Cutting out the Middle Man

Our Community — By on November 17, 2015 3:08 PM
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Traditional intermediary industries face challenges from new business models and the sharing economy
By Esther Chan & Zoe Lai

A police raid on the Hong Kong office of the car-hailing app Uber in August drew attention to the social and legal implications of the global spread of what is being called the “sharing economy”.

The idea of the sharing economy or “collaborative consumption” is based on providing access to resources rather than ownership. An undisputed example would be an app that enables someone to borrow or hire a power drill from someone else who has one to spare.

But as marketing professors Giana M. Eckardt and Fleura Bardhi point out in an article in the Harvard Business Review, sharing is a social activity. When it is mediated by a company between people who do not know each other, for profit, it is an economic exchange.

According to this analysis, businesses like Uber and Airbnb, the online accommodation booking service may be disrupters, but they are disrupters of traditional intermediary businesses as well as of service providers. And this is a phenomenon that is happening across swathes of industries and businesses in Hong Kong.

In the face of climbing costs and diminishing profit margins, Antony Yiu Koon-tung, founder and creative director of Blitz Brand Consultancy, has been turning to freelancers instead of hiring production crews and companies to make advertisements for his clients. This starts with the models, who Yiu finds through his own personal network and on social media instead of through the modelling agencies he used to rely on for selecting models.

“We save the intermediary costs from the modelling agencies and hence it is more cost efficient when introducing the job to our customers,” Yiu explains.

Yiu says that cutting out the agencies means he has less choice and more work to do. He and his staff may have to do the casting themselves and even design the models’ calling cards to show clients.

Hiring freelancers also comes with risks. Yiu recalls a model was nearly two hours late for a shoot to advertise a bra catalogue. His company had to pay the cameraman extra for the time. In such cases, clients may complain and even call off the production.

Despite such experiences, Yiu does not intend to stop hiring freelance models as well as individual units for productions such as cameramen, lighting crews and editing teams. He says hiring each production member separately can cut costs by up to 40 per cent compared with going through a production company. The trend to cut out the middleman is well under way and is irreversible, he says.

Regina_Model

Regina Lee Lok-yee

Regina Lee Lok-yee, a 21-year-old student who works as a freelance part-time model, acknowledges that established, reputable agencies offer better protection for models by securing work for them and making sure they are paid, but she prefers the freedom of working freelance because she can choose her jobs. A contract with a model agency usually lasts around five years and the agency will decide all the assignments.

With more models thinking in the same way, it is becoming an increasingly competitive market. “The market is so large that no matter how low the remuneration is, there will always be someone who will do the job,” she says.

In modeling, cutting out the middleman has not resulted in higher pay for the models. Lee says freelance models are seen as less professional and are paid less because clients hire them precisely to cut the costs of paying an intermediary.

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