Sunday, May 06, 2012

Disintermediation - Open Company

A couple of years ago, I wrote about disintermediation in light of the first clear example of this tendency: amazon and the book industry. At that time it was clear too that the music industry would be next.

Shortening the distance between Producers and Consumers

Industry after industry we are seeing the signs of disintermediation as links in the chain for increasing numbers of vertical markets get smashed one after the next.

Books - This industry as one of the first in the disruption, went full cycle with amazon self-publishing services.

Music - With podcasts and songs markets, this one has no way back. Superstars like Justin Biever launching his career on youtube. Or, websites like SoundCloud: share your songs!

Videos - Netflix or youtube, ustream or video between me and my favorite or discovery indie movies, performers, documentaries.

News - Is mentioning The Huffington Post enough, besides most news coming from our social networks feeds?

Games and Software - If you're a software maker, with the application markets even for the web browsers as in Chrome, the distance from developer to user is becoming really tiny.

Apparel Printing - At Threadless you can submit your designs, vote and get voted into production as well as buy original creations.

Education - So, how long before Coursera, already bringing the best of Universities to the world, becomes available to independent teachers? How about Khan Academy or TEDEd?

Loans - Microfinancing changing the way people in developing countries get loans.

Agriculture - Community Supported Agriculture (CSA). In my small town of Temecula, we have the awesome service of Harvest2U, bringing fresh local organic produce to your home.

Workforce - MTurk: need someone to fulfill a task? simple as submitting it to MTurk. Oops, did I mention amazon one more time? More qualified labor? Find freelancers all over the web, there are 35 skills listed on eLancer and many other similar sites as well.

The list goes on and on. Besides all of these examples, when it comes to finding a product or services provider in any area of our life, we'll do what were trained to do, either ask our friends on social networks or google it. In this way, the interweb (as my daughter Nicole would say) itself becomes the shortest distance between Producers and Consumers.

What's in the middle between the Producers and the Consumers?

The simple answer is that the only last thing between Producers (P) and Consumers (C) is mostly Software (S). Sometimes more than just software, more like Platforms, like in the case of Apple Market, Android Market, Facebook, Amazon itself.

I believe this layer of software between Producers and Consumers (S) (P)(S)(C) will become increasingly thinner.

Nowadays Apple can get away with a 30% cut on every app sold, and every song sold. But for how long? When you're the last chain link in the chain, how much more can you hold the weight?

Which brings me to my next idea: Open Company.

Open Company

Here's a thought, if the only thing separating Consumers from Producers is Software, what would happen if we add in to the mix the Open Source Movement? And the answer is: Open Company!

As much as I admire and respect the Open Source Movement, I always felt that it was missing something. And I believe the something is a stronger ideology. Plus, the ideology of fighting against the big microsofts doesn't really have so much cohesion at this point, the market is diversified and software now are little applications residing on big platforms.

This is the perfect opportunity for the Open Source Movement to play a fundamental role in democratizing our economy. Our fear based tendencies could lead us into thinking that it's scary, as most of the time new paradigms and change are scary for most people.

On the other hand, we could bet that one more time, as it happened many other times with the industrial revolution and other paradigm change times of humanity before, the new paradigm will bring a renewed economy, a freshened source of new ideas, it will trigger innovation into new levels and it will generate a new level of sustainability that brings us as a society to a more just and fair society. As it has been demonstrated multiple times, fairer societies have the highest indexes of individual and group happiness, so it should be all good.

How will desintermediation evolve:

I can think on three two ways disintermediation will evolve:

1. Thinnest P2C layer ever, driving prices down for Consumers and maximizing profit for Producers. Open Source movement could be a big part of this process, saving the people of the "claws" of the big platforms or driving somehow their costs down. I can see this happening at the same time that some young hacker will hack alternative peer to peer star shaped networks for security and privacy issues with cheap distributors processors.

2. Cooperatives could re-emerge on a time when if someone wants to do something, they will need a team that involves technology and systems. Maybe a website will allow for discover and management of this unlocalized, global, cooperatives, where say a software person, plus a person that knows all about x, plus an accountant, plus a marketing person, get together and found their own startup online, without ever seeing each other's faces.

3. The first two are Open Company oriented, the third is smart private players in the industry that become platforms themselves and thinner the software layer. One great example of this is Valve's company experiment on driving prices down and increasing sales in higher percentages, maximizing profit at the same time than reducing costs for consumers, as a clever alternative way towards fighting piracy.

It remains to be seen exactly what shape and forms could Open Company take. I leave it as an open question ... just another thought in the collective mind.

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