Posts Tagged ‘middle man’

Five reasons not to “cut out the middle man”

Monday, July 28th, 2008

Phil Hatchard's The Middle Man from FlickrAt genealogy conferences and in some of the responses we’ve received to our recent e-mails to genealogical societies, potential providers have occasionally referred to Genlighten as a “middle man” in the lookup process. Though the connotations of this term can be somewhat negative, it’s a label we’re willing to live with. After all:

  1. We aim to make it easier for genealogical researchers to earn income by offering lookups.
  2. We plan to receive a commission on each lookup request we process.
  3. By creating an online lookup marketplace where genealogy researchers and lookup providers can find each other, we are indeed acting as a form of middle man (though we would probably prefer the term “third party intermediary”).

I’d like to use this post to clarify our intermediary role and explain the value we offer potential lookup providers.

Transaction Fees, but no Listing Fees or Subscriptions

We’ve decided to follow a “transaction fee” business model on our site, rather than a subscription model (such as Ancestry uses) or a listing fee model (which eBay uses). We chose that approach because it lowers the up-front risk to both providers and clients. A provider who offers lookups through us only pays to use our platform when a lookup transaction is successfully completed. If they don’t get any requests, they don’t pay us anything. Similarly, a potential customer pays us nothing unless they find a lookup offering they’re really interested in.

How It Works — A Numerical Example

Suppose the provider sets their price at $10 to retrieve a copy of a vital record from a local government archive. Our commission rate is 15% for independent providers (we discount it to 10% for societies). So when a customer orders a lookup and the provider successfully delivers the requested document, the provider would receive $8.50 and Genlighten would receive a $1.50 commission. [The customer would also pay a separate handling fee to cover the cost of payment processing.]

The Value Genlighten Offers

Why should providers pay us a commission, rather than keeping the entire $10 for themselves? Why shouldn’t they just “cut out the middle man”?

We think we offer a lot in return for the fees we receive. In particular, Genlighten aims to give our providers:

  • A simple tool for creating both lookup listings and customized data input forms, so the provider gets specific, well-defined requests and just the right info they need to fulfill those requests.
  • A secure online shopping cart that handles upfront payments via PayPal, credit cards and electronic checks.
  • A robust customer feedback and rating capability.
  • Targeted advertising on genealogy-relevant sites and searches so prospective clients can easily find providers’ lookup offerings.
  • Aggregated world-wide demand so providers will have enough requests to make the regular trip to the local archive profitable.

Are these benefits enough to justify our fees? We sure hope so. And we’d love to hear what you think, one way or the other.

['Middle Man' image from Phil Hatchard's photostream on www.Flickr.com.]