removing the middleman

(Not really a blog post per say, but I can write whatever I want on here. That means no proofreading, hell yeah.)

I've been thinking about the removal of the middleman in business services, and how it's becoming a fairly common thing. What do I mean my that? I'm referring to when there is a person who wants a service, and there's another who can provide that service, the transaction between them is done directly with absolutely no mediator. The big middlemen I've been thinking about are publishers, and even banks.

Bitcoins are getting some serious attention nowadays, and in case you don't know what they are, you should go read up on it. It took me a few hours of reading and research to fully grasp the idea of a peer-to-peer currency system, but once I caught on, I realized that the creators of this currency algorithm were onto something big here. The significance of this really shows, with the current value of a bitcoin estimated to be at $75 CAD.

What Bitcoin sets out to accomplish is to remove banks from transactions. Crazy? Yep, but it's been proven to work so far with the thousands of drug deals that are done through the currency with government agencies having no way to track the transactions. Each transaction is stored as a bitcoin block, which is added to the previously existing blocks that are distributed on the peer-to-peer network that powers bitcoin (which requires bitcoin miners, but that's a whole other topic). Anonymously. Money can go in and out of accounts, and the people behind them can never be tracked.

In a world dominated by bitcoins, there will be no banks. Also no taxes, since the government can't track the money - which would result in all sorts of nation-breaking problems. Plus probably a massive surge in hackers who want to take over other computers to gain access to either the bitcoin wallets or their untapped GPU power for extra bitcoin mining. This will never happen, but the important thing is that this is allowing for money transfers through the internet with nobody needing to regulate the exchange.

Publishers, like banks, are not going away anytime soon, but there are instances popping up where they seem to have less control over their own domain. In the video game industry, Kickstarter is gaining some serious momentum and allowing for AAA titles to be developed with money straight from gamers who want the game in the future. The biggest project I can think of at the moment is Project Cars, an incredibly ambitious racing simulation that's schedules to release on PC, Xbox 360, and PS3. Without the aid of a gaming publisher, they have been able to raise almost $5 million directly from fans. The developers will earn 100% of the revenue without having to fork over a chunk to publishers, who would probably blow a couple million on things like marketing and focus testing. It's a huge win for both sides.

Even without Kickstarter, games are adopting models where fans can pay to support development and gain early access to games to provide feedback to developers. A lot of people refer to it as the Minecraft model, since Minecraft was the first major game to allow early purchases at a cheaper cost (less than $10 at the pre-alpha stage, I believe). Games like Arma 3 are getting massive sums of money from fans even before the game's even coming out.

In the book industry, big shot book publishers are starting to feel the early pinches of the ebook model, which allow for self-published authors to succeed in the online marketplace. The Wool ebook series has been selling like hotcakes through Amazon's direct publishing system, and the author Hugh Howey has been making bucketloads of money. He started off with modest earnings in the couple thousands per month, which soon skyrocketed to hundreds of thousands per month. The guy even sold movie rights to Ridley Scott!

Naturally, book publishers wanted a chunk of the pie, so they offered him million dollars deals. Howey refused them all. Sensing how big this was going to be, they started offering deals in the tens of millions, but they couldn't get appealing enough offers for Howey, considering that he was making serious bucks without any corporation aiding him.

As of right now, he's one of the very few successful self-published authors. I believe the reason they're not prevalent yet is due to the marketing. When people walk into a bookstore and see a cool cover of a book, they want it - or at least want to check it out. With ebooks, especially the ones that never hit the physical market, it's difficult to get that level of exposure. But considering everything that is going on, it's not unreasonable to believe that consumer behavior will change to be online-focused, and more authors can make it big without taking a gamble on publishers.

With all this going on, it's probably safe to predict the direction of these industries. Big corporations cannot change fast enough to always keep up with changing consumer demand. Smaller groups of people who actually develop the service can. These groups of people do not want to be constrained by the corporations. Once effective lines of communications can form between the providers and the buyers, we'll start to see some serious overhauls in the industry.