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The Risk of Disintermediation

What is disintermediation? In simple terms, it means the removal of middle persons or intermediaries between producers and consumers. For instances:

  • Customers can buy books from authors directly without the need for physical book stores (distributors) or even book publishers
  • Patients can get the help they need from doctors directly, without the need for hospitals.
  • Students can get the help they need from tutors without the need for tuition/education centres
  • Customers can but products online (and delivered to their homes) without needing to go to physical shops
  • and many other scenarios.

Basically, consumers can get what they need from the producers directly. Now this is worrying for businesses, especially those which falls under the category of ‘intermediaries’.

This whole idea of disintermediation is best illustrated by studying the book publishing industry, which was written in great detail in the article – Book Publishers Scramble to Rewrite Their Future.

In this article, the author illustrated the struggle of the book publishers in fighting multiple digital disruptions.

Declining physical sales due to the rise in digital books

The first struggle was to solve the issue of declining sales of physical books due to players like Amazon who have made reading digitally ‘the new way’. So therefore, ‘the old way’ of buying and holding physical books is at risk of extinction (albeit not so soon).

To fight this, book publishers have begun to scramble in digitalising their books as well as making it interactive. Especially in Indonesia where eCommerce is a huge thing, book publishers are gunning towards forming their own eCommerce platforms to sell their own eBooks.

Disintermediation will be the next fight

While the first struggle of digitalisation is not over, book publishers now face an impending risk of disintermediation. Like in other parts of the world, the book publishers in this region are being further shaken by local players like http://nulisbuku.com/ and many other international players that have gracefully entered this region.

These players have begun to chisel off the power of book publishing from traditional publishing companies and transfer it to the Authors themselves. Readers are now able to buy books directly from the authors and a cheaper price without going through the book publishers as intermediaries.

Now, here’s the third blow to book publishers

We are facing a generation where short chats, videos and ‘disappearing stories’ are the main form of information consumption. It is no longer about reading long articles and there are less passion towards thick books – be it physical or digital ones. So the fight for book publishers to remain relevant has just taken another unexpected turn.

[Source: pixabay.com]
How can book publishers remain relevant then? We have three suggestions to book publishers.

1) Create a community around books and engage them

The quote from eCommercetimes.com will justify the the importance of building a community:

McKinsey analyst Shona Brown told the E-Commerce Times that users who post messages to a site’s forum or contribute product reviews visit that site nine times more often than users who do not participate in community offerings.

“They also remain twice as loyal and buy almost twice as often,” Brown said. “Even people who don’t directly contribute, but do read those message boards, are more likely to come back and to buy. If they feel a connection, they’re more likely to take the next step and become buyers.

2) Facilitate interactions with authors

Book publishers can try to value-add to the authors by facilitating direct chat-based interactions between the readers and the authors. This will make the book ‘come alive’ for the readers.

Prior to releasing their books, authors can also have the opportunity to give snippets/teasers of the books to engage their potential readers better. Authors can also share the context of why they wrote the books which will shed some interesting light to stories that the readers read. This is definitely a value-add that book publishers can provide to both authors and readers.

2) Push bite-size contents which attracts readers to read the full content, eventually

Since the new generation of leaders are so used to ‘bite-size’ and visual contents, this is something that Book Publishers may want to consider as well. Using a Facebook style update postings, Book Publishers can post some highlights of the books and push the updates to potential readers to entice them to buy the books. This is something new but hey, we reckon that it is worth the try.

This is relevant to other industries as well

The learning points we can get by from studying the book publishing industry can be applied to other industries as well. As described at the start of this article, the phenomena of disintermediation is coming and undeniably, it is going to force companies in several industries to review their business models.

That said, if you need a sounding board on these matters, feel free to email us at [email protected]. We will be happy to bounce ideas with you. For FREE.

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