Take out the middle-man and an angel gets its wings

Whenever power shifts from intermediaries to end-users the whole system becomes more efficient and end-users benefit

Call me slow if you like but I’ve just figured out what the internet is good for.

Forget sharing information as a means of bettering humanity. Never mind combining the processing power of millions of machines to crack the secrets of the cosmos. No, the internet plays a much more important, and pressing, role and it’s this: it cuts out the middle-man.

Yes, that’s right. Those with vinyl shoes with zips in; with belts that match their ties, who sometimes think their job is more important than the customers they work for, both internal and external ones (I hate the term stakeholders; we are not vampire slayers) are middlemen, and some of them are women, too. I’m afraid, your days are numbered. Like the dinosaurs of yore, the middle-man’s head has been cut off, but this fact is taking a while to filter through to his feet.

First of all, there was Apple, which showed the music industry that, yes, you can make money from downloads — lots of it, too. In the process, Apple also proved that we don’t really need a music industry at all.

Then there was Fairfax (publisher of Computerworld), which bought Trade Me. I held back our story on the sale because I wanted someone to confirm the price was $700 million and not $70 million. Looking back, it actually seems like a reasonable amount — possibly even a bargain — given the price Google has just paid for YouTube (US$1.65 billion or NZ$2.5 billion). Of course, Google’s share price went up so much as a result of the buy that shareholders not only paid for the purchase of YouTube twice over but gave the Google boys and girls some loose change with which to, presumably, help bring about world peace, or something similar.

The thread that links all these stories together is that middle-men everywhere are now surplus to requirements. Think about Fairfax’s purchase of Trade Me. This isn’t just a case of “Media company buys website and pays dot.com dollars for it”. Far from it. Fairfax has bought the future of classified advertising in New Zealand and everyone else now has to play catch up.

Classified advertising is moving steadily online and for several good reasons. When you decide to sell something via a newspaper you place the ad on the weekend (good exposure) and by Monday or Tuesday the item’s gone. However, you can’t tell the readers that, so you keep on getting calls all week long, which is annoying; especially the guy who tells you he’d have paid twice what you got for it.

Online sales do away with all this. If you don’t make the sale you don’t have to pay for the ad and the ad gets pulled offline as soon as the item has sold. You can also see who is interested in the item and see how much they’re willing to pay for it.

Trade Me has now got into other areas, too. Cars are my favourite, because it means I may, potentially, never have to deal with a used-car salesman again. This is really good as far as I’m concerned because, no matter what price I’ve paid, I always come away feeling ripped off.

Trade Me’s also offering jobs and even real estate and that’s great because all those agents who take your money, to advertise your house or push an auction or sale-by-tender process onto you, are really only able to do so because there’s no alternative. Now there is.

YouTube is doing something similar but on a much larger scale. Today YouTube is all about short video-clips and not much else. Tomorrow it will be about every music video ever released, and the day after it’ll be about every television programme ever made.

Want to see the next four episodes of The Sopranos? Don’t wait for TVNZ to get round to showing them, see them on YouTube. You might have to pay, but probably not much. You might have to watch some ads but, hey, you have to anyway on television. And don’t worry about Prime trimming bits out of Top Gear — you’ll be able watch it uncut online instead.

This is all very good. All the TV networks do is decide what you can and can’t watch, and how much it will cost. In the next few years you’ll get to decide what you want to watch — and what you’re willing to pay for it, too.

Right now we are experiencing one of those rare moments in ICT when one of the industry’s staple trite phrases actually means what it’s supposed to mean: we are indeed experiencing a paradigm shift. And, once the shift is complete, there will be no going back.

Whenever power shifts from intermediaries to end-users the whole system becomes more efficient and end-users benefit.

Whenever that happens an angel gets its wings and I, for one, can’t wait.

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