Forgot about the layer where designers do work for free in the hopes of besting their peers in design battle to win a disappointingly small payoff.
It's hard for any industry to face change, but developers survived outsourcing and photographers survived stock photography. Both industries are still flourishing.
Most if not all freelancing sites start well until they are discovered by unqualified people from India and the likes.
http://pandodaily.com/2012/01/24/get-over-it-haters-99design...
Even many US & UK based designers find it more more worthwhile to use 99designs as a customer acquisition channel vs. doing unpaid proposal writing, pitching, or expensive paid advertising which has no guarantee of results.