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The geeks have usurped an old financial term, disintermediation, and given it a new meaning to describe what happened to Britannica. To them it means the removal of middlemen, the intermediaries who smooth the operation of any economy--folks like travel agents, stockbrokers, car dealers and traveling salesmen. These people are the grease of a consumer economy, the folks who help you do things more efficiently than you could do them alone. But that's all changing: the Net is creating a new, self-service economy. Gates, who was late in recognizing the value of the Net, nonetheless has come up with the mot juste for this development: he calls it "frictionless capitalism."
Say you're planning a trip. Two years ago, you would have phoned your travel agent. But now the complex, proprietary database systems that control the world's airplane-reservations systems are available online and free, reduced to a set of Web pages so simple that even technophobes can book a trip to Paris. And at sites like priceline.com you can actually tell the computer what you're willing to pay for a ticket and then wait to see if it can find an airline that's willing to take you. But will this replace your traditional travel agent? Do you really want to do your own travel planning? That's the crux of the conflict at the heart of this new economy: which services will survive and which will fail, who will invent new ideas (and reap new millions) and who will close up shop, as useless today as buggy-whip manufacturers became when Henry Ford built the Model-T.
Few businesses illustrate this sort of generational corporate conflict better than the book-selling industry. If you want a snapshot of the e-economy, 1998, you could do worse than Jeff Bezos, the founder of bookseller Amazon.com One day last week, as his stock price rose and fell with typical volatility, he stalked through his shuttered Seattle office, on a phone call, staring at his wristwatch, pacing, talking, thinking, plotting, scheming, then glancing at the watch again. Like the Net Economy, Bezos is all about motion.
His conversion to the Web came in 1995, when he read a report that projected annual Web growth at 2,300%. First he checked that he'd read the figure correctly. Then he quit his job as a hedge-fund manager in New York City, packed his bags and drove out to Seattle. Or, rather, his wife drove; Bezos was busy pecking out a business plan on his laptop.
The idea behind Amazon.com was devilishly simple: type in a book's title, the author's name or even just a general subject, and the site will present you with a list of every matching book in its database. Choose your title, type in your address and credit-card number, and service reps at Amazon.com's Seattle warehouse will find your order and mail it to you, usually within one or two days, and often at a hefty discount. Three years after launch, Amazon.com has 2.25 million worldwide customers, and sales that may reach $350 million this year.