A Predatory Practice That Is Sucking This Field Dry

There is a gang of predatory vendors out there sucking some arts organizations dry without those groups even realizing it. So it’s time to kick open the shutters and blinds and shed some light on these disreputable practices.

Arts orgs that don't know better are easy marks for predatory developers.

What we’re talking about here is the practice of some software developers to use open source platforms to build an arts organization’s website but charging the traditional fees associated with a completely bespoke solution. And we’re not talking about a few hundred or a few thousand dollars worth of gouging; we’re talking about arts groups paying tens of thousands of dollars more for development projects than they should.

I have a stack of proposals from a wide variety of design and development firms proposing costs from $60,000 to $130,000 to build an arts organization’s a website; and in many of those cases it didn’t even include integrating a box office solution. Moreover, each and every one of those proposals is based on building the design on top of an open source solution; which by its very nature predicates a price point that should be as much as 75 percent lower.

What is open source software anyway?

According to opensource.org:

Open source is a development method for software that harnesses the power of distributed peer review and transparency of process. The promise of open source is better quality, higher reliability, more flexibility, lower cost, and an end to predatory vendor lock-in.

So What’s The Problem?

In the last few years, a number of open source projects have really taken off to the point where they are so good, software development businesses have adopted them to replace much of their in-house code development and/or solutions that charge hefty license fees. The benefits to an organization’s bottom line are profound; open source saves hundreds if not thousands of hours in writing fundamental code and an architecture that evolves and improves on its own without the related R&D or subsequent release costs.

As a result, these commercial businesses have enjoyed a substantial drop in programming overhead costs. The problem is that far too many of these outfits have not passed on any of those savings to clients and instead, they charge the same fees from when solutions were entirely bespoke.

Why It’s Unethical

What makes all of this unethical is these vendors don’t explain to clients that they are developing website solutions on top of an open source platform and instead, make it appear as though they are designing an entirely custom made product.

“We’re going to build you a new website from the ground up.”

I hear this and see it in proposals so often these days that clearly, the majority of traditional development firms don’t have any plans on changing business practices. And to be clear here, many of the developers using open source solutions but charging bespoke fees aren’t necessarily turning out a bad product, they’re just charging a great deal more without disclosing the fact that they are [sws_css_tooltip position=”left” colorscheme=”rosewood” width=”450″ url=”” trigger=”benefitting” fontSize=”12″]And it’s important to point out here that it means they are profiting from the time and efforts of hundreds of other programmers, designers, and testers for the sole purpose of price gouging [/sws_css_tooltip] from open source solutions.

How Bad Is It?

At a time when resources are stretched thinner than they have in decades and increasing pressure to improve marketing performance via online presence, arts groups are paying tens of thousands more for development work and related programming and design services than they should.

It is simply irresponsible to remain quiet about this issue. Arts groups need to be aware of these predatory practices and favor vendors that leverage open source solutions by passing along the savings to their clients.

What You Can Do To Protect Your Organization

I need to preface this section with a disclosure regular readers are likely well aware of (and I apologize in advance to those same readers for the repetition), but this issue is near and dear to my professional sensibilities because I designed and operate the [sws_css_tooltip position=”center” colorscheme=”rosewood” width=”450″ url=”http://www.ventureindustriesonline.com/about/business-philosophy/” trigger=”Venture Platform” fontSize=”12″]Click to read Venture’s pledge for maintaining a responsible business model. [/sws_css_tooltip] , a website and email marketing solution designed especially for arts organizations. More to the point, it’s built on top of the open source publishing platform, WordPress.

That being said, one of the first things you can do is confirm if any of the prospective providers are using an open source solution. Some of the more common platforms, but certainly not the only options, are WordPress, Joomla, and Drupal. If they are proposing to build your site on top of these platforms, ask them how their use of open source is figured into their fee.

Of course, if you don’t know how their fee structure worked before they started using open source solutions you may not be able to determine if their quote seems fair, plus you may not know enough about the topic to make a reasonable conclusion. But you should be able to read their tells to see if the question makes them uncomfortable or throws them for a loop and if you have any doubts, seek outside assessment.

A Better Understanding

To give you an example of how much savings a high quality platform should provide, take this example from one of the current Venture users. This organization prepared a detailed Request For Proposal (RFP) and received numerous bids from established developers, all of which came in between $40,000 and $60,000. As all of these were no less than $10,000 over their budget, they started asking around.

They solicited my input so I reviewed the proposals and I explained that the bids from developers they liked proposed using an open source solution (although they didn’t label or disclose that it was open source). I explained everything above but I also put together a bid to build their site using Venture so they could have a reference to compare. As it turned out, they decided to use Venture and my developers to build their project.

Now, this particular project included a substantial amount of custom development to build some very purpose built functionality plus they needed additional services such as complete project management etc. However, we still managed to incorporate a number of additional features they had not considered but even then, the total cost came in under their original budget and at 35 percent less than their previous lowest bid.

Thanks to how the platform is designed, the majority of Venture users require little to no custom development work which means the only costs are the annual licensing fees. And when you stack those up against the cost of most development projects, you’ll begin to see just how much time and treasure this field is losing.

Conclusions

In the end, it’s simple: at time when so many arts groups truly believe they have pinched every penny they can during difficult times, it should come as an outrage to see that there are numerous groups who could be saving thousands to tens of thousands of dollars every season or redirecting those funds to other programs cut a little too close to the bone for comfort.

Don’t let your organization become a target for predatory practices and if you feel you might have one of these leeches attached to your group, feel free to get in touch or seek out a reliable, independent authority to evaluate your system.

About Drew McManus

"I hear that every time you show up to work with an orchestra, people get fired." Those were the first words out of an executive's mouth after her board chair introduced us. That executive is now a dear colleague and friend but the day that consulting contract began with her orchestra, she was convinced I was a hatchet-man brought in by the board to clean house.

I understand where the trepidation comes from as a great deal of my consulting and technology provider work for arts organizations involves due diligence, separating fact from fiction, interpreting spin, as well as performance review and oversight. So yes, sometimes that work results in one or two individuals "aggressively embracing career change" but far more often than not, it reinforces and clarifies exactly what works and why.

In short, it doesn't matter if you know where all the bodies are buried if you can't keep your own clients out of the ground, and I'm fortunate enough to say that for more than 15 years, I've done exactly that for groups of all budget size from Qatar to Kathmandu.

For fun, I write a daily blog about the orchestra business, provide a platform for arts insiders to speak their mind, keep track of what people in this business get paid, help write a satirical cartoon about orchestra life, hack the arts, and love a good coffee drink.

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0 thoughts on “A Predatory Practice That Is Sucking This Field Dry

  1. Thanks for bringing this to light, Drew. Having served on a board, I felt completely in the dark as to the appropriateness of the fees we were asked to approve for new software we were told we needed. Having information like this available would make it much easier to ask the questions which should be asked.

  2. Great article Drew.

    As someone who works in the field (as a web freelancer for over 15 years and now in a college marketing department where we work with software development) I read your words as sage advice.

    Price-gouging is more-or-less a regular practice of some design houses – I have even done it myself. I once worked as a freelancer for a company where I thought that I charged an exorbitant amount – something like 5-6K – for a project. They turned around and more than tripled that amount and charged that to the client.

    Sometimes too I would overcharge based on the notion that “if it costs a lot, it must be worth a lot.” Many clients would adhere to this false belief and really believe this to be true. And conversely, there is also a false belief that if something is affordable it is cheap and not good to use.

    My numbers are peanuts compared to the numbers you write about, but i have long argued with a few arts groups in my area that they were flushing their money down a black hole by using certain consulting firms known for this practice. In fact, this company that i mentioned in the previous paragraph has accounts with a group I regularly work with.

    The sad fact is they are being gouged and that lost revenue could be used for other things. Their online ticket sales is a joke that points to a TicketMaster site. And they pay tens of thousands of dollars for that?

    I highly recommend your Venture system to any arts group that is serious about their web site.

    Stop the madness folks!

  3. Thanks for that first person insight Bruce. It’s certainly true that traditionally, lower costs were synonymous lower value; after all, there’s a reason why the adages “you get what you pay for” and “if it’s too good to be true, it usually is” exist. But the advent of open source solutions really are a game changer for their field and by that, I mean Henry Ford level impact on the auto industry game changer. In the end, the only way arts groups will benefit is by insisting on reaping the benefits and favoring developers who adhere to reputable practices.

  4. And as a followup – typically a marketing firm will contract a client for multiple accounts, as is the case with the local group I speak of.

    Publicity, artwork, concert brochures, web site, radio, etc are all lumped into one contract through one company. This too I am afraid is a black hole to watch out for as it exacerbates the tendency to overcharge. That and it makes it much easier for the firm to gouge and hide expenses within the larger budget.

    While this one-stop-shop practice makes things easier for the client, it also can make things sleazier for the design house. This is not jaded, exaggerated pessimism – it is a sad fact of the business. The sentiment in the television series “Mad Men” is not that far off.

    If I were the King of an arts group, I would stay away from this sort of thing, at least for the organization’s web site. With a good platform in place, making a web site for a classical group is not that hard.

  5. Exactly, I’d also add that the uni-contracts it makes it that much more difficult to switch. To be fair, and as you pointed out, the uni-contract does mitigate most of the “playing nice” issues that sometimes occur when using multiple providers but the majority of quality providers I know of (and work with) make those problems a non-issue.

  6. The fact that arts organizations do not always know or understand the cost and value of the development is absolutely true. I definitely believe there needs to be more communication between the two parties as to what is being used for development and the feature set that will result. At the very least, an organization has to be somewhat savvy about underlying technologies to know how much everything should cost.

    What I’ve noticed over several years is that the meaning behind “building you a new website from the ground up” has drastically changed. Before there were open source solutions, building from the ground up meant starting from scratch. Anytime I hear developers use this today, they follow it up with what technologies they will be using. If they are creating a website and hiding the fact they are using existing technology, well that’s something else entirely.

    However, I absolutely have to disagree that a project should cost less if open source software is being leveraged. If a developer is using software that was created in-house (such as a framework or a CMS), then this abstract foundation has already been developed for use with multiple clients and would take the same amount of billable hours and energy to configure than an open source solution.

    Are the numbers you mentioned overpriced? Absolutely. However, stating that these prices should be cheaper because of open source technologies can be misleading. If you are suggesting that these prices are high because developers are claiming to be building everything from scratch and then using preexisting functionality (open source OR in-house solutions), then, yes, that’s a problem.

    The key issue here is to avoid being billed for existing development. It is misleading to single out open source solutions the way you have since a company can do the same thing with a product they have already created in-house.

  7. More thoughts – if I were a client looking for a firm to make a web site for my classical group I would not only ask if they use WordPress or Drupal or some other open-source software, but if they do NOT use these sources I would press the firm as to WHY THE HECK NOT?

    As you point out in your article, there is no real strong need to build a web site from the ground up any more. I would ask this of a firm that builds from the ground up – why re-invent the wheel when these open-source platforms do the job perfectly? Why charge me for all those programming hours, when the programming and functionality is already built-in to open-source platforms?

    Myself, I haven’t built a site from total scratch in over 5-6 years. While many developers may not admit this openly, I would assert that I am not in the minority.

    On the other hand, arguing from a firm’s standpoint, there is sort of a stigma attached to the word “template” when building on an open-source project (creating or buying a template layout to base an entire site on) and relating that term to clients.

    People sometimes look at me like that is cheating or is not a legit way to build a site. In that regard I can perhaps understand a firm’s reluctance to disclose their use of open-source templates, but this is no excuse to mislead or gouge a client.

    With good prompting, “template” does not have to be a bad word.

  8. Good points again Bruce and I have a couple of thoughts here:

    1) In all fairness, I do know that there are some projects (usually at the top end of budget chain) that are still better off with completely custom solutions but those instances are few and far between (and shrinking each year).

    2) Regarding the template point, I don’t even see the open source platforms as anything resembling a stereotypical template. However, you’re right in that that stigma certainly persists, not unlike the misconception that WordPress is a blogging tool (this issue has been written about and discussed Ad Nauseam within developer circles so I won’t belabor it here).

    What I’ve found useful is to introduce new users to the CMS (I favor WordPress) as a framework that provides the same amount of flexibility and creativity as a traditional design from scratch website but instead of starting with a blank page, you have hundreds of hours of coding written for you already that is nimble enough mold and shape as desired.

  9. Hi Jon, many thanks for a very thoughtful comment. But I think we’re talking a bit of apples to oranges in your point about a proprietary CMS created in-house by a developer which is used for multiple projects. I agree that in a case like that, a developer should charge more for work using that solution because that firm invested the time and money into creating a system from scratch. What I’m bringing to light in this article is the practice of developers who use open source solutions in place of the investment of those in-house solutions but charge clients the same prices.

    In the scenario you described with the in-house developed CMS, the developer would continue to be responsible for updating the platform and absorbing all of the costs associated with that process. But when using an open source solution, those costs are defrayed in large part by the collective output of the open source community of programmers. As a result, there’s nothing wrong with using a good in-house designed solution for multiple projects but there is something wrong with developers who gouge clients by benefiting from the enormous amount of community development efforts that make open source platforms so useful.

    I have a strong feeling that we’re actually saying the same thing here but please take a moment to expand on this if you wish.

  10. Ha! Once again, Drew, you’ve jumped into the thick of it. May orchestras heed your words.

    I’ve observed a second phenomenon that makes this practice even more insidious. Often the provider just happens to sit on the orchestra’s marketing committee. The chief executive and the marketer feel pressure to use that designer and not to challenge them with pesky questions like the ones you’re posing.

  11. I think Jon that you are agreeing with the general point but are you saying that if a developer has an in-house platform that they should charge clients every time as if that were a new, ground-up construct?

    If so, that would be ludicrous.

    It really should make no difference with pricing if a house uses an open source or an inside source platform. A pre-established platform is a pre-established platform and charging a client for that as if it were a new custom product just for them is a spurious business practice no matter how it is painted.

    A platform is a platform, and I think that is the main issue here.

  12. That’s a terrific point Bruce! And sadly, it applies to far more than technology solutions but I hope folks take a moment to read your comment a few times and let it sink in.

  13. This is one point where we might have a divergence of opinion but assuming the in-house solution is entirely proprietary (and not forking something from open source for in-house) then the costs associated with using that proprietary solution will be higher. Those costs will likely manifest throughout a number of service offerings that firm offers such as higher license fees, billable hourly rate, management fees, etc. Perhaps the question for arts organizations to consider here is do they want to pay a higher price point for someone to reinvent the wheel.

  14. As a followup and to clarify – not only do I think that it is questionable for a developer to charge a client for an open-source platform as if it were their work, I also think it is questionable to charge a client for an in-house platform as if it were a totally new product just for them.

    This is not to say that a certain charge could not be assessed for the use of that in-house platform – of course people need to be compensated for their time. (Some kind of service fee or nominal amount that over time will churn a tidy profit.)

    It is an ethical issue where some design houses choose the dark side. In the example house I mention in previous comments, they have their own in-house CMS platform.They charge clients saying that it is a custom solution built just for them.

    In a sense it is indeed a custom solution, but neglecting to mention that this solution was built on a pre-existing platform is very misleading to say the least.

    Over-charging a client under that presumption is highway robbery. However, if the client is not smart enough to ask questions and gets ripped-off, my own dark side says “that’s what they get for not paying attention.”

  15. I think I see your point here Bruce and for those on the outside following along, I’ll give you an example of what I believe Bruce is describing. In a number of those proposals mentioned at the start of the article, there are passages that read like this:

    We will design and develop a custom content management system (CMS) for the client…”

    But what actually happens is the developer already has the CMS platform designed and if anything, will make some tweaks to the layout to add the client branding etc. but the fundamental code is unchanged; meaning, they gave the car a new paint job but it’s still the same car.

    In the end, it still comes down to arts groups being overcharged because they don’t know better and the only way to begin putting an end to that practice is talking about and making people aware. That doesn’t mean a website project may not cost $100,000 but arts groups should know that the charges are legitimate and fair.

  16. Speaking from ten years of experience working at a major digital communications agency (and 15 years in the field), I have to say that I think your argument here is based on false premises.

    The fact that a CMS might be open source does absolutely nothing to elimiate or reduce the potential development costs of a website design. All it does is eliminate the licensing fees associated with software. Even then, my experience has shown that ongoing costs for handling the changes associated with “upgrades” in open source platforms are roughly equivalent to the costs associated with licensing. There is *no* free lunch.

    Another way to say it: whether a CMS is open source or not has no relationship to whether the website requires bespoke customization or not. One can customize an open source CMS as much (or as little) as one can customize a licensed CMS.

    There are good CMS platforms and bad CMS platforms. There are those that are more and less well-suited to the tasks of arts organizations. There are options that require licensing fees and options that don’t. The variability in pricing comes from a) How properly aligned a CMS is to the needs of the organization that’s going to be using it, and b) How thoroughly it needs to be customized to meet those needs.

    The only predatory practice I have noticed, in my experience: agencies recommending the CMS solutions they’re comfortable with, or those they have some stake in selling, rather than what’s best for a client.

    Venture may be great; knowing you, I’m sure it is. But I’m sure you’ll agree it’s not right for *every* arts organization, of every size and scale, with every unique need. Because no CMS can be right for everyone. That’s why there are thousands in the market, each occupying a different niche and offering different benefits (and different annoyances, too, if we’re being honest). A good consultant will help his or her client sort through the landscape and identify the solution that’s both cost-effective and right for the organization… and that’s not always the cheapest product in the market. In fact, from what I’ve seen, it rarely ever is.

  17. Thanks for such a thoughtful reply Gwydion; in fact, I think it’s worthwhile to cover each of your points directly in a dedicated blog post as opposed to a comment reply. Consequently, I’ll publish that reply in tomorrow’ post (I’ll post a direct link here after it is published.)

    Stay tuned…

  18. I would be more worried about value received per dollar spent and/or a “pretty” website design with no strategy behind it. An arts organization that spends $60k on a website that just looks a little nicer than their previous website probably did get gouged–if that new website didn’t also increase the conversion rate of ticket buyers or donors, didn’t decrease the workload of their IT or communications staff in maintaining & updating content, didn’t increase the ability of the development staff to segment their donors in a new way, didn’t change the mind of their constituents in some new way about the value of the service/product that arts org provides, etc. Cost is somewhat irrelevant if you don’t consider the return as well. And defining what that return should be is as much up to the arts org as the web development firm. An arts org that doesn’t know what their new website is supposed to accomplish, probably isn’t ready to dive into the new site development foray. They can leave feature spec’s, CMS platform, & the rest to a development firm, but setting clear expectations, and tying outcomes to goals should be a part of their RFP review process.
    [disclosure: I work with Gwydion currently as a consultant, but have also been on the other side, in the arts management field for a decade.]

  19. Thanks Devon, those are some terrific points; in fact, I say much of the same thing in a post I recently wrote for the 2011 Arts Marketing Project Conference (link). In the course of annual orchestra website reviews, I’ve singled out examples that engage in what I believe you’re describing (but correct me if I’m wrong); which is tantamount to a facelift.

    Ideally, any arts org will undergo a complete content review period to improve navigation, refine content, and get those conversion rates up. What I’ve discovered is that at times, they group may not have the time or financial resources to conduct as thorough of a review as they should; but they are still badly in need of a new CMS.

    As such, I’ve discovered that making the switch to an improved platform, taking the time to learn what it can do and how to use it, then making a dedicated effort to roll out new/revised content, navigation structure, information architecture, etc. is an option that ultimately works best.

    It doesn’t solve every problem at once, but it still ends up being better in the mid and long term as it builds confidence and allows them to begin tracking improvements to each change.

    My only other thought is that there are a few circumstances where the facelift option, albeit not recommended course of action, can still produce an immediate benefit if the new system provides better direct control, improved support, etc. *and* an immediate cost savings over the previous solution.

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