How the internet commoditizes middlemen
I'm beginning to think there's a fundamental divide between East Coast and West Coast businesses. It's still emerging, but it's fascinating.
The West is a "younger" part of the US, and not as important as the East Coast economically until pretty recently. The businesses that have emerged there have done so largely unfettered: the model of "creative destruction" and "disintermediate" and "there are no more middlemen" makes a lot of sense in this environment, since that's what California in particular has spent the last 50 years doing, often to other California-based businesses.
But the real reason middlemen exist is because one of the first things you do as a middleman is ensure you will remain central to the process, typically by enshrining your role into law. The West Coast doesn't have much experience with this, and even the slightest hint of "regulation" sends them into a panic, even when it's literally over something like someone trying to overthrow the government. (The West Coast has comparatively little actual experience with government, or with journalism--but that's another conversation.)
The truth is that the NBA would almost immediately destroy a breakaway league. They are not an actual legal monopoly (like baseball!) or a de facto monopoly like the NFL (cf. the US Football League). But they have a similar level of close ties to local and state government; deep subsidies from taxpayers; long-term contracts with venues, many of which they helped to build; and media ties that aren't just about buying airtime, but whether that airtime gets promoted. In long-established, relatively comprehensible markets, there's usually a reason the status quo is the status quo. Players who tried to form their own league would immediately destroy their careers, and they know this. The only players willing to risk such a strategy are players who nobody's really interested in anyway.
Bottom line? Chesterton's Fence, especially on the East Coast, is often electrified, topped with barbed wire, and protected by local police. Disrupting an off-premise electronic storage industry (Box) is trivial, just a matter of buying equipment. Disrupting health care, education, and insurance is another matter entirely. Silicon Valley hasn't even done anything with the funeral industry. There's a problem you know users are going to need solving at some point, and the TAM is pretty huge. Good luck getting past the laws.
"Take out Lebron and 20 other stars and you could create a new NBA overnight."
I dunno, I'd still be a Knicks fan. Would require a lot more to upend tradition for diehards, but casuals may be easier to shift
Hey Erik, great post. FYI, the hyperlink in the first sentence links to a private gDoc :) Last week we talked about [the death of the middle](gDocLinkHere) -- this week we’ll talk about the death of middlemen.