[Regular readers of this blog have read a lot about recent, current and coming disintermediation.  Whether it be the travel business, stock brokerage, media, real estate or insurance it is clear that in this major historical period of transformation, the Internet has brought about clear disintermediation.  Practically any industry will have some structural change due to this phenomenon.  What we will now start to look at from time to time is larger cultural and political institutions that may well be ripe for disintermediation to some degree in the next ten years.]

In 1831 the national nominating convention started to replace the congressional caucus method of choosing nominees for the office of President of the United States.  The delegates to the early conventions were either appointed by a party leader or were chosen under a party caucus system.  This system remained in place until the early 1900s when the primary was first introduced.  The first primary to be used as a means of selecting delegates to the presidential nominating convention took place in Florida in 1904. 

Even though primaries were introduced they did not attract many voters, and the nominating process for both parties continued to be controlled by politicians in ’smoke-filled rooms’ who made deals and brokered candidates.  The number of state primaries for both parties in which delegates wer chosen stayed at 14 until the 1950s.  Even though President Kennedy demonstrated electability by winning primaries, he won the convention nomination in 1960 by working the back rooms where the key party …

Science fiction can be extremely thought provoking, particularly to one who thinks about the future.  There are novels that are fantastical and take place centuries in the future in galaxies ‘far far away’, populated by weird creatures and other worldly landscapes.  Then there are the many novels that are more conceptual, set slightly in the future on planet Earth that posit interesting social views and visions of how humanity might live and be governed; far enough ahead to allow a disconnect from current reality, but close enough to current day that they seem possible.  It is these novels that can provide fodder for thought about the future and what might be ahead for humanity.

All of this came to mind when I read an article last week in the New York Times about a new phenomenom in Japan.  In the last seven years, 10 Gran Cyber Cafes have opened in Tokyo.  These facilities are open 24 hours and are full of cubicles that can be rented for any length of time.  In the cubicles there are DVD players, VCRs, high speed Internet connections, sound systems, regular and satellite TV, video game consoles and computers loaded with software.  Nearby there are libraries with thousands of DVDs, VHS tapes, comic books, magazines and novels.  A customer can come in for an hour or can spend the night.  Couples can share open cubicles to watch together. There is an overnight rate from 11p - 8a which draws both those with no place to sleep …

Yesterday we looked at how Media has been disintermediated and transformed during the past 30 years. Today we look at two industries that are on the threshold of some degree of disintermediation. Using the four part definition of the term , it is clear that real estate and insurance are going to be reorganized from historically developed structures, transactions, fees and processes.

Real Estate

Real Estate is very interesting. We are going to concentrate on residential real estate for this post, because close to 70% of American families own their own homes. A much lower percentage of Americans have experience in commercial real estate. Since all real estate is local, there will be exceptions to the following generalizations, but speaking generally:

-Real estate agents have been very resistant to changing their commission structure.

-Historically these agents have tried to keep listing data to themselves.

-There is now an incredible amount of real estate price information on the Internet and it is very easy to use the Internet to market a property to a global potential customer base.

-In the last few years there has been a dramatic increase in the number of “For Sale by Owner” or FSBO listings, due in part to a heated real estate market where the perception is that if one puts a good property on the market it will sell whether an agent is involved or not. The Internet supports this FSBO effort.

-Agent compensation doesn’t seem to be tied to performance as much as …

In the last post on disintermediation , I gave a deeper definition and current meaning to the term:

1. Disintermediation is the removal of the intermediary or entity

2. If the intermediary remains in place, it will be drained of any excess compensation

3. Industries that hold information hostage for financial gain will be disintermediated.

4. The Internet can be the agent of disintermediation of existing distribution channels.

We are living in a 50-60 year era of transformative change. Disintermediation is part of transformation, as it always is in such eras. The most powerful agent of disintermediation today is the Internet and it is having an effect on most industries. With the above definitions in mind, I want to take a look at some different industries that have, are or are about to undergo disintermediation.

Media

Media has been living in a world of transformation and disintermediation for years. The basic power shift over the past 30 years has been from the supplier (network, station, newspaper) to the customer (viewer, listener, reader)

TV

In the 1970s, the three networks controlled 90% of primetime viewing. There were three people that determined what America watched and when they watched it. These three people, usually middle-aged white men, were the heads of programming of ABC, CBS and NBC, and they all worked in midtown Manhattan within blocks of each other. Now, 30 years later, there are 100+ networks, with 100+ heads of proramming, of all ages and races, providing TV viewers with an incredibly diverse …