What is Disintermediation?

atkins bookshelf wordsIn the context of business or economics, disintermediation refers to cutting out the middleman (the intermediaries) in a business transactions, wherein the company deals directly with the consumer, bypassing traditional brick-and-mortar retail stores, distributors, and/or wholesalers. The Internet, of course, has been the biggest and most obvious disrupter to this traditional supply chain. In the age of the Internet, consumers are used to buying products directly from the manufacturer, e.g, buying iPhones from Apple, computers from Dell, car rides from Uber, furniture from Ikea, etc.

However, in light of the recent presidential election and Donald Trump’s surprising political victory, the term disintermediation keeps coming up again and again in articles and talk shows. In a broader sense, disintermediation refers to people having direct access to information in specific fields without intermediaries from those respective fields, e.g, medical information or advise from medical websites, legal advice from legal websites, and so forth. Now, disintermediation is recognized in the context of journalism and politics. For the first time in America’s history of presidential campaigns, Trump bypassed the traditional media, political parties, and powerbrokers to take his message directly to the people via twitter posts and town hall talks where the media was often banned. Although Trump’s campaign methods left journalists concerned, baffled, upset, and frustrated, many believe that his consistent use of disintermediation contributed to his victory over Hillary Clinton. And in the process and aftermath, the Trump campaign shook traditional institutions from their seemingly invincible foundations. And the damage could be sweeping and long-lasting — as Jonathan Rauch of The Atlantic  observed, “The establishment, to the extent that there still is such a thing, is demoralized and shattered, barely able to muster an argument for its own existence.”

All of this malarky makes most Baby Boomers reminisce about the time, three to four decades ago, when the news was — well, the news. People returned from work, plopped down on the living room sofa to unwind and watch the evening news from one the big three networks (ABC, CBS, NBC). It didn’t matter which network they watched, the news was reported objectively and dispassionately — after being carefully written, fact-checked, and edited. Viewers trusted the news; moreover, news anchors were some of the most trusted individuals in America — Walter Cronkite, Barbara Walters, Ted Koppel, Dan Rather, and Edward Murrow. Sadly, the days of trusting the news like that are long gone.

In her talk, “The Disintermediation of Media and Politics,” Time editor Nancy Gibbs candidly reflected on how the media was cut out of the news cycle: “We are raising a generation now in which everyone is in the media business… I think that [the prevalence of disintermediation] is a bracing situation for those of us who have spent our lives as professional journalists. But I also think it’s a fascinating opportunity, and I would argue a moment for some humility. One of the reasons media has been disintermediated is because we have gotten a lot wrong, particularly in this race… [Trump and Sanders were discounted by the media] because we have systems and rules and arbitrators and power brokers who will prevent anything this wild and unprecedented from happening. That has all turned out to be wrong.” What Gibbs doesn’t mention is the cost of the media getting it wrong. A recent Pew Research Center report indicates that 61% of Americans have little or no confidence in the news media; only 5% have a great deal of confidence in the media. Those dismal numbers now match Americans’ distrust of business leaders and elected officials.

Going forward, government and the media have to do a better job of utilizing the technology that is informing the public. “Change is hard” Gibbs said, “and fear seldom brings out the best in people or in institutions… it is going to take a particular kind of courage on the part of the press, on the part of the political class, even on the part of voters to explore the new territory that we find ourselves in… we need to be open to the idea that this first generation of digital natives has a great deal to teach the rest of us, in whatever field we are in.”

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