Refreshed for 2022, our Friday analysis selects one or more news stories from the week in fashion technology, and presents The Interline‘s take on why they matter to our global brand and retail audience – as well as what they might mean for the longer-term future of fashion. As always, this analysis is also delivered to Interline Insiders by email – and signing up continues to be the best way to get a fresh look at the fashion technology news, completely free, in your inbox every Friday.
The biggest news in any industry this week is Meta’s (formerly Facebook) steep decline in market value, with a one-day loss of $230bn USD. More than just a bad day for the social media giant, this represents the largest loss of value for a single company in a single day of US trading and it comes at a time when big tech share prices are generally buoyant.
Why does this matter for fashion? Because, for better and for worse, Facebook’s fortunes are the most visible indicator of the progress that the MetaVerse is making in the public consciousness. The company might be a Web2 dinosaur in many respects, but in others it remains the bellwether that many people are looking towards to see how the potentially user friendly face of Web3 is developing, simply by dint of being the company that has invested the most publicly in building a platform to bring that vision to life.
And from that perspective, a decline in user numbers for Facebook’s existing core products – which is at the heart of the reduction in share price – represents a decline in the potential market for Meta’s vision of the where the next generation of the web is headed, assuming the company ends up being the platform holder for the MetaVerse it so badly yearns to be.
On the face of it, many (including many here at The Interline) would argue that that would not be a bad thing. Meta’s vision for the future of the internet – embodied, interactive, and wholly-owned – is hardly in the spirit of the open, interoperable MetaVerse that the name denotes. And the idea of handing over more power to platform holders who have allowed that power to fester during this generation of the web is not top of anybody’s list of priorities – especially since early indications are that Meta’s VR experiences are going to be just as prone to the worst of human behaviour as its existing flatscreen ones.
But at the same time, Meta is, currently, the company with the best possible chance of making an immersive web palatable to the average user, and it’s also the company with perhaps the deepest pockets to devote to R&D oriented in that direction. And while those pockets will be feeling a little lighter today, it’s important to remember that Facebook – the platform – still has cloose to a quarter of the human race as active users, and that its profits may not have met market expectations, but they still totalled nearly $40 billion for 2021 as a whole. However palatable you personally find it, Meta / Facebook are still leading the charge in many people’s eyes.
So why is the market treating that position with such skepticism? To some degree, yesterday’s news is clear-cut: shareholders prefer it when numbers go up, rather than down, and a proportion of Meta’s lost market value can be ascribed to that simple equation. But that’s unlikely to be the entire picture. Instead, investors will be looking at the long-term market for Zuckerberg’s vision for the future of the web, and comparing it to applications of web3 that are generating money right here, right now.
And this is where a division starts to form, because while Meta has so far pursued a technology-first approach to building (and owning) the MetaVerse, the most success in the here and now is being had by companies that are embracing Web3 and decentralisation as a matter of content first, platform later.
The most famous of these is, of course, Bored Ape Yacht Club (“BAYC”) whose 10,000 NFT-authenticated artworks are currently the darling of celebrities, crypto enthusiasts, and speculators worldwide. In an extremely pronounced difference from Meta – the company – BAYC is a loose association of pseudonymous entrepreneurs who’ve managed to turn procedural character portraits into a potentially $5 billion USD business, covering the assets themselves, live events and other experiences – all in less than a year.
BAYC has also become a prime target for fashion brand collaborations, with Adidas being near the front of the pack. And while the use case for “Apes” is thus far limited to owning, trading, and being invited to physical events reserved for owners, the company behind the project – Yuga Labs – has a vision that involved launching a videogame and, crucially, its own streetwear label.
While both companies are, ostensibly, targeting the same emerging Web3 audience, where Meta’s efforts are largely behind the scenes, Yuga’s are as in-your-face as it’s possible to be. And at least today, measured by how successful that work has been, the financial world appears to place much greater emphasis on owning a self-governed slice of the pie immediately than it does on building an infrastructure for a future that’s by no means guaranteed to be coming.
Or to put it another way, both companies are betting on Web3 being the future – the whole decentralised, immersive, augmented scope of it – but only one of them is making a decent profit from it at the moment.
In a lot of ways, this is a testament to what decentralisation and crypto advocates have been saying for a long time: people want to make the future in their own image, free from the control of large corporates, with the experience open to everyone. But in another way BAYC, having the dubious honour of being the most visible application of NFTs today, is reinforcing the idea that what’s happening is not for everyone, but rather for another set of the super-wealthy. And that’s a message that fashion should be careful about embracing, even if the industry values the technology that makes it possible.
It’s a twist of fate that this news coincides with one of the greatest blows to individual prosperity in decades, with a meteoric rise in the cost of living in the UK likely to drive down discretionary spending for the majority, while the minority come away unscathed. Which raises a fundamental question about what the next iteration of the web (and the MetaVerse or MetaVerses it enables) are supposed to be: a playground for the haves, or an untapped possibility space for the haves and the have-nots alike.
In this respect, most NFT applications fall into the former category. They are focused on selling scarce assets to people with money, and then bringing those people together to spend money in different ways. And while luxury has always existed (and luxury fashion is certainly performing well in these sunset days of the pandemic) there is a potentially significant perception problem to be overcome for any business that relies on creating an entirely new category of unnecessary goods at a time when people are struggling to pay for the goods they already need – especially when fashion’s overall trend is very much towards accessibility.
Against this background, the time may have come for fashion brands to temporarily park the intricacies of figuring out to make NFTs and MetaVerses into viable business units, and to consider not how the technology will work, but what aspects of the culture they want to plant their flag next to.
To be clear: The Interline is not crypto-skeptical. Considerable invention is likely to come from projects that, right now, are defined by big spending at a very inopportune moment. And when the underlying technology is separated from that cultural moment, there’s a good chance of it achieving what blockchain proponents originally advertised as the democratising potential of decentralisation – banking the unbanked, and providing autonomy over digital identity and asset ownership.
But at the same time, fashion brands will need to find a middle ground quickly. None will keen to align themselves too closely with a platform that’s currently bleeding users, but equally the perception of joining the ranks of hyper-conspicuous capitalism may not be one that many brands’ customer bases respond well to in the current economic climate.
To find its own way, fashion should look to take on the parts of Web3 that work, technically speaking, while avoiding some of the excesses that could very soon create a backlash amongst existing, loyal customers.
The Interline Podcast – Episode 1 Now Available
In the premiere episode of The Interline Podcast, our Editor-in-Chief, Ben Hanson, welcomes Dan Leahy, Co-Founder and CEO of product decision platform MakerSights. Together, they debate how the retail recovery is developing, discuss how rapid digitisation has reshaped the market, and make a case for a model of retail that’s built on data instead of intuition.
You can listen to the show on The Interline, or via Apple Podcasts or Spotify. It’s also being syndicated across a range of other listening platforms, so if you use a different service, search for The Interline Podcast to find and follow the show.
New episodes of The Interline Podcast will release monthly from now on, timed to coincide with the end of each month’s editorial topic. Look for Episode 2: The Data-Driven Supply Chain at the end of February. And if you enjoy the show, be sure to follow it on whatever platform you use to listen to audio shows.
And the best from The Interline this week:
This week we published pieces from two new writers, taking different slants on the subject of sustainability.
First we released our first exclusive from Marije de Roos, which tackled fashion’s difficult balance between responsiveness and responsibility. As an industry that thrives on how rapidly it can act on trend opportunities, fashion has long operated on a model of forecasting and overproduction, which continues to translate into huge amounts of waste – something that’s directly contributing to the industry’s dramatic impact on the environment.
Marije set out to discover whether artificial intelligence could sidestep that vicious cycle and provide a way for the fashion industry to respond to opportunities without compromising on its environmental and ethical commitments.
Second, we published another first exclusive – this time from Darya Badiei, a PhD researcher in fashion management at the University of Manchester. In this piece, Darya looks at the future of animal leather in fashion, and explores whether or not more sustainable alternatives are ready to take its place – and to what extent they should.