Mags are folding. Newspapers are tightening their belts. Writers everywhere are freaking the eff out.

It’s only natural that — for many — desperation has set in.

But I worry about the effect it’s having on the industry at large…an industry that has not seen the per-word rate rise in years, despite inflation.

The biggest offenders? Bidding sites, like Elance and Guru, and blog malls like Examiner and Today.

After the jump, the seven things that bug me about these sites:

1. The pay rates are insane:

As in insanely low.

Most well-respected glossy magazines can afford at least $1/word. With the growing popularity of Internet publishing, many publications have switched to flat fees, which fall far short of the rates magazine writers used to receive. Still, if you’re choosy about projects, and consider the amount of time a post or article will take you to research and write, you can still end up having received a decent hourly rate.

Sites such as Examiner, Today, and eHow, however, offer only traffic-based incentives. For example, Today offers only $2 per 1,000 unique visitors. When you’re taking the time to research, write, and market your post in order to draw in more traffic, how much are you really earning on the hour?

2. This is because clients’ budgets’ are low:

Many of the people posting job opportunities on bidding sites are working with extremely low budgets, sometimes because they don’t have a firm grasp on how long the labor will actually take…sometimes because they’re mere startups and, quite simply, don’t have the dough. As a result, they don’t have a lot to offer you.

3. …and because those with the deep pockets find their service providers elsewhere:

While the Internet is a godsend for the lazy job seeker, those with the right experience know that job sites are a last-resort stop for respected employers.

Most employers try at least three other things before stooping to job ad postings: Finding someone they know within the company to get the job done. Finding someone who knows someone they know. And considering those who have already approached them with a great pitch or much-needed service.

Because of this, you’ll find the best — and best-paid — work through networking and actively pitching.

4. This is also because writers are undercutting other writers’ rates, driving rates down even further:

While one would hope that freelancers beat out other freelancers on bidding sites based upon their talent and breadth of experience, the truth of the matter is that many at-home workers are lowering their rates in the hopes of enticing possible clients with bargain basement prices. Not only does this devalue your own work, but it devalues the work of others, as clients have no need to pay people what they’re truly worth if they can get the work done on the cheap.

This is also why the huge blog aggregators get away with paying their bloggers almost nothing. Those who balk at the low rates don’t worry them, as there’s always someone else willing to work for free.

5. And I’m paying for this!?

While the bidding sites typically offer a basic membership for free, you’ll need to invest some money in order to submit a greater numbers of bids or proposals, or take advantage of other site features. Sites such as Elance also charge you additional service fees based upon your earnings. With the low quality of projects on offer, and the low earning potential, it hardly seems worth it.

6. They’ll try to make it up to you with experience and exposure…:

…but neither of these things pay the bills, and I find it insulting when sites hype up such “benefits” as if they’re something I should be falling all over myself to bust my ass for.

7. These sites often get what they pay for:

And that worries me, because it drives down the quality of content. Many of those who use bidding sites, or blog for nearly-nothing, are those with less experience. And, with the low pay incentives, they won’t necessarily be driven to hone their craft, or take the time to put together a well-written, well-thought-out piece of work.

…

When should you consider actually using one of these sites?

When you’re just starting out:

If your portfolio is somewhat lacking, it may not be as unthinkable to work for less. Even so, I implore you to consider actively pitching to smaller, local publications, or even building your own blog, where you have full control of your content and design.

And always know your bottom line. How much is your time worth to you? Put together a budget, figure out an workable hourly rate, and measure all possible projects against this yardstick.

Anything I’m forgetting here? Additional negative aspects to the sites mentioned above? A differing opinion? Other ways in which writers can sometimes undercut other writers? Leave it all in the comments!