The Death of The Middle: Understanding the Impact of the Internet on Industries

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Glasp

Jul 11, 20233 min read

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The Death of The Middle: Understanding the Impact of the Internet on Industries

In today's digital age, the internet is reshaping industries in a way that fits a barbell distribution curve. This phenomenon has resulted in what is known as "the death of the middle." What does this mean? Well, it means that people are no longer interested in mediocre or average options. Instead, they are drawn towards either mass-market products or highly specialized niche offerings. This shift in preference is evident through the rise of platforms like Substack, which have given prominence to niche bloggers.

The internet has changed our preferences by making us more interested in finding exactly what we want or opting for whatever is most frictionless. We no longer settle for something in the middle. Our main decision as internet consumers has become a resounding no, unless we are getting exactly what we desire. In these cases, that no quickly transforms into a resounding yes. We either want the very specific thing that caters to our unique needs, or we want the good thing that is convenient and consistent.

Interestingly, the removal of friction does not always create a level playing field. Instead, it leads to more people defaulting to hyper-targeted "if" options or default "else" options. This creates winner-take-all effects or, at the very least, winner-take-most scenarios in the "else" category. To illustrate this, let's consider a street with three coffee shops. Despite having options, Starbucks will likely be the most crowded. Now, imagine a street with ten coffee shops. In this scenario, Starbucks will be even more crowded. The reason behind this is that when given an abundance of choices, people tend to gravitate towards the familiar and consistent option.

The key lesson here is that the magnitude of outliers in a world of abundance is much larger than those in a world of scarcity. When we introduce technology, startups, and other factors dictated by the power law, we move into a world where the middle no longer caters to our demands. It becomes increasingly challenging to thrive in the middle ground. Instead, it is advisable to go as differentiated as possible and serve the customer exactly what they want. Embracing the power law is crucial in this context. Rather than trying to pick the winners, aim to have the winners all pick you. This approach ensures that you have the pricing power over the giants and the agility to outpace numerous competitors.

In conclusion, the internet has fundamentally changed the way industries operate by reshaping them to fit a barbell distribution curve. The death of the middle is a result of our increasing interest in either hyper-targeted offerings or convenient and consistent options. To thrive in this new landscape, it is essential to embrace differentiation and cater to the specific desires of your customers. Additionally, understanding the power law and leveraging it to your advantage will give you the edge needed to succeed in a world where the middle no longer holds the same appeal.

Actionable Advice:

1. Focus on catering to the specific needs and desires of your target audience. By offering exactly what they want, you can carve out a niche for yourself in a world of abundance.

2. Embrace differentiation and strive to stand out from the competition. Being average or mediocre will not attract customers in a market that favors extremes.

3. Understand the power law and leverage it to your advantage. Rather than trying to pick winners, position yourself in a way that attracts the winners to your brand.

By following these actionable pieces of advice, you can position yourself for success in an industry that has been reshaped by the internet and the death of the middle.

Resource:

  1. "The Death of The Middle", https://eriktorenberg.substack.com/p/the-death-of-the-middle (Glasp)
  2. "WINERY LOVERS | Your Wine Community", https://winerylovers.club/ (Glasp)

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