I've spent significantly over the last 18 months on print design, web design for our applications, and small web projects (we launched our product a few weeks back). I also run an office for a thriving high-end services business. Some thoughts:

First, designers seem to like to point out that you wouldn't hire an accountant just because he had QuickBooks, or an engineer because he had a CAD program. Therefore, why would you hire an amateur designer just because they had Illustrator? I can answer that question! Because if you hire bad accountant you get audited. If you hire a bad engineer you get sued. If you hire a bad design firm, most of your most important clients will not be able to tell their work apart from Wolff Olins.

Second, designers like to point out how graphic design is so much more than illustration, involving as it does detailed market surveys and studies of what will work for your business. I have two responses to that. Response one: I have never been wowed by a designer's ability to calibrate their work to any of my businesses, and I've worked with plenty of designers who didn't need to bill me $5000 to find out what style would fit us. Response two: if I pay $5000 to have you do a detailed, careful study, I shouldn't have to pay it again on every subsequent project that isn't rebranding my company.

I think one of the real issues here is that there are two "kinds" of graphic design projects: full-service and a la carte. A la carte work is cheap. Full-service work is very expensive. Companies that don't have $50MM marketing budgets probably get 95% of the value of graphic design out of an a la carte project. Most of us just need a design that doesn't mix PMN Caecilia with Futura. But a lot of not-amazing full-service consultancies will go out of business if they're stuck charging at the 80%-solution rate.

Which brings me to my next point. Which is mercifully short. It is that the best designers will charge whatever they want, and structure their work however they want, regardless of how well 99designs does. Happy Cog and Blue Flavor are still going to have wait lists, because they are proven producers.

It's the same thing with our business, and, I imagine, with every other services business in the world. There is always low-end competition. In our industry, it's Payment Card certification for websites that accept credit cards. We all have misgivings about those low-end services, just like our corporate accountant is probably not enamored of H&R Block. But only in the graphic design industry is there a moral/ethical issue over the existence of low-end competition.

Actually, that's not true. There's another industry that has profound concerns about low-end competiton. It's the interior design industry. Did you know that in many states, you need to pass a licensing exam to pick a set of throw pillows?

I have one last point to make. Designers like to crack jokes about what'd happen if other industries were forced to do contests and auditions to get work. I don't understand why they think these jokes work. Because in my industry, we're routinely called on to do detailed discovery, advisory, and consultatative work prior to starting large engagements. It can take weeks of otherwise billable times. Often, that work comes to nothing, or even directly assists our competitors. We call this "part of the sales cycle", and part of running a business that has to work in good faith in the market with other companies. In the long run, the "spec work" we've done has always paid off. I don't think we're outside the norm on this; for instance, high-end law firms have given us hours of free consult help without expecting a dime from us.

There is clearly a form of "spec work" that everyone agrees is immoral: sponsoring a design contest, collecting the submissions, and using them to complete the project in-house without paying anyone. Nobody's talking about that here. I will probably not source work from 99designs. But I can't imagine why anyone would have a problem with someone who did.