The New Middleman

Back in the glorious dot com bubble days, there was a lot of talk about the Internet providing "disintermediation" - big word, lots of syllables - basically meaning cutting out the middle man. And it was true in many instances - companies were able to connect directly with consumers in new and interesting ways. There were a lot of false starts and a few crazy ideas about how that could actually work, but overall there was some disintermediation going on.

Fast forward to the current Internet/economic model. What I'm seeing now is a lot of 'intermediation' going on - lots more virtual middlemen. I see more and more websites that are portals - nothing more, nothing less. Portals are fine and some even serve a purpose, but if you read enough blogs out there, you'll run into people boasting that they used to run a company but now they just collect orders for others, pass off the work and skim a bit of the profit off the top for their meager efforts. Hey, if it works for you, that's fine, but as a consumer, I tend to look at who this company is and what value they're adding. With these new middlemen, I'm not seeing any value add at all. From a business model perspective, that doesn't seem sustainable - there's absolutely no competitive advantage, barriers to competitors, etc. It's just slap up a website, gather product feeds and skim off the top. How do you position that? How do you sell that to your would-be consumers? If you're looking to reap an extra $500 a month for your efforts, I suppose that's fine, but I you have to add more value than that to make a living.

I mention this because in lean economic times, people are increasingly desparate to find a way to make more money or to even earn a living. They can become incresingly targeted by these "get rich quick" schemes that involve spending some start up capital in hopes of getting a revenue stream out of it. Guess who makes money most of the time? The people selling the concept, selling the web design or web hosting, selling the ad words or the search engine optimization package...but not you. So beware. Be-very-ware.....

There are a million portals out there, some better than others. In some cases, portals make a lot of sense - they bring together products from various sources that you might not otherwise find together in one place (items that have a common theme) - and maybe wrap some interesting content around it. But in too many cases, it's just a product feed or two and a mediocre looking website.

As consumers, we vote with our dollars. Some voters are very conscientious about how and where they cast their votes - others, not so much. My economic votes these days increasingly go to companies that are adding value. After the enormous economic meltdown last fall where the bubble was created by companies who were not adding any real value, I think I'm even more aware of this issue than ever before.

So, from a business perspective, you need to look not only at how you're earning income but how you're adding value. If you're adding real value, you may have a sustainable business. If you're not adding real value, you're not likely to last. Just my 2 cents for today....what are your thoughts? Chime in.