The Internet Creates a New Kind of Sweatshop

When hurricane Katrina struck New Orleans in 2005, the Red Cross announced a toll-free telephone hotline to help victims and their families find each other. The hotline was quickly swamped. So the Red Cross turned to a little-known firm called -LiveOps, a company that recruits call agents from around the world and directs their tasks entirely through the Internet. Within three hours, it had arranged for 300 people to staff the phones. A few days later, the freelance agents had processed more than 17,000 calls.

This success story—combining impressive numbers with a good cause—is an example of a new phenomenon: using the Internet not just to aggregate and access computing power, but also to find and direct brainpower. Invoking the current mania around cloud computing, where things your computer used to do now happen online, a new class of companies are promoting cloud labor. "Get fast turnaround times for jobs computers can't do," says one site. "Spool up thousands of people without picking up the phone." This new form of labor has begun to catch on in the post-financial-crisis world. It could create efficiencies and opportunities that economists hitherto could only dream of. It could also usher in a new era of digital sweatshops.

To understand just how radical this new form of labor is, consider how it works so far. It's a pyramid of sorts, with services designed to tap serious (and rare) smarts at the top, and others to enlist anyone with a brain wave at the bottom. At the apex of the pyramid are companies like InnoCentive, a venture founded by pharma giant Eli Lilly. It is essentially an eBay for difficult problems. Companies pose questions that they can't easily answer in-house, and then set a bounty for answering them by a certain deadline. Think you can find a way to prevent orange juice stored in see-through bottles from turning brown? There may be $20,000 in it for you. Or perhaps you know how to produce a "material supply of novel, non-commercial thiazolidine-4-carboxylic acid amides"?

In the middle of the pyramid lie tasks that pay less but don't require the brains of Thomas Edison. That's where a virtual-call-center organization like LiveOps fits in. It relies on more than 20,000 "contractors" (they're not officially employees) working out of their homes. Once they've passed tests for reading comprehension and basic computer skills, they're put to work. They might begin by relaying takeout orders from hungry callers to a restaurant franchise. After tiring of that, they could switch to handling the Red Cross hotline for a while, or soliciting membership renewals for a regional automobile club. In markets like Elance, you can put out for bid a design for your Web site or a quick turnaround for someone willing to draft an article about, say, distributed labor. Elance says that tens of millions of dollars have changed hands for thousands of such tasks, flowing to more than 100,000 people since 2002.

At the bottom of the pyramid are mindless tasks that are still too tricky for a computer to handle. Amazon's little-known but game-changing Mechanical Turk offers tasks for as little as penny a pop. One task displays pictures and asks "Turkers" to label them with keywords. Another seeks people who know coffee-shop owners—and then asks them to send the owners e-mails, $1 per recipient. Workers discover the Web site themselves or hear about it from friends.

It all sounds great, and in many ways it is. The Internet has created new markets for human labor potentially gleaned anywhere in the world—indeed, a company called CrowdFlower has set up a special program to channel tasks to refugees working at a data center in Kenya. Elsewhere, these services offer those working from home many more options than they'd have commuting to a single employer. And for those who need work done, these services also offer unprecedented flexibility: tasks can be ramped up instantly, at prices that reflect intense competition within a huge labor pool.

What's to worry about? For one thing, online contracting circumvents a range of labor laws and practices, found in most developed countries, that govern worker protections, minimum wage, health and retirement benefits, child labor, and so forth. Any jurisdiction that imposes restrictions on how crowdsourcing services operate might find itself bypassed—a firm like LiveOps could simply disconnect all its contractors in, say, New York, and make more work for people in Arizona. Workers may have to accept near-constant monitoring of every mouse click and conversation. Many of these services ask workers not to disclose even that they've worked for a firm. Your reputation is just another trade secret.

People can also be enlisted to do work without any idea for whom they're working or why. You might synthesize a new chemical that winds up being used as a poison or in a bomb. Iran's leaders could ask Turkers to cross-reference the faces of the nation's 72 million citizens with those of photographed demonstrators. Based on Mechanical Turk's current rates, Repression 2.0 would cost a mere $17,000 per protester.

If labor can be summoned and directed from afar, fewer and fewer interactions will remain untainted by those seeking to influence their outcomes. I see a park of the future, its visitors staring into small screens, clicking or talking away. One puts the finishing touches on a $10,000 challenge answer. Another casually asks three friends to see a movie with him that evening, not because he wants to, but because he'll earn a $10 commission. A third is picking up a penny for counting how many others are there, not sure why or to whom it matters. We might miss the days when we went to the park just to have fun.