Net transparency not quite a straight deal

Disintermediation is, in the opinion of many traditionalists, a rather ugly word for an ugly phenomenon. Put simply, it means getting rid of the middleman between customer and brand owner or content supplier; and its avatar has been the internet.

Before the advent of the internet, we needed record companies and record retailers. Now, faced with the likes of Napster and iTunes, it’s far from certain what future they have. In January The Arctic Monkeys’ album “Whatever People Say I Am, That’s What I’m Not” became the fastest-selling debut in chart history. Yes, the album’s release was managed by a record company, but only after the group had built its fan base from a MySpace account. The current number one, Gnarls Barkley’s “Crazy”, takes the process a stage further by reaching the top of the charts on the number of downloads alone.

The erosion of record company and retailer power may be an extreme example of disintermediation, but plenty of other businesses are having to watch their backs. As Nick Higham points out, radio – as a valued source of information on new releases – is particularly vulnerable in this context. Other traditional media are suffering, though more indirectly. Elsewhere, the internet is widely seen to have administered the coup de grace to Dixons as a high street retail brand. Look up and down London’s Tottenham Court Road, and the number of shuttered electronics stores will tell a similar story.

But, granted its growing importance as a price comparator for consumers, is the internet quite the honest broker it appears to be? Not if we are to judge by the controversy brewing over utility “switching” services. Understandably, against a background of rocketing energy prices, portals which offer apparently unbiased price transparency, plus a seamless switching mechanism shorn of tiresome and untrustworthy door-to-door utility salesmen, have acquired a rapid popularity. So much so that the largest, uSwitch, was recently able to sell itself to US media company EW Scripps for a healthy &£210m. The controversy has arisen because uSwitch (and others) have to earn a living and – so says British Gas at least – are unwilling to promote the price regimes of those that fail to pay them a commission, however competitive they may be.

The important point lies less in the rights and wrongs of the controversy than the perception that there are varying levels of transparency, and the consumer had better beware. Far from being a perfectly transparent membrane allowing consumers to see exactly what they are getting, internet services have an agenda all of their own.

This is less about disintermediation (though they may well perform the useful service of demystifying consumer choice) and much more about building brands in their own right. Nothing wrong with that of course, so long as a superior market process does not get muddled up with brand values in the consumer’s mind. There is, after all, a world of difference between building a brand, and building a trusted brand.

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