Graphic designers love to talk about spec work and why it's bad, but I still find that non-designer types—98.5% of the world*—have no idea what we're talking about.
Spec work, short for speculative, is labor in hopes of getting paid. It generally goes something like this—an email or Facebook post from Bob's Used Mattresses: "We're having a logo design contest. Submit your designs and you could win $25, and a new, used mattress. Not to mention, it'll be good for your portfolio."
Let me first say, I'm not a communist (though I think they had great intentions). I am indeed a free-market capitalist, whatever that means (though it hasn't worked as well as I'd hoped).
You may be thinking that spec work just sounds like good-ol' fashion, 'merican-made competition. And you would be wrong.
Spec work 1) wastes the time of designers, 2) creates a sub-par product, and 3) delegitimizes the profession.
A big waste of time
Let's say a homebuilder puts up a spec home. Chances are he or she will eventually sell it. But, in the case of a logo contest you have one winner and lots of losers (P.E. dodgeball, anyone?). Let's say 100 designers each put 3 hours into their logo for Bob's Used Mattresses. That's 300 design hours, and even at a measly $10/hour that's $3000 buckaroos. And remember, Bob's payout is only $25 dollars. Bob has just stolen $2,975. "But they're all consenting adults, and that makes everything okay, right?"
A sub-par product
At this point I've only treated poor Bob with contempt, but I feel for him too. He gets no say in the design process, no interaction with creative designers to experience that wonderful designer-client synergy, and he most likely will have to wade through a lot of crap to maybe find a few decent visual solutions.
Delegitimizes the field of graphic design
A logo contest is sort of like a coloring contest... for adults... but, designers do this for a living.
I once heard a pastor friend talk about going around to churches to preach for "experience". He quipped that "Experience don't put food on the table."
A logo is not a product. You can't return it at Walmart. It's intellectual property. It's invested with blood, sweat, creativity, research and skill. You can't put a price on it because it's emblematic of all your company or organization hopes to stand for—making the logo invaluable.
By the way, this all got stirred up again today, because I got two offers in one day to participate in a "design contest". I said no thanks and I hope you'll do the same.
Stick around for the Q&A...
Q: "I'm a design student. Is it okay for me to do spec work?"
A: That's a good question. No.
Q: "Isn't it risky for a client to hire just one designer for a project?"
A: Yes, business is risky. But for peace of mind, the client picks a designer based on a designer's portfolio and track record.
Q: "I'm a designer and I do free work for causes I believe in... is that wrong?"
A: No, because you're giving out of a spirit of generosity not a gambling compulsion.
Q: "Is it okay to do graphic design for a 'love offering'?"
A: Only if you're married.
*Statistical data is completely unfounded.