Information, Functional, and Access Asymmetry

I’m wondering how much technological unemployment will result from the simple, natural elimination of information asymmetry and the subsequent disintermediation of required agents.

That’s a mouthful. Let’s break it down.

Information asymmetry is when one party to a transaction has more information than the other. For our purposes, we could also call it “functional asymmetry” or “access asymmetry,” to represent when only one party has arbitrary access to some functional system required to complete a task.

In our case, let’s take the classic example of the travel agent, and how the Internet effectively killed them.

A travel agent had asymmetric access to information over their customers. Back in the day, they had access to systems that no one else did – primarily SABRE, which was the system they used for booking travel. They had a login to this system, you didn’t (and you probably didn’t even have network access back then). Since you needed this system, you needed travel agents. They sat in the middle.

And then this asymmetry began to resolve. Gradually, we were able to book reservations online. With this, the travel agent got disintermediated – they got removed from the middle of the transaction. Granted, they still have a need in some complicated travel scenarios, but I’m betting the lion’s share of airline tickets – especially in the U.S. – are booked directly online.

We’re seeing the same shift in the financial services market. A stockbroker traditionally had more information, functionality, and access than an investor, therefore they were needed. This is slowly going away. If you want to make a simple stock purchase, you no longer need a stockbroker.

Web design is another example. Traditionally, companies had to employ a professional web design firm to produce a website. But recently, we’re seeing huge growth in very sophisticated “sitebuilder” systems, like Squarespace and WordPress.com. The functionality they contain, coupled with an abundance of professional quality design themes, has disintermediated a lot of firms in the lower end of that market.

Information, functional, and access asymmetry has powered many business models. Lots of people had jobs simply because they were required to sit between the customer and the business goal. Much like the Industrial Revolution created a class of people who owned the means of production, there are people today which own “the means of access and/or functionality” (a neo-Bourgeoisie, perhaps, in Marxist terms?), and who count on that asymmetric ownership to stay in business.

But as technology advances, this asymmetry naturally resolves due to (1) the elimination of artificial barriers (you needed someone else just because you didn’t have access), and/or (2) the increasing accessibility and quality of self-service (you needed someone else because it was a complicated domain).

As a result, many businesses lose their need to exist.