One of the most persistent myths about the Internet is that it's eliminating the need for middlemen.
Since the early days of the Internet when Bill Gates wrote in his book The Road Ahead that the "information superhighway" would become the "ultimate go-between" and that "only the humans involved in a transaction will be the actual buyer and seller" there's been a constant theme that middlemen are finished.
In fact, some of the most successful and most highly valued tech startups are middlemen.
Examples include Uber, Airbnb, eBay and Etsy - all of which provide classic middlemen functions.
And, of course, the many online work intermediation platforms such as Upwork, Fiverr, Task Rabbit, Work Market, etc. are middlemen.
Even more interesting is these work intermediation platforms are spawning a second layer of middlemen.
Research by the London School of Economics finds that a new type of market intermediary, which they call agencies, are responsible for a stunning 27% of all workers hired at least once on Upwork.
Key quote on these agencies:
Agencies are typically groups of around three to ten workers with similar skills and backgrounds. They are independent of Upwork, but the website accommodates their presence by allowing common agency members to reveal their affiliation on their profile page and to display the pooled feedback scores of all current and past agency members. Employers can observe these agency-level feedback scores, even for new agency members who have yet to be employed on the website and have not earned any individual feedback scores.
In other words, the agencies allow their members to show strong profile scores, even if an individual member is new and hasn't built up a solid score. This increases the likelihood that an employer will hire members of the agency.
The main reason most of the Internet middlemen are thriving is because of the need for trust. Because most buyers and sellers have few interactions, it's hard to develop trust. intermediary platforms provide a variety of methods for increasing the trust levels between buyers and sellers.
A good example is Airbnb. The Forbes article How Airbnb Used Design To Break Through Its Biggest Challenge describes the efforts Airbnb has gone through in this area. You can also watch Airbnb founder Joe Gebbia's TedTalk on this topic.
But middlemen will continue to flourish for a variety of other reasons.
I recently read the book The Middleman Economy and it dives deep on how middlemen add value in today's economy. It lays out six value added roles middlemen play. Most of these are at least somewhat related to adding trust to transactions.
The book is quite good and well worth reading.
But for those who prefer the Spark Notes version (or, if you're around my age, the Cliff Notes version), see the author's summary Fast Company article.
BTW, the latest in a long line of technologies touted to eliminate middlemen is blockchain. The widely tweeted article Blockchain technology spells the end of middlemen explains why.
Maybe it will. But I doubt it.