Reintermediation

Abstract:     
As the digital revolution has interrupted traditional supply chains and wholesaler relationships with manufacturers and retailers, companies are developing new methodologies to create supplier loyalty critical to control of market share. This article documents the leading strategies being utilized by companies to re-assert their relevance in the value proposition for their clients and the consequences of these new business models on intellectual property law, privacy rules, and influences on judicial contract interpretation. The business model transformation was anticipated and well documented. In Philip Evans and Thomas Wurster's bestselling book, Blown to Bits (Harvard Business Press 1999), the authors identified the Internet's informational flow as having the ability to fundamentally reshape the relationships between consumers and retailers. Described as "disintermediation," they postulated that the inverse relationship between the richness and reach of content was eliminated by the extremely low transaction costs associated with providing consumers highly rich content through digital media. The Internet eliminated the need for middlemen to provide expertise. Successful companies have employed reintermediation, the use of proprietary sales channels and exclusive intellectual property-protected techniques as tools to establish brand loyalty, enforce brand exclusivity, and command market-share.

Keywords: intellectual property, privacy, disintermediation, patent, copyright, economics, antitrust

JEL Classifications: F02, K00, K21, L1, L12, L13, L40, O34, M13, M20, L82, K19, K20, K33, D43

Working Paper Series