Global Crisis/Innovation Blog

Direct to the Client:  Can You Disintermediate a Service?

By Shlomo Maital

 

 

Here is the latest “power word” in innovation:  Disintermediation.

     Yuk.  One of those economists’ words.  Never trust a word with two prefixes joined, especially when one is ‘dis’.  

    But there is a powerful idea here.   Disintermediation means “eliminating the middle man” and linking supply directly to demand, or creator/innovator directly to user/fan/customer.  Writing in the Nov. 1 issue of Bloomberg Business Week, John Tozzi ( jtozzi2@bloomberg.net) describes “Bandcamp”,  and how Ethan Diamond left his great job at Yahoo to launch Bandcamp, an easy way for rock bands to publish and sell music online.   Writes Tozzi:

  Artists can plug Bandcamp’s player and storefront into their own websites to stream entire albums for free and sell or give away downloads. Today, hundreds of thousands of artists use Bandcamp, and Diamond says about 25,000 join every month. That makes the company a fast-growing contender to succeed Myspace as the go-to online tool for musicians to get music directly to fans. As Myspace users decamped for Facebook, “there was basically a huge vacuum left,” says Aram Sinnreich, founder of media consultant Radar Research. “There were more than 10 million bands on Myspace. All those bands needed someplace to go.”

 Food coops are linking farmers directly with consumers. Capital markets are making it possible for businesses to borrow directly from lenders, without banks.  Digital books are enabling authors to sell directly to readers without a publisher.  Disintermediation takes that frustrating, sterile, greedy middleman (publishers give authors 12 ½ per cent royalties, take a year to prepare the book, and then, forget to market it) and eliminates him/her.  The Web is a powerful tool for disintermediation. 

   Pick a service or product.  Innovator – can YOU disintermediate it?   If so – you have a business. 

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Bandcamp Powers Online Sales, Aims to Fill Myspace ‘Vacuum’, By John Tozzi – Nov 1, 2011

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