by adam mathes
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There Is No Disintermediation

Before XOXO I asked:

Will we just get new technological gatekeepers that fill a similar role as the old media distributors? Are they better, worse, or just different?

Questions for XOXO

The conventional wisdom is that the web has been a force for disintermediation, connecting creators directly with an audience, and that was I think part of the framing of the XOXO festival.

After listening to the speakers – artists, musicians, product creators, and tech companies, what it seemed like to me was that the story of the first ten years of the web (1994-2004) may have been about that, enabling anyone to share their own works on their own sites and connect with a worldwide audience.

But the story of the last few years I think is something different.

It’s the growth of alternatives to traditional media companies, which historically have offered an integrated suite of services and compensation in exchange for ownership of intellectual property. Rather than an integrated offering, we see the growth of an a la carte model where content creators can pick and choose which tools and services to use, while retaining their rights.

These new tools are mediators, but they’re qualitatively different.

Traditional Media

A simplified view of a traditional media company is that it combines the following:

  • Selection - choosing what to fund and publish
  • Funding - book deal advances, the far more complex world of movie or television financing, salaries for paid writers for articles
  • Editorial control - adjustments to the content being created
  • Production - physical goods creation
  • Sales & Distribution - warehousing, sales to retailers or direct to consumers
  • Marketing - advertising, PR and other means to increase demand

The New Mediators

The new technological mediators generally focus on disentangling these.

Kickstarter has a very light selection process, and can be thought of as a non-exclusive service to get funding, combined with a built-in marketing mechanism. The real “selection” of funding is through the users of site. It moves editorial selection away from a few trusted tastemakers directly to the most fervent potential customers through – essentially – pre-orders.

Etsy can be thought of as a way to bootstrap a sales & distribution system on the web, in exchange for a percentage.

Apple’s App Store handles sales & distribution, and provides a very light filtering (we hear about the few that get rejected, but it’s fundamentally a small blacklist of rejects, not a curated whitelist of acceptances.) Amazon’s Kindle Store, VHX, and other platforms are similarly ways to sell and distribute intellectual wares without the difficulties of setting up individual web sites and storefronts.

Selection is perhaps not as important in a world with infinite shelf space. The “shelf space” and selection that is done in these places is placement in the prime “featured” real estate of the home pages, or initial views. It’s selection of mass exposure, not access control.

Lulu, Createspace, CD Baby and various other services offer production and sales and distribution of physical goods on an on-demand basis, without the initial high capital costs of large runs (though at higher unit costs.)

Marketing, basically, falls back to the creators themselves. And I’d argue that in a lot of cases it’s not “word of mouth” or “social media” but much of the successes in this space can be traced directly to established bloggers with serious audiences acting as tastemakers. A link from Daring Fireball, a mention on Waxy, etc. And in a lot of these cases it is a little unfair to even call it marketing since you can’t buy it at any price.

The Differences

New mediators are non-exclusive and non-binding

In almost all of these cases, the creators retain their copyrights, intellectual product, and are free to use competing services, and free to remove their products from the services if they so choose.

New mediators thrive without picking winners and losers

I believe that at their core the traditional media companies view themselves as tastemakers – as the selectors of what will win in the marketplace. So while they might outsource other aspects of their business that is the part that is core to what they do.

And while many of the physical limitations that forced selection previously – shelf space, television time slots, spectrum – are fading in importance there is still the fundamental limiting factor of our time, so selection always has a place.

This doesn’t mean that new mediators don’t weed their collections of spam, garbage, or other serious problems - just that it’s not the focus of what they do. It’s not the service they’re offering.

But for me the question is: on a practical level, which is going to foster more innovation over the next few years: a gaming console like XBox 720 with a tightly controlled selection process and high barriers to entry, or Valve’s new Steam Greenlight where indie PC games can get promotion and distribution through Steam based on community feedback?

And while Greenlight is brand new, and the XBox 720 isn’t even out yet, I’m pretty sure I know what the answer is.

New mediators make creators into businesspeople

While these services drastically lower the bar toward previously hugely complicated things - running an online store with physical good fulfillment, creating and selling t-shirts and CD’s on demand, raising funding via thousands of small Amazon payments - they do require artists and creators to take control of their own business destiny.

This is different than traditional indie models – like independent record labels, or 20x200 where part of the deal is: you create, we’ll worry about all this other junk.

So What?

Part of my thesis here is that information technology has actually so drastically lowered the cost of business communication that we are now seeing instances where specialization and loosely coupled systems of complementary businesses can compete against complex integrated large companies, in large part by getting lots of people access to the market with the combined power of these specialized services.

But so what?

In addition to just being interesting and exciting, I believe we should judge the new mediators and their outputs by:

  1. Diversity - are there new and different things that exist as a result of this service?
  2. Compensation - are creators making more money as a result of this service than alternatives?
  3. Rights - do these services leave intellectual property rights with creators, or does it require signing them over?

When services are doing these things, I think we should applaud them. When they fail to do so, we should be wary.

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