Wednesday, September 29, 2010

Understanding Disintermediation

Click on image above to view video.

David Houle is a futurist, strategist and keynote speaker. In this video he clearly describes the concept of disintermediation.

In short, disintermediation is eliminating the middle man:
For example, historically newspapers, through classified advertising, connected sellers to buyers and charged a fee for doing this. If you wanted to sell a piano, a car or a cat you took out a classified ad in the newspaper.

Classified Ad revenues once were a significant source of newspaper revenue. I remember visiting the San Jose Mercury in the 1980s and an editor telling me Classified Ad revenues paid for all the costs of producing the newspaper and display advertising sales in the newspaper were pure profit.

Ebay and Craig's List came along and came up with new ways to connect buyers and sellers and newspapers were disintermediated. Buyers and sellers no longer needed newspapers to connect to each other. That is when the decline of newspapers really began.

Typically technology provides the means for disintermediation and it has been happening for a long time, as Houle explains in this video.

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