for companies.
This tactic is more the galling when it is applied to freelancers whose work is almost inevitably characterized by feast-and-famine fluctuations. The unpredictability of freelance life has always made it easier to squeeze these contributors than full-time staff. When you don’t know when your paycheque is coming in, a suboptimal offer can look quite nice. In that context, Condé Nast’s offer looks a whole lot like taking advantage of the basic reality of freelancing to get away with paying less. On a general level, that is what companies have always done, but this is a particularly craven exploitation of the payment cycle for freelancers.
If you believe that Condé Nast is merely charging administrative costs here, the deal is far less galling. Companies, however, rarely act so generously and the history of freelancing hardly encourages one to apply such benefit of the doubt. The squeeze is likely on, and it will only be getting worse.