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>Before the internet, consumers who wanted to buy an airplane ticket would talk to a travel agent, who would type into a “green screen” terminal, which would “t
by Traster 6y ago
>Before the internet, consumers who wanted to buy an airplane ticket would talk to a travel agent, who would type into a “green screen” terminal, which would “talk” to a mainframe computer, which would procure said airplane ticket.
Sorry but what? Before the internet you went to a travel agent. Now you go to... expedia (a travel agent). The only difference between then and now is your human travel agent has been replaced by an algorithm designed to efficiently fleece you.
This isn't disintermediation. There is intermediation of 500 silicon valley engineers between you and your flight instead of 1 local travel agent.
Naturally this is A16Z's business model, go from a state where 100,000 travel agents are getting $50,000 a year for sales and move to a state where their start up is making $5Bn a year capturing that same value.
What's bizarre though, is A16Z trying to explain to you that actually that $5Bn they're trying to capture actually doesn't exist. Expedia isn't a middle man making money, no according to A16Z there's no longer a middle man. Pay no attention to the $20Bn market cap.
- SuoDuanDao 6y agoI think the basis for that pretense is that every digital intermediary can compete with every other digital intermediary, unlike a human intermediary who can only effectively compete with other human intermediaries in the same geographic area. This causes very different effects on pricing. It's probably premature to say that it will drive the profit margins of the intermediaries almost to zero, but that is one possible outcome.
- eru 6y agoMargin is a bit of a nebulous concept. Computers can help bring down costs. Competition can help force companies to pass on those savings. (Though even in the absence of competition, there is some incentive to lower prices in order to increase volume. But it's much weaker. See eg https://en.wikipedia.org/wiki/Monopoly_profit https://en.wikipedia.org/wiki/Monopoly_profit)
- DSingularity 6y agoAnd here lies the humanitarian problem with “software eats the world”.
- eru 6y agoWhat is problematic about this?
- Traster 6y agoIf 500 silicon valley engineers can replace 100,000 travel agents earning $50,000, then you have 500 silicon valley engineers earning $10m and 100,000 unemployed travel agents.
- jeofken 6y agoIn fact, the stable boy and hay industry has never recovered after the introduction of the Ford model T.
- Traster 6y agoWhich is fine, as long as you're not the stable boy, don't care about the stable boy, and don't live in a democracy where the stable boy gets a vote.
- ppod 6y agoRight, but the lesson is that we ought to look after the stable boy, not that the invention of cars was a bad idea.
- killtimeatwork 6y agoThe crucial side-effect of most productivity-increasing inventions is marginalization of most of the work force (barring the few lucky ones - the SV engineers in the case of XXI century), destruction of communities and concentration of wealth and power in fewer hands. The luddites were definitely onto something. Wendell Bell explored these ideas in detail in his writing, if anyone is interested in learning more.
- bjeds 6y agoThat's not true in any way, shape, or form. Maybe it's true for you, but don't assume it's true for others or for the the rest of the world. When I book a flight ticket, I go to the airline directly, which is true for more or less all people I know. For me this will typically be KLM, AirFrance, or SAS. These companies are Dutch, French, and Swedish. There are no "500 silicon valley engineers" between me and them. The world is bigger than your little world. I didn't even know what Expedia was until I looked it up.
- Traster 6y agoThe expedia example was from the article not from me. Airlines could set up phone lines for direct purchases before the internet.
- killtimeatwork 6y agoIt works well for popular flights within Europe, but if you want to fly to bit less mainstream destination given your starting point (even something like Katowice -> Las Vegas, and back), you may end up on transfers between different airlines, or the return part of the journey may be via a different airline. Booking through Expedia, Kayak etc. is basically the only way (I know) to handle this with zero hassle.