Sunday, May 10, 2015

Disintermediation and Reintermediation: "Life on the post-Facebook internet"

We intro'd last December's "'Amazon Unveils Its Own Line of Diapers, Confirming Partners’ Biggest Fears' (AMZN)" with:
In most cities in America around a quarter of the Victorian-era mansions were built by wholesalers of one type or another, hardware, dry goods etc., it was a good way to make a living.
No more. They are being disintermediated out of existance....
From The Awl:

The Attention Brokers
In 1997, a Computerworld column called out a particular stain of internet boosterism. “One of the most recent forecasts for the Web is that it will let companies sell their products directly, bypassing the traditional need for channel support,” David Moschella wrote. “Frequently cited examples include online booksellers, stock traders and travel agencies. Those certainly are interesting examples and powerful examples of the Web’s potential,” he says, “but even a cursory analysis reveals that those innovations have almost nothing to do with disintermediation.”

Internet commerce had arrived, as the prophets foretold! Except it wasn’t Random House or Doubleday selling books, or the authors themselves. It was Amazon. Airlines were selling tickets directly but middleman sites like Expedia, which aggregated tickets into one place, were clearly the future. “At this stage,” he concluded, “we should recognize that competition on the web is mostly about the battle between channels, not their elimination.” Just because two people anywhere in the world can now share information with each other instantly doesn’t mean there isn’t plenty of space in between.

Two years later, in the same magazine, this process—of internet companies destroying middlemen only to eventually become them—was described with another term borrowed from the world of finance:
In 1998, Jack Shafer, then deputy editor of “the on-line magazine” Slate, imagined the media’s odd and accelerated version of this cycle:
Already, electronic commerce mavens are talking about ‘reintermediation,’ in which a new breed of Web middleman will rise to make sense out of the chaos wrought by disintermediation. As the technology of the Web evolves, Internet devices will become as ubiquitous as telephones. Every newspaper will have the potential to break news as fast as a television station. Every television station will have the potential to become a newspaper.
This was a column about the Drudge Report, but replace a few proper nouns and it could almost be a piece about blogging a few years later, or about citizen journalism a few years after that, or about Twitter a few years after that. This framework is useful for describing much bigger things that happened elsewhere online, too. From big web portals to search engines to social media, over the last twenty years the web has been passed, in pieces, between middlemen with either the biggest audiences or a more efficient—or convenient, or useful—form of intermediation. What seems to have changed, mostly, is how fast the hand-offs happen, and how ambitious the middlemen are.
The marginalization of web publishers has been swift. This week seems to be a milestone, at least psychologically, as Facebook, which routes an enormous proportion of the world’s mobile web traffic, prepares to assume the role of funder, distributor and host for news. The Wall Street Journal, writing about Facebook’s plan to host news organizations’ articles (in addition to videos, which are already hosted there) on its own site and app, did so from a notably compliant perspective.
Facebook Inc. is offering to let publishers keep all the revenue from certain advertisements, in a bid to persuade them to distribute content through the social network, according to people familiar with the matter. Many publishers now post links to their content on Facebook, which has become an important source of online traffic for news sites. But opening those links on a mobile device can be slow and frustrating, taking around eight seconds.
The Facebook initiative, dubbed Instant Articles, is aimed at speeding that process, people familiar with the matter said.
Business Insider laid out the broader situation:
Traditionally, media companies have operated independently and controlled their own destinies. They owned the whole content supply chain, from research to writing to publication to distribution. In the digital era, they built their own web sites, which drew loyal readers (direct traffic), and they sold most of the ads that ran on their sites, keeping 100% of the revenue.
Those days are gone.
Now the fate of publishers increasingly depends on social platforms like Facebook, where billions of people discover news to read and videos to watch. And the social platforms are equally interested in the media business.
“Facebook’s plan,” the article continues, is to “own articles, not media companies.” (All such writing is slightly tense and cautious, sort of like when the Times reports on itself. How are most people going to come to this article about Facebook? Where, a year from now, might they be reading it?)

Facebook’s is a reintermediation by default: the service is such a dominant source of readers—much more so than any other individual website—that it can characterize eight-second load times as a legitimate reason for publishers to grant hosting and distribution of their product to Facebook. From the publisher’s perspective, Facebook went from non-entity to link-sharing site to meaningful source of traffic to one too large not to accommodate, to finally becoming an existential threat....MORE