Middlemen live.
Not all that long ago, the conventional wisdom was that the Net was going to create an epidemic of "disintermediation," with producers and consumers of goods doing business directly, routing around the middlemen who traditionally linked the two sides. But middlemen in many industries have begun fighting back - and they're getting some help in Washington.
Consider, for instance, the real estate business. A host of new Internet sites, such as NewMLS.com, are offering prospective homeowners ways to find, buy and sell homes without using an agent. But the agents are angry, and they're trying to enlist Congress to their cause.
The 700,000-member National Association of Realtors has made its top priority the passage of a bill that would protect databases - such as the Realtors' valuable Multiple Listing Service, the national compilation of real estate listings. Asserting that sites like NewMLS.com are pirating the Realtors' proprietary information, the group has won the support of some key players, including House Majority Leader Dick Armey (R-Texas).
The Realtors favor a bill that carries criminal penalties for anyone violating the rights of the original gatherer of information. Newspaper associations, legal and business publishers and stock exchanges also back the bill. Almost every Internet company - with the exception of online auction house eBay (EBAY) - has lined up on the other side.
The database debate is one of a growing number of policy fights that pit the interests of old-line businesses against Internet companies. Realtors, travel agents, car dealers, beer and wine wholesalers - all key middlemen in the old economy - are worried about the competition coming from the Net. Broadcasters, movie studios and sports leagues are likewise trying to protect themselves from technological change.
And all are turning to Congress, state houses and the courts for help to maintain the status quo.
Two weeks ago, for instance, the American Society of Travel Agents filed a complaint with the Justice Department seeking to block an online joint venture among 27 U.S. and foreign airlines.
Likewise, in the past 12 months, car dealers in nine states have fought successfully to toughen state franchise laws, which make it virtually impossible for manufacturers to sell cars directly - such as over the Internet - rather than through locally franchised dealers. Wine and spirit wholesalers last year convinced the House to let states that prohibit the direct sale of alcohol to consumers take out-of-state wineries to federal court if they ship wine across state lines to fulfill orders received on their Web sites. A Senate hearing on the issue is likely this spring.
Meanwhile, a coalition of television networks, movie studios, media and sports organizations recently teamed up to fight the rebroadcasting of network and sports TV over the Internet. That comes after a federal judge stopped a Canadian Web site, iCraveTV, from replaying such broadcasts.
Rob Atkinson, executive director of the Progressive Policy Institute, a Washington think tank, has a phrase for this phenomenon: He calls it "revenge of the disintermediated."
"A lot of the players, big and small, in the physical world have been asleep," Atkinson says. "Now the Internet gets to be a bigger part of daily life of Americans and they're waking up and realizing this is threatening their privileged position. It's not unprecedented for industry groups to go to government and try to protect their turf, particularly when new technological changes enter the marketplace and shake things up. But they're all doing this under the guise of fairness and protection of consumers."
History is replete with examples of companies, industries and professional associations asking the federal government for legislative protections that would defend their positions from rapid technological change.
