TCS Daily

Is Small the New Big?

By Glenn Harlan Reynolds - August 3, 2005 12:00 AM

Blogger Jeff Jarvis writes:

"Last month, I wrote that small is the new big. More demonstration of it: eBay is fast becoming one of the largest employers in America. Of course, it hardly employs anyone, but it enables a lot of people to employ themselves and run their own businesses: 724,000 people are using it as their full- or part-time employment, up 68 percent from a year go; another 1.5 million use it to supplement their income. Walmart is America's largest employer with 1.1 million workers. Sure, the eBay-self-employed don't have Walmart's crappy benefits and uniforms (if eBay were really smart, they'd institute group health insurance!) but all those folks are their own bosses. As industry gets bigger and bigger, small becomes more and more of an economic force."

Actually, as Jeff discovered, the eBay people are really smart, as they offer health benefits to their "Power Sellers" -- basically people who sell $1,000 or more a month and get good customer reviews. So thanks to eBay, you can have a job where you're your own boss, but you can still get the benefits of group-buying for health insurance. And lots of people do. I actually emailed the Amazon folks -- who have hundreds of thousands of "Associates" and "Afilliates" -- to ask if they were going to do the same thing, but the answer I got was rather vague and noncommittal. My guess is that if people care, market pressures will force Amazon to match eBay's offer. But there are already large (if undetermined) numbers of people making a living via Amazon, too.

To some degree, this supports Jeff's thesis: You can do things now, as a little guy, that formerly could only be done with a big organization. But what's interesting is the symbiosis here. The little guys can do as well as they do because of the big organizations, like eBay or Amazon, that they associate with, not in spite of them.

This really isn't a question of big versus small, because the key is to be both. It's easier to be small because outfits like eBay are big: eBay's buying power lets it make group insurance policies available to its sellers on terms they'd be hard-pressed to equal on their own - much as eBay's website, by aggregating lots of minor sellers into one big marketplace, makes it much, much easier for individuals to make a living buying and selling things via the Internet.

I think that there's a big future in that sort of thing. Lots of people like the idea of being self-employed, and technology makes that easier in all sorts of ways. But while you may not want to work for Dilbert's pointy-haired boss, you probably would want Dilbert's health plan. In a way, sites like eBay and Amazon are disintermediating the pointy-haired boss, and the other layers that sit between people who do work, and the actual customers - just as music sites like are disintermediating the record companies (and producers and A&R men) who sit between the musicians and their audiences.

But they're also re-intermediating, by putting themselves in that role. To the extent that they're doing things that traditional companies used to do - like dickering with health insurance companies, and providing a trusted reputation that makes customers feel better about dealing with strangers they'll never meet - they're filling that niche, although in a very different way, and one that will have very different implications for the economy, and for employment.

As I listen to people talk about the economy, health insurance, and the job market, I don't see much evidence that this shift is getting the attention it deserves. It may represent a trend, though, as important as the rise of Big Business in the first half of the 20th Century. Small may not be the new big, exactly, but empowering the small guys may be the new role for the big ones.


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