Big Distribution Oligopolies are Dead… almost

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Marc Andreessen (of A16Z fame) created a Manifesto for the changing of News media with a recent blog post

For me, the key sentence was :

“Distribution is going from locked down to completely open, anyone can create and distribute. There is no monetary premium for control of distribution.”

Here, he was talking about the big media companies that had control of who could report the news through their control of the distribution (limited TV stations or owned the expensive newspaper distribution) In fact, the internet has broken down lots of other ‘distributors’ that historically could demand a premium and control a market.  I think his sentence applies to this broader market and not just News Media.

For sure we have seen this effect in music (recording, CD production, and retails sales chain have been decimated), movies, books… For traditional products (such as IT hardware and software) big distribution companies and regional ‘classical’ distributors kept the markets closed. Today, however, you can now hire (remotely) 3PL (third part logistics), eCommerce platforms, social media + localized web advertising for awareness and education, and perform education at a distance with tools like Skype and eEducation platforms. BI:XPAND represents yet another step in this evolution away from big ‘distribution controlled’ oligopilies. For high value, complex sales, you traditionally needed to be acquired by a larger company or agree to abusive reselling terms of a big company with regional sales offices. Companies like HP had notoriously bad sales teams, yet remain profitable due to this distribution control (they want 50-90% of the money from reselling your product). When we do our job right, smaller companies with breakthrough products can acquire something that feels similar to the experience one would have using the shared, regional sales organization within a larger company but without the negatives associated with working with one of the IT giants.

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I, for one, celebrate the end of big technology companies monopolizing access to customers just as Marc celebrates the end of mono-source news. Unfortunately, for our segment of the market, big players still have large cash war chests and have not yet been affected significantly by our style of democracy. Our “Arab Spring” is just starting.

 

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