Disintermediation

The internet continues to revolutionize society. Yes, it's another day in the 21st Century. Instapundit and many other bloggers have been following the story of the disintermediation of the news. That is, the mainstream media no longer can act effectively as the gatekeeper of public information and discussion.

The swiftboat veterans story, whatever you think about the merits of the swifboat vets' claims, demonstrates this clearly. The conventional wisdom in the blogosphere holds, and I don't doubt it for a minute, that the Kerry campaign and the mainstream news media have had a policy of ignoring the story in the hope that it would go away, until they no longer could ignore it because blogs placed it on the American agenda, without the traditional media's say so. They're not used to this.

This was also the case in the recent Trent Lott affair. Perhaps oddly, the Republicans handled the issue much more smoothly then than the Democrats are doing now. Of course there's a lot more at stake for the Democrats in the swiftboat vets controversy than there was for Republicans in the controversy over Lott's remarks praising Strom Thurmond. The Republicans would retain control of the Senate whatever they did. The Democrats, on the other hand, can lose their chance at the White House.

The revolutionary power of the internet largely lies in removing the intermediary, the middle man. And this doesn't just apply to the traditional news media, print and television, though the news media will naturally squawk louder than other displaced intermediaries. The internet is also disintermediating, or is threatening to disintermediate, travel agents, car salesmen, liquor stores, book stores, record labels, movie distributors, stock brokers, phone companies, librarians, auctioneers, pharmacies, and even to some degree doctors and lawyers.

Some of these threatened intermediaries, notably car salesmen and liquor stores, are very busy buying politicians in order to have them legally enforce their mediation, their middle man status, by passing laws against internet alcohol and automobile sales. Shame on the politicians, yeah, but you can't blame the merchants for trying to protect their niche, buggy-whipped though they may be.

Where the mediated product is a service or intellectual property covered by the First Amendment, the middle men have had much less success protecting their monopolies. Services have long been secondary in the eyes of the law. Even in our service economy they are less well-considered than manufacturing or retail, where there's an actual, tangible thing one can point to as the subject of the law. And IP, movies and music and text, a.k.a. speech, is subject to all kinds of First Amendment protections against prior restraint and chilling effects, so that the traditional middle men in this area have far fewer legal precedents protecting their exclusivity than do merchants or distributors in any other area. No one can pass a law requiring that news can only be disseminated through local newspapers; they can pass a law that says that automobiles can only be distributed by local (and not coincidentally, political contribution-happy) car dealers.

Anyway, the traditional news media can't fight their disintermediation by any legal means. They can only fight it by providing a service superior to their disintermediated competitors. So far, they're not succeeding, though it's early. They have yet to admit to themselves that they're competing against a new entity. Or they are beginning to notice, but are dealing with the new competition via the dissemination of a lot of sass.

I remember planning a trip to Orlando back in 1991. It took a visit to the local Liberty Travel office to get it done, though I suppose it could have been accomplished over the phone. But now, I'd never think of stepping foot inside a travel agency or even calling one on the phone. I can get my plane tickets and hotel rooms and car rentals online directly from the source. And I can choose from far more options online than my travel agent ever gave me. But Liberty Travel is still around- they make money in value-added niche markets (I suppose). But no one really needs them anymore.

The New York Times, CBS News, CNN, and their colleagues are becoming just like that travel agent I relied on in 1991. They can survive by providing special niche market news-gathering services, but no one really needs them any more. The service they provide is being disintermediated.