Recently I tried out the service "99 Designs", largely with good results. However, this got some pushback from peers of mine in the web development community, which prompted a good bit of thinking on my part about the various ethics and contingencies of Knowledge work and Digital Labor. So, here goes.
First Principles
I'm sympathetic to the "No Spec" movement, especially when considered in the historical context of design and creative as a profession. To this day, much of the business of design involvs doing the work first, "on spec", and then only getting paid if the client liked it. If you're a fan of Mad Men, you've seen this. Don Draper forces Peggy and the gang to pull an all-nighter in a desperate bid to try and land a big new account. It's a staple of the show.
At its most extreme, the spec work process requires a completely finished product before payment, and a buyer will solicit this from several different individuals or firms, ultimately choosing only one to get paid. Or in the ultimate dick move, choosing nobody and "taking the campaign in-house" — which usually means stealing the best ideas and assets but handling the final execution internally, without paying anyone.
Clearly, this is no bueno: as one of my internet heroes Mike Montiero says, "F-you, pay me".
But, It's Maybe a Little More Complicated