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Aggregation Theory

Aggregation Theory

The disruption caused by the Internet in industry after industry has a common theoretical basis described by Aggregation Theory.

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Edits on 15 Jul 2019
Carla Faraguna
Carla Faraguna approved a suggestion from Golden's AI on 15 Jul 2019 11:27 pm
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This has fundamentally changed the plane of competition: no longer do distributors compete based upon exclusive supplier relationships, with consumers/users an afterthought. Instead, suppliers can be commoditized leaving consumers/users as a first order priority. By extension, this means that the most important factor determining success is the user experienceuser experience: the best distributors/aggregators/market-makers win by providing the best experience, which earns them the most consumers/users, which attracts the most suppliers, which enhances the user experience in a virtuous cycle.

Edits on 11 Jul 2019
Ralf Bamert
Ralf Bamert edited on 11 Jul 2019 3:38 pm
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Aggregation Theory

The disruption caused by the Internet in industry after industry has a common theoretical basis described by Aggregation Theory.

Article

The fundamental disruption of the Internet has been to turn this dynamic on its head. First, the Internet has made distribution (of digital goods) free, neutralizing the advantage that pre-Internet distributors leveraged to integrate with suppliers. Secondly, the Internet has made transaction costs zero, making it viable for a distributor to integrate forward with end users/consumers at scale.



This has fundamentally changed the plane of competition: no longer do distributors compete based upon exclusive supplier relationships, with consumers/users an afterthought. Instead, suppliers can be commoditized leaving consumers/users as a first order priority. By extension, this means that the most important factor determining success is the user experience: the best distributors/aggregators/market-makers win by providing the best experience, which earns them the most consumers/users, which attracts the most suppliers, which enhances the user experience in a virtuous cycle.

...

The result is the shift in value predicted by the Conservation of Attractive Profits. Previous incumbents, such as newspapers, book publishers, networks, taxi companies, and hoteliers, all of whom integrated backwards, lose value in favor of aggregators who aggregate modularized suppliers -- which they often don't pay for -- to consumers/users with whom they have an exclusive relationship at scale.

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Ben Thomson

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Statechery.com

Ben Thomson





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Aggregation Theory



Web

July 21, 2015

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Ralf Bamert"Initial topic creation"
Ralf Bamert created this topic on 11 Jul 2019 3:30 pm
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 Aggregation Theory

The disruption caused by the Internet in industry after industry has a common theoretical basis described by Aggregation Theory.

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