It happened a year or so later. I had left the studio and, more importantly, I had seen Flash (which has become the de facto standard for downloadable 2D animation on the Web). Like a mystic in the desert, I saw The Vision: the World Wide Web would come to dominate the media in what others have called (I'm too conservative to do so) the greatest advance in communication since Gutenberg. Or at least it would change the more mundane concern closer to my heart: the distribution of what we call "TV animation" to the mass of consumers.

Which brings us to disintermediation.

Disintermediation is the process whereby an intermediary is removed from an economic equation. In other words, how the middleman is squeezed out of a transaction, whether it be a tangible purchase (downloading software on the Net directly from the publisher, instead of going to a store to buy it) or the provision of a service (reading this magazine on the Net, once again directly from the publisher). Elsewhere on the Web you can find discussions of disintermediation with regard to the effect it has on the freer flow of information, which is the aspect of the Web that brings from media mavens the analogy with Gutenberg. The concern here is more with how it will change the patterns of commerce that have come to dominate our industry over the last 50 years.

Disintermediation as a major economic force was first documented 25 years ago or so, when the process of corporate finance borrowing moved away from the banks (middlemen). Prior to then, banks would hold excess institutional funds, paying a lower interest rate to the owner of the funds than the banks received from the eventual borrower. (It's called the spread.) Borrowers found they could raise money at a lower cost by directly selling debt obligations (corporate notes) to the very same institutions, while the institutions found they could receive a higher return on their funds. These transactions eliminated the intermediary (the bank), and thereby avoided the cost of the spread to both the borrower and lender. The process revolutionized the banking industry, and in some ways led to all the banking crises since, as banks no longer had (or have) the highest quality loan customers and therefore have been playing in riskier arenas, like loans to Russia and investments in Internet start-ups.

In TV, the middlemen are broadcasters, cable and broadcast networks, and syndicators, and a process, not unlike what the banks suffered, is now squeezing them out. In the old days we called them "gatekeepers" (among other names not to be used in a family publication), and they controlled the medium while skimming the cream off the top. Simply put, they paid a set license fee to the producer (who did at least keep other rights) and derived all the income from the transmission of the shows. With the fragmentation of the audience since the early `80s, which has been noted previously in Animation World Magazine, audience size has diminished to the point that most straight license fee deals are no longer feasible for producers. As a result, the gatekeepers have found it harder and harder to source shows in the former fashion.

Many of our friendly vertically integrated media empires have spent the last decade doing their best to avoid the negative results of disintermediation. The standard corporate answer to this squeeze is vertical integration, whereby a media conglomerate controls all the steps from creation through final delivery. Time Warner is perhaps the best example: one division creates the show, another distributes it, yet another exhibits it, and still another delivers the show to the consumer through a cable into the house. Simple solution - an adaptation of the old model. And while it's working for the time being, it may not work so well in the future.

With the advent of Flash, and other means of delivering animation over the Web, the traditional form of distribution is under attack. The number of sites offering animation entertainment already outnumber the cable and broadcast networks, and it is only a matter of time before their audience size grows exponentially and speeds the erosion of the "old media" dominance. Aiding this trend is the oft noted fact that youthful audiences are early adopters of new media. On the Net, the highest penetration figures are for the age group under 24 (over 80% of teens regularly use the Net), and TV claims that Net users were previously "light TV users" does little to alter the reality that there is a seismic shift in entertainment patterns.