Are The Old Enablers Becoming The New Gatekeepers?
from the watch-out dept
We've argued, for a long time, that just railing against "middlemen" misses the point. There are always middlemen. But not all middlemen are created equal. The distinction, that we've discussed multiple times, is the difference between enablers and gatekeepers. That is, historically, many middlemen came to power because they were gatekeepers. If you wanted to do something -- be a musician, write a book, sell a new product -- you effectively had to get "approval" and support from a gatekeeper who had access to those markets. Being a gatekeeper gave them enormous power, such that the gatekeepers often became central to the market, rather than the people/companies they were working with and it also allowed them to craft ridiculous deals that were incredibly favorable to themselves, at the expense of those they were working with. That, of course, is why there tends to be so much inherent antipathy towards traditional gatekeepers.In contrast to that -- and what we found most exciting about many of the new companies that had popped up over the last decade or two -- was the rise of middlemen as "enablers." These were situations where the middlemen weren't gatekeepers, and weren't "required" to do what you wanted to do. Instead, they were companies that helped give people/organizations a lift up on what they were trying to do, while keeping them and their work (rather than the middlemen) central to the market. So, when you see things like eBay or Etsy or Kickstarter, those are more enablers (and, yes, they do have some restrictions on use, but they're more policy based, rather than "can you make us money"-based).
Of course, the truth is that there's a spectrum along which these middlemen lie. It's not two separate buckets, where "enablers" are here and "gatekeepers" are there. Rather, intermediary companies often fall somewhere along that spectrum. It seems somewhat clear that, for the most part, newer firms are becoming successful by being enablers, rather than gatekeepers. But... they don't necessarily remain enablers their whole lives. One thing that is worth paying close attention to, is how companies shift over time, and when they start to shift from being enablers to being gatekeepers.
In fact, it seems like some of the big "clashes" we've been seeing in the tech/web world lately are along those lines. Lots of people have talked about Instagram and Twitter fighting with each other, which is just the latest in a series of "fights" among hot web companies blocking each other. Considering that many of these companies grew up on a web 2.0 ethos of openness and sharing -- and we're now watching them get more locked down, proprietary and limiting -- it seems obvious that some of these companies are moving along the spectrum from enabler to gatekeeper.
Anil Dash recently wrote a great post in which he frets about the fact that we're effectively losing key parts of the open web, which made the web great. You should read the whole post, as I couldn't do it justice summarizing it here. Again, it seems like many of his points are really about some of the more successful "internet" companies moving along that spectrum more towards the gatekeeper side of things, and that clashing with the more open spirit that the enablers built their reputations on. Dash, rightly, points out that this is self-correcting over time. We shouldn't necessarily fear the new gatekeepers, mainly because a gatekeeper business model, while lucrative in the short-term, is unsustainable in the long term. Companies, which move along that chain chasing the easy money, need to learn that they do so at their own peril. Becoming a gatekeeper merely opens up massive opportunity for a new enabler to disrupt you. That's a lesson that too many companies learn way too late.
That said, Dash fears that because a new generation is growing up in a world with more closed systems, that we may lose some generational knowledge of what came before:
I both agree and disagree. I'm among those who get a bit frustrated when I see new entrepreneurs trying something that was done before -- and they seem to have no knowledge of it (ditto for reporters who cover the big "new thing" without mentioning that half a dozen companies did exactly the same thing a decade earlier). But, some of that, I'll admit, may just be the onset of old fogeyism. Yes, there's value in knowing the past, and learning from it, but there is also value in the naivete with which some new entrepreneurs jump into the pool -- often not fully understanding the past. Will they repeat some of the mistakes? Sure. Absolutely. But not being burdened with the past can sometimes be a key ingredient in redoing something that failed in the past, and in somehow making that slight unexpected tweak that just makes it work.This isn't some standard polemic about "those stupid walled-garden networks are bad!" I know that Facebook and Twitter and Pinterest and LinkedIn and the rest are great sites, and they give their users a lot of value. They're amazing achievements, from a pure software perspective. But they're based on a few assumptions that aren't necessarily correct. The primary fallacy that underpins many of their mistakes is that user flexibility and control necessarily lead to a user experience complexity that hurts growth. And the second, more grave fallacy, is the thinking that exerting extreme control over users is the best way to maximize the profitability and sustainability of their networks.
The first step to disabusing them of this notion is for the people creating the next generation of social applications to learn a little bit of history, to know your shit, whether that's about Twitter's business model or Google's social features or anything else. We have to know what's been tried and failed, what good ideas were simply ahead of their time, and what opportunities have been lost in the current generation of dominant social networks.
So, I agree wholeheartedly that the "new gatekeepers" mean that we've lost some sense of what made the last generation of internet companies great. And I do hope that the next generation that comes along can similarly disrupt the last generation, often by being the enablers that break up their new gatekeeper role. And I think that companies who understand the history of how enablers disrupt gatekeepers should understand why progressing down that spectrum in search of short-term profits can lead to long-term pain. So I think it's wise for those companies to learn from history. But I'm less worried about the new entrepreneurs jumping into the space. They'll likely find their opportunities in being the new enablers, because that's where the disruption occurs.
Watching the cycles of innovation can be a fascinating (and at times frustrating) past time. Companies make the same mistakes over and over again. The ones, which actually don't fall for the usual traps, are few and far between. But, in the long run, the new startups tend to be pretty good at showing the old guard that they chose the wrong path.
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Filed Under: enablers, gatekeepers, innovation, intermediaries, middlemen, progress
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mmmm
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Re: mmmm
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Jamendo doesn't have any rights to the music though, the artists and fans can both pick up and leave any time they see a better service.
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Dotcoms is proposing a service to allow files to be uploaded for other to be downloaded, and does not define the types of content or licenses to be used. There fore his proposed new service is as a pure enabler of file distribution.
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I disagree, because the barriers to entry in Jamendo's market are quite low. There is not much of a fence, so no place for them to be a gatekeeper.
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Beware of big companies
If the tech community, which believed in openness, can have companies that behave like big oil, big auto, big pharma, etc., I think it ultimately affects every company that gets to a certain size.
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Re: Beware of big companies
With companies and human beings, the effect appears to be this: it take a certain predatory nature to be willing to do what it takes to achieve great wealth and/or power.
It's not that achieving it makes you predatory. It's that if you aren't predatory, you won't really want to achieve it in the first place.
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Re: Re: Beware of big companies
It's not that achieving it makes you predatory. It's that if you aren't predatory, you won't really want to achieve it in the first place.
Good point. Which is why I think we need to talk about how to engineer the system (it doesn't have to be through laws, but it does have to be to stop gaming the system as much as possible) so that once power/wealth get too concentrated, a brake happens, or the power center automatically comes apart. I don't expect either to happen right away, but I am highlighting the discussions about the P2P and other movements as I find them.
Capitalism and economics as we know them are not the only options and there are experiments in other economic systems. In many cases those are happening because people have been shut out of mainstream economics and have no choice. If your income is disappearing, you look for ways to get by on less. And as consumption declines, it has a ripple affect elsewhere. People are going to stop buying stuff because they can't buy stuff. And as they do that, they take down industries trying to sell them stuff.
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Coincidentally, this is the exact reasoning behind having a progressive income tax. Money is power in our society, and if you accumulate enough wealth it become easy (and inevitable) to subvert society and present an existential threat to it. The progressive tax structure was intended as a way of putting the brakes on that sort of accumulation.
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That's why I don't fully embrace the Techdirt approach to life. I'm concerned that some of the points advocated are done so to allow Google to function that much more unencumbered, which will make Google that much more powerful. Now if we can talk about how to free up society and ALSO break up corporations the size of Google, I'm more open to the discussions.
I'm also concerned that certain libertarian positions are going to be used to allow those with property to continue to maintain it, while not creating opportunities for those without property to ever get any. If libertarian arguments ultimately maintain the status quo, I'm not really excited about them. And by status quo, I mean allowing rich people to stay rich. If you have to pay for everything out of your own pocket, then it's hard to get anywhere if you can't pay. Privatizing everything doesn't work so well for you if you can't pay for education, health care, safety protection, etc.
Ultimately I am very concerned that the quality of life for most of the world will go down with the effects of global warming and unsustainable economics, but the wealthy won't have to deal with it because they can buy their own safety. So they can continue to advocate policies that are bad for the world, but if 90% of the world's population disappears as a result, it doesn't affect them very much.
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Those are the real problems, Google at the moment can't stop others from entering the market, the bar is low, anybody can do what Google does if they have the knowledge to do it, MySpace failed before them was AOL(the portal not the infra-structure), they are not a real problem if they ever do something bad people will jump elsewhere.
Freedom is the only real deterrent to system abuse, that is why is so important, it keeps the incentives to exploit others in check because they can't funel people into traps without everyone jumping overboard.
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My point is that once a company becomes as big as Google, it has the financial resources to lobby the political system to favor what it needs to stay in control.
Start by reforming campaign financing and lobbying. Lots of people across the political spectrum support it and yet nothing has gotten done. If anything, more money is flowing into politics. ALEC, for example, writes laws and gives it to politicians who pass them unchanged. Those laws favor ALEC members.
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We need simple rules that everybody understands, that everyone agrees to fallow and fight for, so keep it simple.
Organize to debate laws just like ALEC and just like ALEC spoon fed those laws to elected officials if they don't want to pass those laws people can always elect others or make a scene.
More importantly everyone should understand the core principals of how a free democratic society depends, so they can fight for it, exclusive deals are a no-no, granted monopolies are a no-no, legislation for the children full of other stuff that erodes civil liberties is a no-no, no matter what is called.
If we the people can't organize and make it happen we surely deserve to be exploited for being dumb.
More importantly, don't be Obama, don't say your plan is worth it, when you haven't tried it yet, do you have any experiences that prove that what you propose would drive things in the direction you expect or it was just a thought exercise you tried?
Have it been experimented anywhere? your own home perhaps? your neighborhood? a school board? can you show others how to replicate the results so they can test it and report on it?
This is a crucial difference of people who do and those who don't, the people who do experimented and know what it will happen and what could go wrong.
You see, the only way to guarantee that you will be heard is if those people in power know you can affect change, the politicos respect business because they believe business can put them in power or not, you have to change that perception first.
The Tea Party did just that so it is not impossible, they came close but they were not organized enough, they didn't have the right tools to make it.
Organize, plan, test and apply.
You have the tools already, people could create a virtual country and simulate things, that would be a start, there is a game online that allows people to rob others is a space game that I forgot the name, you can infiltrate others clans and if you got the trust you can suck them dry and it is allowed to happen the most successful clans learned to cope with it and the solution is always the same, all resources must be distributed to minimize damage, the power is distribute so no one individual can control everything and can be crushed by the remaining clans if he turns out to be the enemy.
This is what we need to do, instead of centralizing the power in the federal government we should be taking away the responsibilities they have and doing it ourselves, healthcare comes to mind, instead of waiting for the government to try something that works, we should be doing the field test right now, creating community clinics, incentivizing people and schools to join in in the search for knowledge and creation of tools to start empowering the low cost community health centers, instead of paying medicaid we should be investing in community alternatives some will fail, some may succeed and armed with that knowledge people will know what it needs to be done and how it is done.
The revolution is DIY or DIE!
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The revolution is DIY or DIE!
And what are you doing? Especially if you are running low cost community health centers that are delivering affordable medicine without government help, please point us to them. We need more health care solutions.
Even if you don't want to give us your name, provide links to projects you are involved in so we can see how they are working.
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Predatory behaviour as mr. Fenderson mentions can include pricing out competitors for short periods of time (this is very common) and/or price fixing (even Adam Smith recognised that behaviour in fully free systems). What is more debatable is effects of multi-field companies. If a company controls two companies in closely related markets, they can gain synergies like lending money and owning an autoshop. By only presenting their own loan or directly demanding that their own loan is used, they can corner the market.
Too big to fail is more of a problem for the national states. If companies of a certain size go down, a certain percentage of GDP is lost. Smaller government in regards to this phenomenon only limits the possible countermmeasures.
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Facebook disrupted MySpace, and now must prevent anyone else from disrupting them.
It might take years or decades, depending on how rich and powerful the gatekeeper can get, but it's going to happen eventually. Esp. in creative industries that depends on things being new and inventive.
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Well, to be fair, MySpace was already well into its death spiral before Facebook started getting big.
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"There are always middlemen." -- We can reduce them.
You should concentrate on the trillions traded on the now definitely corrupt exchanges, Mike, rather than the wandering vagueness you have here.
Schoolmarm raps your knuckles, Mike, for "past time" when you meant "pastime", or if wanted to be old-fashioned "pass-time". Guess the spell-checker doesn't help for context.
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Re: "There are always middlemen." -- We can reduce them.
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Re: Re: "There are always middlemen." -- We can reduce them.
Even with research it is hard for average investors to make good investments in the market these days. The market works when everyone has equal access to information and when the trading technology operates the same for everyone. Neither of those are the case these days.
Now, if I were advising someone with a long-term frame who wanted to put money into the market, I'd say, "S&P 500." But if you need access to your funds in within the next 10 years, cash may be your best bet. As we have seen since the dotcom crash, it can take a long time to recover what a down market can do to your portfolio.
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Re: Re: "There are always middlemen." -- We can reduce them.
Perhaps, but if the last few decades have taught us anything, it's that you still face the substantial risk of putting your money under the control of a group of unapologetic thieves.
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Re: Re: Re: "There are always middlemen." -- We can reduce them.
Yes, that's pretty much how more people see it these days -- that it is rigged against them. That wariness has at least taken the steam out of the IPO market, which is a very good thing. And without IPO exits, the return for VCs goes down, too. Which is also a good thing, given what companies have been funded.
For as many smart people as have gone to Wall Street over the last few decades, I'm not sure what positive we have to show for it. Did we really need to find new ways to push money around?
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Silicon Valley and money
Like I said, I think the problem is about economics and how wealth is accumulated, which then acts as a bubble to segregate those with power from everyone else.
I posted this in the discussion about disruptive industries, but it is so good and so relevant I want to repost it here.
How to Fix Your Soul - Umair Haque - Harvard Business Review: "Imagine that I pioneer a wondrous nanomaterials startup that offers everyone a blindingly awesome new technology. What's likely to happen, without institutional innovation — without better building blocks for markets, corporations, and economies, in this case?
"Well, the first thing that's likely to happen is...nothing. Wall St and Sand Hill Rd probably won't bat an eyelid at my startup, choosing, instead, to do what they've been doing for the last decade or so: allocating capital to Groupon, Zynga, Facebook, and their ilk. But let's assume, for the sake of argument, that by some miracle of virtue, that they do invest in my amazing nanomaterials startup. What happens next? Well, without political innovation, I'll get rich, and my backers will get rich — but the middle class is likely to continue its long, slow slide into oblivion. The benefits of technological innovation, in other words, without institutional innovation, are likely to remain hyperconcentrated at the top — with all the attendant problems that stem therefrom: regulatory capture, political gridlock, mega-lobbying, middle class implosion, planetary destruction, and finally, more of the same: real economic stagnation."
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I don't see this happening. The underlying problem stems that every new gatekeeper extols their current business having broke the chains of the previous, they instill new chains making it more difficult for others to make the same claim.
People always think in the "now", but fail to remember the past. When the next generation does come along, they'll have all the laws and "policies" the old gatekeepers enacted and will find it nearly impossible to make it "big".
For the first time ever using Google, I hate this company. If you're not aware, it recently made an unannounced changed to its Safe Search filter settings. But what's more troubling was its change to the algorithms.
This isn't about "boobs", but the loss of true control people have. Nudity may be one complaint addressed with this change when looking for a topic, but what of the hundreds of online stores in our face? I don't want those, but yet I've no option for a "pure" search.
I'm now searching for an alternative, but sadly, there's really nothing better than what Google provided.
Ebay was the same for me. I wasn't a seller. I was a buyer, but the second it stripped my ability to pay with a credit card and use their payment service to complete transactions, Amazon got one more customer.
This closed wall mentality scares the shit out of me (and you know how often I cuss) because we're being lead down a path no differently than the gatekeepers before them all the while they will start closing off the paths they used to get where they are today.
Apple's success didn't come from inventing anything. I came by taking advantage of the growth in the mp3 (via piracy, to boot). Do I fault them for this? No. But when they're now using these monies to stop others from doing the same, that's a problem every American should wake up and deal with.
But they won't, because there isn't an app to do that.
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The lure of walled services is data collection. The more you can monitor your users, the more data you have on them. As people have pointed out in the post about Google fiber, it's a great opportunity for Google to see everything you do online.
So if it is up to companies, I think they will continue to do everything they can to keep you within their walls, even if those walls aren't always visible. I hope the blocking technology continues to keep up to deprive them of that data. But as we run more stuff on mobile devices, it's hard to keep these companies out of our lives.
There is a lot online and in mobile I won't do because I don't want to share that info. So that may be the ultimate backlash. People stop using networks, apps, etc.
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Further most users want convenience, and would use a centralized service rather than a simple home server. This also has privacy issues, and associated problems of mising private and public life. I.e. Facebook and twitter for both friends and family communication, along with more commercial relationships such as with favorite bands.
People need to be eductated on such issues, such as why it might not be such a good idea to communicate with politicians and friends on the same accounts.
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Didn't spot it until afgter I posted, no red line :-(
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Conversely we have major corporations setting industry standards organizations such as the IEEE. Now the IEEE and the like are the middlemen in the name of consumer choice. Industry standards usually meant free market and it's unfortunate that due to a piss poor patent office, the IEEE has no standards what so ever.
I think the reform of the copyright and patent system should not call for totall abolishment and reconstruction, it should be refind or fine tuned and a bit tougher to get a patent.
I don't care who started it, but this new business model of lawsuits over patents and riding the gravy train to get a bite of the money pot should be stopped. Don't kill the system because of those who have abused it, punish those who have blatantly abused it. This includes Apple, Samsung, Nokia, HTC, or anyone else in this stupid war. It's brining them all down.
I am terribly fead up with the patent wars and I've honestly drawn away from any support from any company. Someone will mention of course that I'm an Apple Fanboy...little do they know I owned, and still own a few pre-OSX machines. The problem isn't mainly Apple but the entire war itself. Problem is, nobody owns up to the fact that their company had done just as bad or worse than Apple in some cases.
The problem (and my point) is that everyone is liking or disliking various companies because of the way they litigated against each other. These industries will end up tearing down everyone and leaving consumers with nothing.
As for the middle man argument...before the patent ware...we consumers were the middlemen. We decided which company stayed or went. What people sometimes fail to realize is that they need to find what they prefer rather than going by word of mouth...that alone had an amazing power on the market. It's certainly more effective than any fanboy or idiot out there trying to defend what they see as superior.
By which I will say to each his or her own.
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But wouldn't that make them juicy and delicious?
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If you learn it as the past you're just as likely to think that it was given up for a reason than to imagine it's something worth returning to.
Better for someone to think of being more open as an original idea and valuing it on it's own merits.
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Copyrights, patents, SOPA, PIPA, ACTA, TPP, DMCA, MAFIAA.... The list goes on forever, all of them are 'locked down' systems. In the future, I see a world society where a select few individuals are allowed to make the products, and the rest of humanity is expected to consume those products.
Of course, there's no way something like that will be sustainable. Which is why the global economy is tanking right now. The notion that America would become a 'service industry' and that we'd sell each other car insurance, health insurance, collage tuitions and medical care, to make our livings, is proving itself to be a failure on the global economic stage.
The only thing gatekeeping causes, is poverty and oppression. Islam is a gatekeeper religion, because you're locked down into their religious belief system. If anyone tries to break free, you're labeled an infidel (pirate) and sentenced to death.
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