“the freelancer surprise” at end of month
If you work in the creative business, I’m sure you’ve noticed the change over the past 5 years - more and more creative shops cropping up, who bill themselves as “collectives”, “creative networks”, or some other word to represent a federation-style structure that fits somewhere between Yugoslavia and the British Commonwealth (but hopefully with less ethno-nationalism). It’s a freelance-heavy model, reactive to today’s creative and business realities.
So why is the collective (and heavy freelance use in general) having its moment? I’d love to wax romantically here about the benefits of the freelance lifestyle; the ability to decamp to Mexico city for a month and the benefits of never having to really care what the tyrannical creative director says about your work. However, I have to be honest: freelancer-heavy models came to the forefront for reasons both functional and financial.
The output changed: Whether you’re an agency, a production company, a media company, an entertainment studio, etc: the outputs that you’re expected to produce have increased. If you were a media company putting out text articles in the past, you now produce video, social, text, and likely some form of IRL content. The New York TImes is basically a cable channel. All of this creative output means you need more specialist players, but unless you’re the NYTimes, you may not be putting out enough volume of each to support full time roles. This means that every creative company needs to have an army of freelance talent at their fingertips.
The financials changed: Everyone is monetising in a much more fragmented way. In the agency / studio / creative services space, the massive reduction and re-distribution from AOR work to project-based work has fundamentally changed the nature of revenue; the same revenue fragmentation has occurred across the broader media and entertainment environment. More fragmented revenue means a more more volatile P&L, and profitability that’s much harder to underwrite.
The result: everything is a project, with its own revenue stream and specialist team that’s needed. The collective is perhaps the purest expression of this operating model (and perhaps the most honest version of it). Rather than treating freelancers as overflow capacity, collectives build their businesses around a curated network of independent talent from day one - and make that network a core part of their brand and client pitch.
But it’s not just collectives leaning into freelance: we’ve spoken to many companies both in rapid growth mode and reorganization mode who are intentionally increasing their freelance mix. Those in rapid growth mode are doing it to scale without adding to their fixed cost base. Those who are restructuring towards this model are doing it as an insurance policy against revenue volatility.
Whether you call yourself an agency, a studio, a collective, or a creative network, almost every creative business today is operating somewhere on the same continuum: balancing a core team with a flexible layer of freelance talent. This model isn't going away anytime soon, so the companies that win will be the ones that evolve their operations to match this new reality.
The Ups
Quality and specialization: The project-based nature of today's creative economy demands a much broader range of expertise. Freelancers give companies access to talent they otherwise couldn't justify hiring full time. For many founders, this is a creative decision. You may not be able to afford a world-class creative director or support a senior podcast showrunner year-round, but you can bring them in for the work that actually requires them. The result is often higher-quality creative output without permanently expanding your fixed cost base.
Matching the supply and demand curve: At the baseline level, freelancers give companies the ability to better match the more up and down “demand”(revenue) in today’s creative environment with the “supply” (creative talent and output). If a client doesn’t come back, you aren’t carrying the team that services it. This allows companies to avoid the “dips” that create margin loss (the empty hotel rooms from the hotel room theory). It’s a volatility hedge in a business that’s become increasingly more volatile.
The Downs
Hiring and maintaining a fleet or creative freelance talent causes a lot of operational headaches – the operational effort to treat freelance talent like full time talent is large. This tends to have three layers:
Visibility - Who is on? Who is off? How do we avoid the "freelance surprise" (the giant dump of invoices arriving at month-end that nobody saw coming?)
Economic - If freelancers cost ~25% more than FTEs, when should this become a permanent hire? What’s the best way to contract freelancers to ensure you’re not overpaying? At some point, companies may decide that the margin erosion from leaning too heavily on freelance will outweigh the financial benefits of flexibility.
Strategic - What are the roles and inputs that need consistency to create a durable relationship either with an audience or a client? A client who gets a different team every quarter may eventually wonder what they're paying for beyond project management, and an audience who gets a different creative product may disengage.
Optimizing the Mix
At the end of the day, creative leaders will build the team they think they need. And starting a project or a company as a freelancer collective is a great, low-capital way to start a business. Here’s some framing questions we help our clients think through when they’re considering their freelance mix, whether they’re assessing their current operations, or looking to evolve their freelance model.
Quantitaive:
Is this a skill or person an always-on need for your company, or is it project-specific?
Do you know whether the current demand for this role is enough to justify a full time hire? What about the future demand?
Qualitative:
Do you feel you have the right incentive structure and relationship to drive the outcomes you want? (if the answer here is no, can you change how you’re contracting them so that the answer is yes?)
Is the ability to call this person at any time important to you?
Our advice to clients is simple: no matter how you want to use freelance talent from a creative perspective, invest into the operational infrastructure supporting it. When the operational piece breaks down, the work (and the process) becomes too sloppy to justify the operational flexibility, and the fidelity loss in the output will overwhelm the economic benefit of the model.
Whether you’re pursuing a freelance heavy model as a launching point, a stepping stone, or an ultimate creative and operational expression, FOL-IO can help. In addition to helping companies manage their freelancer "visibility" issues, FOL-IO helps companies decide whether a capability should remain freelance, become full time, or no longer exist. The goal isn't to maximize freelancers or maximize full-time employees. It's to understand where each makes the most economic and creative sense. Reach out if you want to see how FOL-IO can help scaffold your freelance operations.
