Brave new world: the middleman’s days are numbered

Modern economies have been built on the principle of a middleman who facilitates relationships between buyers and sellers. The Silk Road is an historic imprint of this type of trade with middlemen moving between East and West, trading goods between customers at both ends of the compass. Of course, 800 years ago and more they were vital and played a critical role in uniting foreign cultures and planting seeds for the world in which we live today. But that was clearly a long time ago and today goods move around the world in hours.

Yet this business model still exists to a large extent. But rather than goods or services middlemen today tend to trade information. Companies have used and still use a long chain of business relationships in which goods and services are bought and sold. They stand in the middle ground and use their knowledge or information to bring together buyers and sellers while taking the largest slice of pie.

A publisher is a classic example; they take the work from an author and trade it with a bookseller, typically taking the biggest cut. Most companies today do this, irrespective of what product or service they are selling. It’s how they make their money.

Glimpse of hope

When technologies began to appear there was a glimpse of hope that it would create a fairer world. But companies are still setting the price for a product or service, and not the market. They still control your experience and the quality of service you receive and make a fortune from doing so.

The gig economy promised to undermine this model by connecting buyers and sellers directly. The idea was that a buyer for instance could communicate directly with a taxi driver or someone letting an apartment without the need for a middleman.

But businesses have exploited this approach, squashing it in the process. Services such as AirBnB, Uber and others have driven a stake through heart of the gig economy. They simply blocked communication between the buyer and seller, stood between them and raked massive profits as a result.

Not modern but archaic

Ironically they have marketed themselves as the modern face of business, built on digital operations with limited need for bricks and mortars, enabling people to use computers and smartphones to make transactions. But they are still middlemen.

But it’s not just buyers who pay inflated prices, sellers are squeezed too. A musician, game developer, food producer or even a taxi driver actually receive far less than their work is worth. A distributor or service mediator steps in and gobbles a large percentage because they own the process through which the service or product is delivered and they set the price.

Cusp of a revolution

However, today we stand on the cusp of a technology revolution that will gradually change this. It is comparable to other technological innovations, from the steam engine to the microprocessor, all of which gave rise to previously unimagined products and opened up vast new sectors for economic and social activity.

The seed of this revolution lies in the fully integrated global community in which we all live and one in which the simple click of a mouse will result in a purchase directly from a producer without any middlemen.

Imagine if you had a service that in five seconds allowed you to find whatever you are looking for whether it’s a plumber, nanny, furniture, airline ticket, car insurance or anything else, without a middleman? The core concept on which most businesses are built today would simply evaporate. They couldn’t act as a middleman trading services and products at price because buyers and sellers interact with each other directly.

Holiday in Paris

Search giants like Google have driven us down this road to some extent because they have eliminated the traditional business model in many areas. For instance imagine you are going to Paris for a holiday and you’d like to take a boat down the river Seine and past Notre Dame.

Previously you would go to a tour operator who would arrange and book the service on your behalf. However, with Google you can simply book the service directly and eliminate the middleman fees which are often around 50%. All you paid the tour operator (the middleman) for was information that you didn’t have access to such as boat companies, point of embarkation, trip timings and price.

However, there is one last bottleneck before we can establish a fairer relationship between buyers and sellers or services. And this is learning how to wisely utilise the information that middlemen hold close to themselves and ensure everybody benefits in a fair manner.

Brave new world

At Humans.net we are working towards this process by providing a platform, based on blockchain technology that unites people whether they are buyers or sellers. This is based on a database that works like a network, a network that is shared with people all over the world, where anyone and anything can connect to it.

Of course middlemen will still exist if you want to use their services but information will be liberated in a sense. It will be owned by people who will use the database to trade skills, services and experience directly with each other in all areas of commerce from a nanny to financial services and more.

It will eliminate the notion of information arbitrage and create a fairer more just environment where we no longer have to pay up to 50% fees to middlemen. At Humans.net we are striving towards creating this brave new world and planting seeds for the future, just like the traders did on the Silk Road hundreds of years ago.