Category: online | 線上 | 온라인으로 | オンライン

The online field has been one of the mainstays since I started writing online in 2003. My act of writing online was partly to understand online as a medium.

Online has changed in nature. It was first a destination and plane of travel. Early netizens saw it as virgin frontier territory, rather like the early American pioneers viewed the open vistas of the western United States. Or later travellers moving west into the newly developing cities and towns from San Francisco to Los Angeles.

America might now be fenced in and the land claimed, but there was a new boundless electronic frontier out there. As the frontier grew more people dialled up to log into it. Then there was the metaphor of web surfing. Surfing the internet as a phrase was popularised by computer programmer Mark McCahill. He saw it as a clear analogue to ‘channel surfing’ changing from station to station on a television set because nothing grabs your attention.

Web surfing tapped into the line of travel and 1990s cool. Surfing like all extreme sport at the time was cool. And the internet grabbed your attention.

Broadband access, wi-fi and mobile data changed the nature of things. It altered what was consumed and where it was consumed. The sitting room TV was connected to the internet to receive content from download and streaming services. Online radio, podcasts and playlists supplanted the transistor radio in the kitchen.

Multi-screening became a thing, tweeting along real time opinions to reality TV and live current affairs programmes. Online became a wrapper that at its worst envelopes us in a media miasma of shrill voices, vacuous content and disinformation.

  • IT director powers up + more stuff

    The IT director is seeing a return to power and its thanks to the power of hackers and AI. The smartphone, the resurgence of Apple and SaaS saw IT decisions become more organic thanks to increased access to online services that provided better features than traditional enterprise software companies and the rise of knowledge working. IT teams found management of mobile devices onerous and faced hostile users.

    TSB -  8th Chief Technology Officers (CTO) Meeting
    Michiko Fukahori of the Japanese National Institute of Information and Communications Technology at ITU TSB – 8th Chief Technology Officers (CTO) Meeting

    This meant that the IT director became less important in software marketing. A decade ago marketing had pivoted to a bottom up approach of ‘land and expand’. This drove the sales of Slack, Monday.com and MongoDB.

    Two things impacted this bottom up approach to enterprise innovation:

    • Cybercrime: ransomware and supply chain attacks. Both are not new, ransomware can be traced back to 1989, with malware known as the AIDS trojan (this had much cultural resonance back then as a name). Supply chain attacks started happening in the 2010s with the Target data breach and by 2011, US politicians were considering it a security issue. Over COVID with the rise of remote working, the attacks increased. The risk put the IT director back in the firing line.
    • AI governance: generative AI systems learn from their training models and from user inputs, this led to a wide range of concerns from company intellectual property leaving via the AI system, or AI outputs based on intellectual property theft.

    The most immediate impact of this is that the IT director is becoming a prized target on more technology marketers agendas again. This takes IT director focused marketing from back in the 1980s and the early 2000s with a top-down c-suite focus including the IT director. This implies that established brands like Microsoft and IBM will do better than buzzier startups. It also means I am less likely to see adverts for Monday.com in my YouTube feed over time.

    This doesn’t mean that the IT director won’t be disrupted in other parts of his role as machine learning facilitates process automation in ways that are continuing to evolve.

    Target data breach: Why UK business needs to pay attention | Computer Weekly

    Supply chain security – DHS finds imported software and hardware contain attack tools | Inquisitr

    Software is not dead | Kevin Xu

    The bizarre story of the inventor of ransomware | CNN Business

    Silicon Valley steps up staff screening over Chinese espionage threat

    Business

    The whole supply chain is subsidised’: inside the EU’s blockbuster Chinese EV probe | South China Morning Post

    Brands plan for a quiet Pride Month | News | Campaign AsiaThe hesitation around Pride may also be related to executives’ increasing reluctance to speak out on social issues more broadly. Wolff pointed to Edelman’s Trust Barometer, which found that 87% of executives think taking a public stance on a social issue is riskier than staying silent. “Essentially, nine out of every 10 executives believe that the return on investment for their careers is not worth the support during this turbulent time,” said (Kate) Wolff. “This is clearly problematic for both the community and the progress we have made in recent years.”

    Apple, Microsoft, SpaceX talent jumped ship after return-to-office mandates, study reveals | Fortune

    China

    The whole supply chain is subsidised’: inside the EU’s blockbuster Chinese EV probe | South China Morning Post

    Resignation Bordering on Despair – by Stephen Roach – economics of China and Hong Kong – more here: An Audacious Wake-Up Call – by Stephen Roach. Roache was the head of Morgan Stanley Asia.

    China’s Global Ambitions – Part 1: A Violent Thrust Into Modernity – Preston Stewart – quite a nice China primer.

    Consumer behaviour

    Brands have misjudged the politics of youth | WARC – STRAT7 Research on how woke has become a negative terms for some as the term takes on ambiguity and polarity in societal discussions.

    Why Companies Should Add Class to Their Diversity Discussions | HBR

    What triggers brand boycotts? | WARC | The Feed – interesting research, but I would like to have seen China and South Korea in this due to the interest boycott behaviours that happen.

    People Like Harrison Butker Are Taking Over Catholicism | The New Republic – looks like the evangelical catholics

    An uneven commute | Mastercard Services

    The death (again) of the internet as we know it | Noah Smith

    THE SILVER CULTURE PROJECT – interesting project by BBH London though the age bias in marketing and adland is strong

    Culture

    Rebecca F Kuang: ‘I like to write to my friends in the style of Joan Didion’ | The Guardian

    Design

    Pedestrians Aren’t Hearing EVs on the Road | Extremetech – engine sounds in EVs would be a solution. Imagine if your EV could sound like the dignified rumble of a 1980s vintage Mercedes 560 SEL?

    Nokia’s Classic 3210 Returns With Modern 25th-Anniversary Upgrades – DesignTAXI.com

    IKEA hosts flea markets at European stores to ‘keep good things going’ | Trendwatching – its a pity that most Ikea products are now built for margin rather than quality.

    Emoji history: the missing years  ⌘I  Get Info

    Making the Band: An Oral History of the Livestrong Bracelet | Texas Monthly – history of the early 2000s social object

    Economics

    The Foundation of American Folly – by N.S. Lyons

    Finance

    StanChart’s Iran transactions subject of fresh whistleblower claims | FT

    Chinese underground banks shaking up money laundering.

    FMCG

    CosMc’s: Brand Launch — Macaihah Broussard • Art director

    Nestlé Introduces Vital Pursuit Brand to Support GLP-1 Users, Consumers Focused on Weight Management

    Gadgets

    Oral-B Hopes You Didn’t Use Your $230 Alexa-Enabled Toothbrush | Hackaday

    Germany

    German parliament will stop using fax machines : NPR – I knew fax machines were still important in Austria and Japan. Interesting to see that they were still important in Germany as well

    Health

    Benchmarks for digital marketing in the pharmaceutical industry – phamax Digital

    Hong Kong

    This city never slept. But with China tightening its grip, is the party over? | CNN Business

    HEY YU, DREAMER: Vanity car plates in Hong Kong prove an endearing, enduring trend | The Straits Times

    China’s Economic Worries Spur a Different Kind of Shopping Spree – WSJ – sales of Hong Kong based insurance policies surge again representing middle class capital flight.

    Ideas

    Is human creativity fading away? – by Joel Stein and The age of average — Alex Murrell

    Pop Culture Has Become an Oligopoly – by Adam Mastroianni

    Tony Robbins on How to Make Tough Decisions – Real Leaders

    IPA | Top Ten Practical Stress Busters | IPA

    Is modern life bad for creativity? | LinkedIn – Contagious on Sir John Hegarty’s opinion on how modern life is making great advertising campaigns harder:

    • A lack of shared cultural references
    • Pivot towards sales due to wealth of customer data
    • Remote working preventing collaboration

    IP

    Harley-Davidson sues Next over alleged trademark infringement | FT

    Luxury

    Chinese Firms Are Investing Heavily in Whisky Market | Yicai GlobalAlthough international liquor giants have developed the local whisky consumption market for many years, the market penetration rate of overseas spirits in China, including whisky, is only about 3 percent. This means domestic whisky producers will need to develop new consumption scenarios, Yang said. Whisky consumption in China centers mainly around nightclubs, gift-giving and tasting events held by affluent consumers, Yang noted, but in these scenarios, imported whisky brands with a long history tend to be more popularly accepted,, so it will be difficult for domestic rivals to compete. According to the latest report from alcohol market analysts IWSR, China’s whisky market was worth CNY5.5 billion (USD758 million) last year, having grown more than fourfold over the past 10 years. It is expected to reach CNY50 billion (USD6.9 billion) in the next five to 10 years.

    Yoox Net-a-Porter exits China to focus on more profitable markets – Multi-brand luxury clothing sales platform Yoox Net-a-Porter is closing its China operations, this against a backdrop of other brands also pulling out of Chinese e-commerce including Marc Jacobs fragrances. The corporate line from Richemont was “in the context of a global Yoox Net-a-Porter plan aimed at focusing investments and resources on its core and more profitable geographies”.

    LVMH’s unit put under court administration in Italy over labour exploitation | Reuters – shines a light on the eco-system of Chinese manufacturers inside Italy that use Chinese and immigrant staff to cut costs

    Step Into The Next Chapter Of Oakley’s Future

    Fashion Matters on the big trends from FT Business of Luxury conference and Watch live: Kering deputy CEO Francesca Bellettini in conversation with Jo Ellison

    Ignite the Scent: The Effectiveness of Implied Explosion in Perfume Ads | the Journal of Advertising Research Scent is an important product attribute and an integral component of the consumption experience as consumers often want to perceive a product’s smell to make a well-informed purchase decision. It is difficult, however, to communicate the properties of a scent without the physical presence of odorants. Through five experiments conducted in a perfume-advertising context, our research shows that implied explosion, whether visually (e.g., a spritz blast) or semantically created, can increase perceived scent intensity, subsequently enhancing perceived scent persistence. It also found a positive effect of perceived scent persistence on purchase intention. In conclusion, the research suggests that implied explosion can be a powerful tool for advertisers to enhance scent perception, consequently boosting purchase intention.

    The great fashion Brexit? Why UK designers are decamping to Milan | Milan fashion week | The Guardian

    Marketing

    How SEO moves forward with the Google Content Warehouse API leak | Searchengineland, original leak here: An Anonymous Source Shared Thousands of Leaked Google Search API Documents with Me; Everyone in SEO Should See Them – SparkToro and How independent websites are dealing with the end of Google traffic – The Verge

    CHARLOTTE TILBURY CELEBRATES A YEAR IN GAMING • Women in Games

    The Problem With Behavioral Nudges | WSJ

    Touchpoints and the Omnichannel Revolution | BCG

    Marketers’ Meta habit is reshaping the ad industry | WARC

    Bank on it: Financial media networks are the next big opportunity – The Media Leader

    Fan Bingbing tasked by Malaysia’s Melaka to lure in 1 million Chinese tourists | South China Morning Post

    Mat Baxter’s Huge turnaround job | Contagious – interesting perspective on his time at Huge. What I can’t square it all with is what we know about marketing science and declining effectiveness across digital media

    Celebrate the Unique Ways You Listen With ‘My Spotify’ — Spotify – a judo move on the sinister nature of algorithms in consumers lives

    On my LinkedIn, I couldn’t escape from the Cannes festival of advertising. Partly because one of the projects I had been involved in was a shortlisted entry. One of the most prominent films was Dramamine’s ‘The Last Barf Bag: A Tribute to a Cultural Icon’. It was notable because of its humour, which was part of this years theme across categories.

    Materials

    Renewcell secures a future | Vogue Business – manufacture a fibre that uses recycled cotton instead of wood pulp in viscose

    震災復興から生まれた刺し子プロジェクトをブランドに! 15人のお母さんの挑戦!  – CAMPFIRE (キャンプファイヤー) – ancient Japanese craft – KUON and Sashiko Gals are part of a new generation of designers keeping the traditional Japanese technique of sashiko alive. And together, they are bringing the decorative style of stitching to our favorite sneakers (including techy Salomons!). Sashiko is a type of simple running stitch used in Japan for over a thousand years to reinforce fabrics. It’s typically done with a thick white thread on indigo fabric and made into intricate patterns.

    Media

    The new dot com bubble is here: it’s called online advertising – The Correspondent – old article but useful in the way it calls BS on much of the cheerleading for online advertising.

    The Epoch Times faces a federal money laundering indictment : NPR

    Canon made a special lens for the Apple Vision Pro’s spatial videos – The Verge

    Pinterest ads set for 17.1% growth to reach $4.2bn next year | WARC | The Feed

    Streamers like Netflix, Max, and Peacock are raising prices — here’s why | Yahoo! Finance and The Dream of Streaming Is Dead – The Atlantic

    The Rot-Com Bubble | Ed Zitron

    CEOs Go to War Against Creatives – by Ted Gioia

    Meet AdVon, the AI-Powered Content Monster Infecting the Media Industry

    DVD special features draw fans back to physical media. | Slate – a digital roadmap for streaming services and also shows the power of physical artefacts

    Adtech vendors join forces for European Programmatic TV Initiative – The Media Leader

    The New York Times And Instacart Integrate For Shoppable Recipes | AdExchanger

    Online

    Apple set to be first Big Tech group to face charges under EU digital law | FT – interesting that they are going after Apple first. Japan moves the same way: Japan law forces third party App Stores on Apple & Google | Apple Insider

    Labour raced to outspend Tories online before spending caps kicked in | FT

    Nationalism in Online Games During War by Eren Bilen, Nino Doghonadze, Robizon Khubulashvili, David Smerdon :: SSRNWe investigate how international conflicts impact the behavior of hostile nationals in online games. Utilizing data from the largest online chess platform, where players can see their opponents’ country flags, we observed behavioral responses based on the opponents’ nationality. Specifically, there is a notable decrease in the share of games played against hostile nationals, indicating a reluctance to engage. Additionally, players show different strategic adjustments: they opt for safer opening moves and exhibit higher persistence in games, evidenced by longer game durations and fewer resignations. This study provides unique insights into the impact of geopolitical conflicts on strategic interactions in an online setting, offering contributions to further understanding human behavior during international conflicts.

    The Internet: Now you see it, now you don’t

    Bumble buys community building app Geneva to expand further into friendships | TechCrunch

    TikTok ‘law violations’ complaint referred to US justice department | FT

    Gambling addiction’s growing grip on the frontlines – ripping through Ukrainian armed forces and causing havoc at home

    Retailing

    Sellers Call Amazon’s Buy Box ‘Abusive.’ Now They’re Suing | WIRED

    eBay will no longer accept American Express cards over ‘unacceptably high’ fees – The Verge

    McDonalds removes AI drive-throughs after order errors – BBC News

    Security

    Huawei exec concerned over China’s inability to obtain 3.5nm chips, bemoans lack of advanced chipmaking tools | Tom’s Hardware – this is rather different to the picture that The Economist portrays of an all-conquering Huawei: America’s assassination attempt on Huawei is backfiring | The Economist

    The Stanford Internet Observatory is being dismantled | Platformer

    The West Coast’s Fanciest Stolen Bikes Are Getting Trafficked by One Mastermind in Jalisco, Mexico | WIRED“Not so long ago, bike theft was a crime of opportunity—a snatch-and-grab, or someone applying a screwdriver to a flimsy lock. Those quaint days are over. Thieves now are more talented and brazen and prolific. They wield portable angle grinders and high-powered cordless screwdrivers. They scope neighborhoods in trucks equipped with ladders, to pluck fine bikes from second-story balconies. They’ll use your Strava feed to shadow you and your nice bike back to your home.” – not terribly surprising, you’ve seen the professionalisation and industrialisation in theft across sectors from shoplifting, car theft and watch thefts so this is continuing the trend.

    Fortinet Acquires Lacework | Forrester Research – looks like its a move to prevent supply chain hacks.

    China’s Nvidia Loophole: How ByteDance Got the Best AI Chips Despite U.S. Restrictions — The Information – interesting that Oracle have been caught sanction busting and Chinese firms building US data centres that Nvidia can shop to.

    West grapples with response to Russian sabotage attempts | FT

    “Everyone is absolutely terrified”: Inside a US ally‘s secret war on its American critics – Vox – Indian black ops in the US and Canada

    NVIDIA technology found in Russian military drones | Defence Blog

    Armed gangs stage bank heists in Gaza | FT

    Software

    What’s going on with AI in Sequoia? – The Eclectic Light Company

    Google AI Gemini parrots China’s propaganda – by Wenhao Ma

    Apple Intelligence for iOS 18 is here. But can Apple beat AI rivals? | Quartz

    Anthropic course on Claude generative AI · GitHub

    Consumer Trends unveils the AI-Powered Future – Ericsson – god this is dark.

    Aptoide’s iOS game store launches on Thursday – The Verge

    The Top 100 Gen AI Consumer Apps | Andreessen Horowitz

    Which media companies have made deals with OpenAI? and Media Companies Are Making a Huge Mistake With AI – The Atlantic – sold themselves cheap.

    Microsoft can remember it for you wholesale – net.wars and Windows 11 Recall AI feature will record everything you do on your PC | BleepingComputer

    Apple plots creating AI ‘black box’ for iCloud | AppleInsider

    Future of Software development/SDLC with AI and Gen AI | Forrester Research

    OpenAI Just Gave Away the Entire Game – The Atlantic – The Scarlett Johansson debacle is a microcosm of AI’s raw deal: It’s happening, and you can’t stop it. This is important not from a technology point of view, but from the mindset of systemic sociopathy that now pervades Silicon Valley.

    Goldilocks Agents | Sequoia Capital – the quickening evolution of more capable and reliable AI agents.

    Apple Intelligence is Right On Time – Stratechery by Ben Thompson Apple’s orientation towards prioritizing users over developers aligns nicely with its brand promise of privacy and security: Apple would prefer to deliver new features in an integrated fashion as a matter of course; making AI not just compelling but societally acceptable may require exactly that, which means that Apple is arriving on the AI scene just in time.

    Style

    Can the runaway Hoka boom last? FT

    ‘Rare, vintage, Y2K’: Online thrifters are flipping fast fashion. How long can it last? | Vogue Businessas secondhand shopping becomes increasingly commonplace, this latest outburst brings to light the subjectivity of resale. What determines an item’s worth, especially in an age of viral micro-trends and heavy nostalgia? Is it ethically moral to set an item that’s the product of fast fashion — long criticised for not paying workers fairly — at such a steep upcharge, and making profit from it? If someone is willing to pay, does any of it matter?

    Tools

    YouTube Channel Statistics – ViewStats

    Web of no web

    HyperCinema | Hyper-personalized AI experiences for global attractions – although this is aimed at shopping mall events and theme parks, I could also see it being used in B2B contexts at trade shows and conferences.

    Congress unconvinced by Space Force GPS resiliency plan • The Register

  • #theinternetisdying

    Perhaps due to the febrile nature of the times we live in, the tech-savvy community seems to have become aware of various trends, leading them to conclude that #theinternetisdying. This term itself is imprecise. The internet is a series of abstractions, ranging from physical infrastructure to software and functions upon which communication, messaging, video streaming, app data, transactions, and web pages operate.

    Bovine metaverse

    So technically, #theinternetisdying is actually #thewebisdying.

    So why now?

    I believe the most intriguing question regarding #theinternetisdying is this: why now? What has occurred is more about internet users awakening from their ‘comfort zone’ and abruptly realising how rapidly things have evolved? I believe that a number of inciting incidents are the cause of this sudden wakefulness:

    • Google as regressive ‘tax’ rather than marketing channel exposed.
    • Continued deterioration of Google web search.
    • Link rot.
    • Online media businesses look to make money by selling proprietary and user-generated content to LLMs as a revenue stream.
    • Realisation that a lot of web content is adapted or created using LLMs. The non-English web has been expanded by machine translation of English language content. Secondly, LLMs have been used to create a lot of good enough content in English for publications like Sports Illustrated.

    The reality

    In reality, what’s happened to the web as netizens knew it has happened over time. To use a vintage web phenomenon as an analogy. It’s like the vintage Joe Cartoon interactive Adobe Flash animation Frog in a Blender from the late 1990s.

    A cartoon frog sits in a blender and admonishes the viewer, claiming that they wouldn’t dare to to blend him. The blender has settings from 1 to 10. 1 is mildly agitated water, 10 is instant blended frog. Silicon Valley has slowly upped the power of the blender and netizens realise that things have got weird.

    Google tax bias

    Google search has been on the shit list of websites as engineering documents from inside Google were leaked. They revealed some aspects about how search actually worked that Google had been denying for decades. A few of the key findings were:

    • Google search learns from ‘external devices’, so things like Chromecast dongles. Data from the Chrome browser is used in a similar manner, despite Google repeatedly claiming that it wasn’t in the past.
    • Google values quality, relevant sites, BUT, that value is caveated by restrictions it puts on small quality sites and the benefits it provides to large platforms detailed below.
    • Popular sites receive higher search levels through the ‘Navboost’ system. This reinforces platforms and established sites. Smaller sites would need to spend proportionately more on Google advertising to match their larger competitors traffic funnel. This designed imbalance is the digital equivalent of John Pierpoint Morgan’s nefarious involvement in railroad transportation, or the Vanderbilt and Rockefeller agreement on oil transport in the 19th century, which drove much of the subsequent anti-trust regulation in the US – this is the Google tax. It’s a regressive tax that is levied on smaller businesses and the ‘free web’.
    • It is deliberately set up to hold back small sites, many of whom have seen their traffic drop by up to 91 percent. This adversely affects sights that might have deep domain knowledge, specialist retailers and netizens who host personal sites and blogs like this one.

    Google has even lied in court and in parliaments to hide these facts. Disclosure of these details have rippled through the search engine marketing industry and strongly discouraged numerous web businesses once the truth came out – for a lot of businesses #theinternetisdying.

    For Google the timing couldn’t be worse:

    • It is seen to have dropped the ball on LLMs, despite having developed most of the key technology powering the likes of OpenAI and Anthrophic.
    • Google’s local business advertising for the likes of coffee shops or nail clinics have suffered due to the cost-of-living crisis post-COVID and consumer behaviour changes in various countries.
    • Traditional Google search advertisements for e-commerce are being rapidly eroded by retail media. That is ‘search style’ adverts on the likes of Amazon, Tesco and eBay.

    Google is perceived as having set itself up as the ‘start page’ to the open web, while all the time sticking the proverbial knife in all of which adds an inevitability of the feeling of #theinternetisdying.

    Decline of Google search

    Back in June 2022, The Atlantic complained about the declining utility of Google. This echoed similar themes on discussions that had happened earlier in the year on Hacker News and Reddit. The consensus was that they searched Reddit, StackOverflow, Hacker News or StackExchange as it provided a richer, more relevant base of search results.

    I have been using social bookmarking service Pinboard and photo service flickr for search for similar reasons for the past few decades.

    Pinboard allows me to search 65,000+ web pages that I have found over that time for something that might be useful. My act of saving the page link in pinboard allowed me to categorise the page saved and implied a certain ‘good enough’ quality to it. I also get to search the public links of other netizens that do a similar thing. Pinboard is insufficiently popular to reward spammers, so the quality quotient is relatively high. Reddit offers a more expansive corpus of links and information, without the same level of quality control.

    The reason why Google’s web search has degraded has its roots in Google’s pivot to mobile two decades ago. Google abandoned key areas of interest to web users:

    • Boolean search terms, which would have been harder to do on early mobile devices.
    • Blog search because it was non-mobile content.
    • Google News and RSS, in favour of nascent mobile social platforms that it lost out to.

    And the list goes on, I am less sure why it has suddenly surfaced into the public consciousness now?

    Link rot

    A month or so go my friend Matt in his newsletter recommended a website that allowed you to search Google to find out the oldest mention of a term. So I put my own name in, and nothing came up prior to 2004.

    DECAY

    That meant all records of my early agency work had been expunged from the web. Work that included big brands:

    • BHP-Billiton
    • Ericsson
    • MTV Networks
    • Palm
    • Sony
    • Verizon

    Alongside startup brands that fizzled out almost as quickly as they had started. Maybe there is still some traces locked somewhere in behind LexisNexis or Haymarket Media paywalled databases.

    Author and veteran member of the digerati Cory Doctorow wrote about link rot this year, partly prompted by research from the Pew Research Center. Pew found that 38 percent of content surveyed disappeared over a ten-year period.

    Link Rot google trends

    But link rot isn’t a new concern. Interest in link rot seems to have peaked 20 years ago.

    google books ngram

    Link rot is a subset of a wider concern called bit rot, where digital media degrades over time, or can no longer be read due to issues with software file compatibility. Bit rot as an issue was explored in a series of short stories by Canadian author Douglas Coupland in a book of the same name back in 2016.

    Web of data to walled gardens

    Of all #internetisdying factors, this one surprised me as much as link rot. Closing of Twitter API access was considered to be a defining moment for #theinternetisdying. However it fails to acknowledge that the high point of the web of data was web 2.0 and the comparatively free access to APIs. Facebook with its closed wall by design set the standard for subsequent services like TikTok and Instagram. Like link rot, the awareness timeline feels a decade too late. The closure of Google Reader is an equally big impact back in 2013, stopping mainstream adoption of RSS in its tracks.

    LLMs

    Journalist Steven Levy has been chronicling Silicon Valley for decades. He wrote a few of my favourite non-fiction books including Insanely Great, Crypto and Hackers. In the summer of 2023, he wrote an article for Wired magazine: What OpenAI wants. This became a cover story for the September 2023 issue of the magazine under the header ‘Dear AI Overlords, Don’t Fuck This Up’. Less than a year later, the consensus from netizens seems to be that they already have.

    Dear AI overlords don’t mess it up

    Several things have happened, here are three of them:

    • Imitation became mainstreamed. OpenAI used a female voice that was apparently a copy of Scarlett Johansson’s voice due to Sam Altman’s infatuation with the premise of the Spike Jonze film Her. A Ukrainian YouTuber found her likeness being used as an avatar to sell Russian goods to Chinese consumers.
    • Misinformation had everything from the Pope wearing a designer down jacket and fake black supporters for presidential candidate Donald Trump.
    • Scott Galloway talked about ‘corporate ozempic’ where AI being good enough to reduce human tasks allowing for corporate headcounts to disappear. The CEO of Klarna freely admitted that they used AI to replace 700 employees in customer service roles. AdVon was used to write articles for SportsIllustrated driving anger and anxiety in readers and journalists.

    Automation has eaten blue collar roles for decades, but it has taken the automation of white collar roles to create the panic and sense that #theinternetisdying and AI is killing it.

    The Sky Is Falling In

    Chief Vitalstatistix

    As a child I fell in love the Asterix The Gaul books. In them was the Gaulish village chief Vitalstatistix – who is portrayed as mostly reasonable, well-informed, fearless, (comparatively) even-tempered and unambitious. Vitalstatistix was known for his irrational fear that the sky may fall on his head tomorrow. I was thinking about Vitalstatistix as I wrote this post on #theinternetisdying.

    Back in the late 2000s, Dr Ira Wolfe wrote a book that discussed how online behaviour and Google services were creating irreparable damage in the workplace and beyond. His book was merely the latest in a series of panics about societal destruction:

    Back in March 1997, Wired magazine had their own version of the #theinternetisdying, they believed that web browsing (or web surfing as it was termed back then) was about to be killed off by ‘push technology‘. This episode of The Computer Chronicles gives a good overview of push technology at the time.

    You may already be using push technology without realising it, such as receiving mobile notifications for breaking news or localised weather alerts.

    In conclusion, #theinternetisdying? really?

    Previous technological shifts introduced new challenges, but we adapted and progressed. There’s no reason to think the current ‘#theinternetisdying’ phase is any different from those before. Perhaps in 15 years, I’ll be writing about how people feel the ‘metaverse’ has become closed or some other futuristic concern.

    Posts on related content can be found here.

    More information

    The Internet as You Know It Is Dying | Fabricated Knowledge

    Rot-Com bubble | Ed Zitron

    Pluralistic: Linkrot (21 May 2024)

    5 Reveals From Google’s Leaked Search Docs | AdWeek

    When Online Content Disappears | Pew Research Center

    The Internet: Now you see it, now you don’t | Daniel Tynan

    The Open Secret of Google Search | The Atlantic

    Is Google Dying? | Hacker News

    Geeks, Geezers, and Googlization: How to Manage the Unprecedented Convergence of the Wired, the Tired, and Technology in the Workplace by Dr Ira S Wolfe

    The Trick To Understanding New Media: Nobody’s In Charge | Yahoo! Finance

    Dead tools | renaissance chambara

    Media Companies Are Making a Huge Mistake With AI – The Atlantic

    Meet AdVon, the AI-Powered Content Monster Infecting the Media Industry

    The Japanese knotweed of generative AI is strangling Facebook | Social Warming

    Google messed up Gemini launch, Sergey Brin says | CNBC

    Klarna AI assistant handles two-thirds of customer service chats in its first month | Klarna

    AI makes photos of fake Black Donald Trump supporters | Quartz

    Ukrainian YouTuber found her AI clone selling Russian goods on Chinese internet | Wenhao’s News Blog

    Google Mired in Controversy Over Gemini AI Chatbot Push – WSJ

    Corporate Ozempic | No mercy / no malice

  • Shutting down

    Shutting down is a conscious choice. You might see it described as digital detox or a digital break. I, like a number of people that I know have a ‘dumb’ phone to complement my smartphone. This is different from the pre-broadband era of the internet where going online was an active decision punctuated by the sound of the modem.

    At that time, keeping in touch was an active decision rather than the tyranny of the pings from messaging applications. We cocooned ourselves from each other with a personal audio soundtrack via an iPod or a Discman. This cocooning effect was viewed to have a positive effect on personal autonomy was called the Walkman effect by sociologists.

    Once you used a device be it the modem-connected PC, TV or music player you went through the act of shutting down devices. My parents still go room-to-room at night shutting down devices.

    Pimp my N95
    My Nokia N95

    Over the past two decades we have stopped shutting down. A number of things happened:

    • Phone as Swiss Army knife. Cellphones quickly became our alarm clock. Working on the Nokia N93 launch with Flickr (then part of Yahoo!) felt like a watershed moment allowing photos to be taken and shared instantly online. During the July 7th London bombing, I got home by navigating with the ring bound A-Z atlas of London, which lived in the bottom of my backpack. Now I have four apps that would use depending what I wanted to do.
    • Device as social currency, your smartphone says as much about your economic health as your car. It’s a hygiene level of status, just like branded training shoes (sneakers) were when I was at school.
    • Synchronous social media. The now long-forgotten iNQ SkypePhone, BlackBerry and Danger Sidekick heralded no-shutting down engagement.
    • Dark patterns / design techniques used to encourage app or service use as a compulsion. It is no coincidence that a number of senior design and engineering teams at Tinder and Instagram sat in BJ Fogg’s persuasive computing design (captology) modules, yet the products used techniques that Fogg described as unethical.

    Parent and policy voices.

    The key points that activists and concerned parents talk about revolve around the following talking points:

    • Screens now dominate our lives, and their presence is only getting stronger and more powerful. For instance, I can no longer phone up my local surgery to get a repeat prescription or book an appointment, it’s all mediated by the surgery website and the NHS app.
    • (Some) adults can control to a certain extent how often and when they use screens. Shutting down is proving hard for many adult consumers to do. But there is a commonplace screen addiction. Empirical evidence suggests that it would be damaging for children. I could make countervailing points, here is a better place to see them outlined.
    • Smartphone addiction and drug addiction share some similarities including a neglected personal life, a pre-occupation with the subject of the addiction, social media as a mood modifier or for escapism. The implication is that smartphones are an unwilling appendage which add capabilities (some of which are of a questionable value) and can’t be put down. All of which reminded me of my childhood (and adult relationship with music).

    The push seems to be on regulating the services that run on top of smartphone platforms.

    There doesn’t seem to be a corresponding focus on encouraging shutting down as a desirable behaviour; presumably because the efficiencies promised by digital government services are too alluring.

    Under-supply.

    While there might be a desire for dumb phone, there are remarkably few options as second generation mobile networks have been turned off around the world.

    HMD (what was Nokia’s terminal business) is the leading player in this sector. They are starting to do clever things that tap into the idea of shutting down and being present in the meatspace at key moments.

    HMD x Heineken x Bodega collab dumb phone

    Heineken collaborated with HMD and streetwear atelier Bodega to collaborate on a ‘dumb’ phone in a transparent case, similar to electronic devices issued in prisons.

    HMD x Heineken x Bodega collab dumb phone

    Heineken seem to doing this for a number of reasons:

    • People are less likely to be themselves when there is a broadcast studio in your pocket full of distractions to pull you away from the now.
    • Shutting down allows you to be more present for your friends.
    • Losing a £1,000+ device down the pub full of work information and access to your bank account isn’t a particularly attractive option. So providing a cheaper option is a bit like the ‘festival phone’ tough but basic Nokia that I bring to gigs and festivals.

    Punkt.

    A less well known competitor is Punkt. Punkt is a boutique Swiss consumer electronics company who have made a number of cellphones, home phones and a Braun-like alarm clock. Punkt want to promote the idea of intentional technology use, rather than as a wrapper around our everyday lives. Their MP02 phone acts as a wi-fi hotspot and a dumb cellphone, as they view a two device strategy of laptop and phone leans in better to their intentional technology use vision. Punkt make shutting down easier, by adding friction to switching on.

    More related posts can be found here.

    More information

    Battle lines drawn as US states take on big tech with online child safety bills | Guardian Online

    UK children and adults to be safer online as world-leading bill becomes law | GOV.uk

    Zuckerberg among tech bosses to testify on child safety | BBC Online

  • April 2024 newsletter – no. 9

    April 2024 newsletter introduction

    Welcome to my April 2024 newsletter which marks my 9th issue. We managed to make it through the winter and the clocks moved forward allowing for lighter evenings in the northern hemisphere.

    Strategic outcomes

    The number nine is full of symbolism in a good way. In Chinese culture it sounds similar to long-lasting. It was strongly associated with the mystical and powerful nature of the Chinese dragon. From the number of dragon types and children to the number of scales on the dragon – which were multiples of 9. You have nine channels in traditional Chinese medicine. In Norse mythology there are nine worlds and Odin the all-father hangs on the tree of life for 9 days to gain knowledge of the runes.

    Social media-related cognitive dissonance

    A couple of conversations with people, spurred me to write this next piece.

    I know it’s obvious and common sense, but it needs to be said occasionally. This time last year, I was on a Zurich work trip, providing support to a teammate running a workshop for a client who viewed the agency as the least worst option. We did good work and built temporary rapport, we got insight about the wider client-side politics at play. It was the classic example of the complexities involved in agency life and Lord knows we already have enough internal politics in our own shops to deal with.

    The photo I shared on Instagram at the time gave no clue to what was happening, serving as a reminder to consider the curated nature of social feeds when scrolling through.

    April work trip to Zürich

    New reader?

    If this is the first newsletter, welcome! You can find my regular writings here and more about me here

    Things I’ve written.

    • Fads versus real trends
    • A quick guide to jargon used in pharma marketing.
    • What my answers to Campaign’s a-list questions would look like.
    • Boutique e-tailers and why the multi-brand luxury retail sector has gone from boom to bust.
    • Very Ralph and other things – Ralph Lauren’s world building abilities and how others from a cancer patient or overseas migrant workers have bent the world to their needs, or made a new one.

    Books that I have read.

    • There are a few books that I revisit and the March 1974 JWT London planning guide is one of them. In many respects it feels fresh and more articulate than more modern tomes.
    • Chinese Antitrust Exceptionalism by Angela Zhang sounds exceptionally dry to the uninitiated. But if like me, you’ve worked on brands like Qualcomm, Huawei or GSK you realise how much of an impact China’s regulatory environment can have on your client’s success. Zhang breaks down the history of China’s antitrust regulatory environment, how it works within China’s power structures and how it differs from the US model. What becomes apparent is that Chinese power isn’t monolithic and that China is weaponising antitrust legislation for strategic and policy goals rather than consumer benefit. It is important for everything from technology to the millions of COVID deaths that happened in China due to a lack of effective vaccines. Zhang’s book won awards when it first came out in 2021, and is still valuable now given the relatively static US-China policy views. Given the recent changes in Hong Kong where she lives, we may not see as frank a book of its quality come out of Hong Kong academia again on this subject matter.
    • Van Horne and Riley’s Left of Bang was recommended by a friend who recently left military service. It codified and gave me a lexicon for describing observations of focus group dynamics and observation-based shopper marketing. Probably of bigger value to people more interested in the analytical side of behavioural science is the bibliography – which is extensive.

    Things I have been inspired by.

    Sustaining a sustainable brand

    Kantar do a good webinar series called On Brand with Kantar. I got to watch one of them: Why consumers ignore brands’ sustainability efforts. Consumers are reticent to trust in brand’s sustainable efforts. Kantar’s recommendation is to stay the course and continue to demonstrate real sustainability. Kantar’s work complemented System 1’s Greenprint US-orientated sustainable advertising report. There is a UK-specific version as well with half a dozen ideas for marketers published in partnership with ITV.

    Media platform trends

    GWI released their 2024 Global Media trends report. GWI takes a survey based approach to understand consumer media behaviour.

    • Broadcast TV still commands the greatest share of total TV time, despite Netflix, Amazon Prime Video and a plethora of other streaming platforms from Criterion to Disney+.
    • Survival/horror players are most excited about gaming luxury collabs, whether or not luxury brands are equally excited about survival or horror gamers is a bigger question.
    • Games console ownership has halved in the past ten years. This surprised me given how many of my friends have a Switch or PlayStation 5. It probably explains why Microsoft is focusing on being a publisher rather than on platforms as well.

    Japanese online media spend

    Dentsu published a report looking into 2023 Advertising Expenditures in Japan. A couple of interesting outtakes.

    • They focused exclusivity on internet advertising, which gives you a good idea on where they want the balance of media spend to go, rather than necessarily the right tool for the right job. Yes digital is very important, BUT, we live in a world were we are wrapped by and consume layers of digital and analogue media.

    We can see from GWI data that this viewpoint is likely to be still excessively myopic in terms of media due to offline – online media linkages. This is likely to be even more so in Japan that still has a more robust traditional media industry.

    There_s_so_much_crossover_across_media_channels
    • Internet advertising reached a new high, despite being a couple of years after the Olympic games were hosted in Tokyo. (Media spend when a country hosts the olympics tends to be skewed that year upwards).

    One thing I would flag is that this report is based on surveying people across the Japanese advertising industry and built on their responses. So there maybe some biases built into that process. Overall it’s a fascinating read.

    Social media engagement benchmarks

    RivalIQ published their 2024 Social Media Industry Engagement bench report, download it to get the full details. Three things that struck me straight away:

    • Macro-level decline across platforms on engagement rate, which matches the trends that Manson and Whatley outlined ten years ago in their Facebook Zero paper for Ogilvy Social.
    • If brands didn’t need enough reason already to reduce exposure to Twitter, the falling engagement rates on the platform add additional reasons. Overall video seemed to underperform on engagement compared to photos.
    • One thing leaped out to me in the industry verticals data, if you are looking to reach student age adults, why not consider collaborating with higher education institution social media accounts rather than influencers?

    Shocking health outcomes

    The Hidden Cost of Ageism | A Barrier to Innovation & Growth | Future Work – sparked a lot of discussion with its implications on workplace practices, particularly within the advertising sector. What was less discussed but more important was the implications of ageism related biases on healthcare treatment.

    Under-treatment or Over-treatment: Older adults may receive less aggressive treatment options or are overtreated because of age-related biases, rather than based on individual health needs and preferences.

    Dismissal of Concerns: Healthcare providers might dismiss older patients’ health issues as inevitable parts of ageing, potentially overlooking treatable conditions.

    Age-Based Prioritisation: In some cases, age influences the allocation of healthcare resources, with younger individuals being prioritised over older ones, assuming they have more “life worth living.”

    The Hidden Cost of Ageism | Future Work

    MSNBC News in the US did a report on what it called a ‘Post-Roe underground’ echoing the underground railroads to free slaves in the Southern states and the Vietnam war era draft dodgers who escaped north to Canada. This time it is to help women access abortion pills or procedures in other states or Mexico.

    MSNBC

    My friend Parrus hosted a talk on World Health Day, more on that here, the key takeaway for me was not trying to replicate developed market solutions in developing markets. Instead think about how it could be reinvented. Thinking that could be extended beyond health care to consumer goods, telecoms and technology sectors as well.

    Luxury market shake-up

    Business of Fashion covered a US court case where two women brought a lawsuit against Hermès, alleging purchase of its sought-after Birkin bag is dependent on purchase of other products and is an “illegal tying arrangement” that violated US antitrust law.

    5D3_1690

    Hermès is more vulnerable than other brands because it owns its retail stores. The case, if successful could have implications far beyond the luxury bag-maker. For instance, how Ford selected prospective owners for its GT-40 sports cars, or most Ferrari limited edition for that matter.

    While we’re on the subject of luxury, LVMH are rerunning their INSIDE LVMH certificate which is invaluable for anyone who might work on a luxury brand now or in the future. More here.

    Morizo

    Toyota are on a tear at the moment. They correctly guessed that electric cars were too expensive at the moment and focused hybrids as a stepping stone to electric and hydrogen fuel cell production. They have also successfully use the passion for driving in their products and their marketing. The Toyota GR Yaris was a result of Chairman Akio Toyoda instructing engineers to make something sporty enough to win the World Rally Championship and affordable.

    He also outed himself as a speed demon who went under the nom de plume of Morizo.

    Quebec

    For many English speakers one of the most dissonant experiences is being confronted by a language you can’t speak. It’s part of the reason why ireland managed to become the European base of companies like Alphabet and and Intel. So I was very impressed by this campaign by the Quebec government to attract visitors and inbound investment.

    Things I have watched. 

    I watched Mr Inbetween series one in March and managed to work through series two and three this month. I couldn’t recommend them highly enough as a series. They just keep building on each other.

    Over Easter, I revisited some old VHS tapes my parents still had and rediscovered the Christopher Walken science fiction horror film “Communion.” It epitomizes its era, with alien abduction narratives emerging during the Cold War and permeating popular culture from “Close Encounters of the Third Kind” to “The X-Files,” tapering off after 9/11. “Communion” demonstrates how effective editing and minimal special effects can heighten tension and emotion. Despite the film’s incredulous premise, Walken delivers a fantastic performance.

    Modesty Blaise” is from a time when comic book adaptations were uncommon in cinemas. This 1966 adaptation of the 1960s comic strip shares stylistic similarities with “Barbarella” and stars a young Terence Stamp. I received a tape copy from a friend who was attending art college at the time. The depiction of the computer as a character with emotional reactions in the film feels contemporary, echoing the rise of virtual assistants like Siri and ChatGPT, despite being portrayed as a mainframe. It is interesting to contrast it with Spike Jonze’s movie Her made 50 years later.

    Useful tools.

    A lot of the tools this month have been inspired by my trusty Mac slowly dying and needing to get my new machine up and running before my old machine gave out.

    Time Machine

    Apple’s native backup software, Time Machine, serves as a personal sysadmin for home users. Regular backups are essential. If a crucial document disappears while you’re working on it, Time Machine, coupled with a Time Machine-enabled hard drive, allows you to retrieve earlier versions of the document, potentially saving your sanity in critical moments.

    Microsoft Office

    I prefer the one-off payment model over Office 365 services. I use Apple’s Mail, Contacts, and Calendar apps instead of Outlook. While Office is available for just £100, which is reasonable considering its features, I still prefer Keynote over PowerPoint for creating presentations.

    Superlist

    Many of you may recall Wunderlist, which Microsoft acquired, but much of its original charm was lost in the transition to Microsoft To Do. Superlist is a reboot of Wunderlist by the original team, this time without Microsoft’s involvement. It’s available on iOS, macOS, and the web, catering to both individual and team task management needs.

    https://youtu.be/2MzzbRhYlSA?si=04eBXH-MqKLpX2bN

    ESET Home Security Essential

    I used to rely on Kaspersky, and while I generally like their products, I have concerns about the potential influence of the Russian government. Therefore, I switched providers. ESET has a strong reputation and offers better Mac support than F-Secure. I can recommend their ESET HOME Security Essential package.

    Amazon Basics laptop sleeve

    I use a various bags depending on my destination and activities. Over the years, I’ve found that Amazon Basics brand laptop sleeves work well for my machines. They’re often among the cheapest options available and tend to outlast the computers they protect. 

    Laptop camera cover

    Cover on Mark Zuckerberg laptop camera! You must have to follow this:-

    The photo of Mark Zuckerberg’s laptop with tape covering the camera raised awareness about privacy. Webcam privacy covers, such as a sliver of plastic that slides across, are ideal as they allow your laptop to close fully. A pro tip is to use a red LED torch to clearly locate your camera when applying the stick-on cover.

    Protective case and keyboard cover

    I’m a big fan of clip-on polycarbonate shells to protect my laptop, as they provide a better surface for the stickers that personalize my machine over time. You don’t necessarily need a big-name case. The one I have came with a keyboard cover that works well. Anything that prevented Red Bull, coffee, or croissant flakes from getting under my keys is worth doing.

    Screen protector film

    The screen protector film provides great protection and is easy to apply and clean, even for beginners like me. I’ll update you if my opinion changes.

    The sales pitch.

    I have enjoyed working on projects for PRECISIONeffect and am now taking bookings for strategic engagements or discussions on permanent roles. Contact me here.

    More on what I have done here.

    bit.ly_gedstrategy

    The End.

    Ok this is the end of my April 2024 newsletter, I hope to see you all back here again in a month. Be excellent to each other and enjoy the bank holiday.

    Don’t forget to like, comment, share and subscribe!

    Let me know if you have any recommendations to be featured in forthcoming issues. 

  • Boutique e-tailers

    The luxury sector is undergoing a transformation, and nowhere is that more apparent than in the world of boutique e-tailers. I am of a generation that grew up with boutiques, carefully curated fashion looks from multiple brands.

    Farfetch_8
    TAKA@P.P.R.S

    Exclusive

    As a child, my Mam would get me jumpers as I grew up from different small stores like this. To this day, the ultimate compliment she would give any item of clothing was that it was ‘exclusive’.

    As I started buying my own clothes I pivoted between sports shops for my footwear, Ellis Brigham for layers, Caran D’Ache – a menswear boutique in Birkenhead at the time for jeans and ‘going out’ clothing. (Having known the owner/manager quite well, I suspect that the store was named after the Swiss writing instrument company, rather than the pseudonym of French satirist Emmanuel Poiré). This was where I got my first down jacket (by Naf Naf), Oshkosh B’gosh dungarees and Champion sweatshirts. At the time Ellis Brigham was a sea of Polartec and Gore-tex with no down jackets in sight.

    I started venturing further afield and went to Quiggins in Liverpool, Affleck’s Palace in Manchester and what’s now the Victoria Quarter in Leeds. I’d also started coming down to London with friends to find brands I couldn’t get at home.

    Famous high-end boutiques like Browns built a reputation for championing up and coming womenswear designers like Hussein Chalayan and Alexander McQueen. They also helped the likes of Ralph Lauren, Jil Sander and Calvin Klein start seeing in London. At their best boutiques moved culture as curators and taste makers. I got my love of American workwear from Caran D’Ache and Japanese streetwear from the late lamented Hideout which was just off Golden Square.

    Department stores were the first aggregators of boutiques with a mix of single brand and multi-brand concessions under one roof. Brands like Selfridges, Harvey Nichols, Isetan, Lane Crawford, Mitsukoshi, Neiman Marcus, Saks Fifth Avenue, SEIBU and Shinsegae.

    These established businesses have their place, indeed LVMH owns a number of selective retail businesses like DFS (often known as T Galleria), Le Bonne Marché and Starboard Cruises. So multi-brand distribution has a place in the luxury retail mix. Over time the premium department store brands and LVMH’s select retail brand would both have boutique e-tailers within their brands providing an omni-channel experience.

    In the run up to COVID, multi-brand retail counted for 57 percent of luxury sales, management consultancy Bain expect this to decline to 36 percent of luxury sales by 2030.

    Online

    Online continues to disrupt retailing over a quarter century after it landed. The first casualties were book stores and music stores. Twenty years ago, one of the most enjoyable activities that I did in my spare time was rifling through record store shelves, digging for surprising or elusive vinyl records, CDs and DVDs.

    Some of the places were I did this are long gone, like Tower Records in Piccadilly Circus. On the flipside, new businesses sprang up to be online first, or online only. Amazon started as a book store and eventually became the modern-day equivalent of the Sears Roebuck catalogue.

    Luxury was no exception and a variety of dedicated boutique e-tailers sprang up:

    • Matches
    • MyTheresa
    • Net-a-Porter
    • YOOX
    • Farfetch

    In the same way that mobile operators were the key determinators of whether mobile phone shops were successful, luxury brands had the whip hand over multi-brand boutiques. Phones4U died when its relationships with EE and Vodafone came to an end. The FT article The implosion in luxury ecommerce implied a similar pivotal moment between Farfetch and Kering, but with Farfetch managing to sell itself to Korean e-tailing business Coupang instead of going into administration.

    One brand / one store

    Luxury brands have looked to gain more control over their customer experience and get closer to the customer overall. This has seen many brands open single brand stores. Up until the 1980s, Louis Vuitton sold mostly through department stores, now it’s mostly through its own brand channels. Some brands like Audemars Piaget, now only sell through their own single brand showrooms.

    The big name department stores continued to hold a position in the marketplace due to their own brand power, even while smaller mid-market stores in provincial cities folded.

    Over time, brands extended their shop front into the online sphere. This was done once two things were able to happen:

    • An all-up online and offline view of a given customer and CRM systems allowed this to happen. This wasn’t for efficiency reasons to go online only, but to provide an omnichannel service to match customer’s omni-channel lifestyles.
    • Getting this all-up view will also help with future EU legislation moving towards a circular economy.
    • The ability to provide a high level delivery experience for online purchases. This mattered less with fragrances than it did with watches and handbags. High security logistics providers like Ferrari were able to provide this to the main luxury brands.

    One small chink of hope for multi-brand stores is that single brand stores may be forced to either change business practices, or insulate themselves from legal action via authorised dealerships. A court case brought by two women against Hermés in the US claims that having to buy other products to get a crack at purchasing a Birkin bag is a violation of antitrust laws.

    The obligation to buy other products first, is what the women claim is an ‘illegal tying arrangement’ which is why Hermés might be in violation of antitrust laws. Other brand who have authorised dealers rather than their own showrooms are less likely to be at risk.

    Compressed middle-class

    One of the first things that I learned when doing LVMH’s INSIDE LVMH certificate was that the bulk of luxury purchases are made by the middle classes.

    Robert Gordon’s Rise and Decline of American Growth outlined how the middle classes in America (but also many other western countries). Income inequality, automation and globalisation drove a stagnation and decline in middle class numbers, even as the number wealthy increased.

    Globalisation elevated a new middle class in Asian countries like Japan, Korea, Hong Kong, Taiwan and Thailand. Energy drove middle class growth in the countries surrounding the Persian gulf and Nigeria. Louis Vuitton opened their first show rooms in the US in 1914, in Japan in 1978 (though department stores had been selling their products for years). The first Korean shop opened in 1984 and China eight years later.

    Over the past few decades this was compensated by new middle classes growing. They don’t necessarily have the earning power of a middle class westerner, but the purchasing power level may vary considerably. So a middle class consumer in a country like Thailand, Malaysia or Singapore might have more disposable income than someone in the UK.

    Japan’s middle class quickly reached stagnation due to the lost decades of economic growth after their 1989 asset bubble. Korea has gone through a similar challenge, it has seen raised consumption, but recently this is driven by household debt rather than prosperity.

    China

    Quantity is a quality of its own, which is a reason why Chinese consumers have been so important to luxury brands since the early 2000s when China joined the WTO and its economy took off. Once there was even a small growth in middle class numbers that represented a big increase in global luxury sector sales. The decline in economic growth due to the property sector bubble has dampened luxury sales to China. It is not only about the decline in ability to purchase, but also the decline in being seen to purchase western luxury goods.

    This less conscious consumption started early on during the Xi administration’s desire to combat corruption and aspire to a more equal society. Gifting declined. Economic decline accelerated this Chinese macro-trend.

    COVID and after

    COVID changed consumption. Money that would have previously been spent on experiences such as restaurant meals or travel transferred into things. Both single brands and boutique e-tailers got a lift in this environment. But a wider economic effect is still working its way through the economy. This effect is known as the bullwhip or Forrester Effect.

    This resulted in a number of economic distortions:

    1. Partial shutdown – Consumers no longer went to work or high traffic retail hotspots. Non-essential workers didn’t go to work. Logistics systems buckled under the weight of packages and luxury businesses diverted production to support medical needs such as LVMH’s perfumes businesses making hand sanitiser.
    2. Unusual increase in demand – Home working drove an increase in demand from media consumption and home improvement to buying more stuff from all that money they saved from not going out.
    3. Supply chain disruption – Air cargo prioritised medical supplies while existing stock sat in empty shops.

    All of this disruption which drove inflation, this reduced demand as consumers had less to spend.

    Above inflation price bumps for luxury goods

    Luxury brands focused on their inflation proof ultra-high net worth customer base and raised prices to compensate for the reduction in sales volume. The fight for that reduced volume pitched multi-brand boutique e-tailers against their suppliers and the results weren’t pretty.

    Boutique e-tailers are going to the wall, or consolidating to weather the fiscal storm until such time as middle class consumers can start spending aspirationally again.

    Some of these businesses can’t be saved. Matchesfashion, which was bought out by Frasers Group didn’t have much chance.

    Financial decline of Matchesfashion

    You can find similar posts here.

    More information

    The implosion in luxury ecommerce | FT

    Case Study | Selling Luxury to the 1% | BoF

    Matchesfashion axes half its staff after going into administration | FT

    Harvey Nichols staff face redundancies as it eyes return to profitability – Retail Gazette

    LVMH-Backed Luxury Watch Site Hodinkee Cuts a Fifth of Jobs – Bloomberg

    Who Gets to Buy a Birkin Bag? | BoF

    The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War (The Princeton Economic History of the Western World) by Robert J. Gordon

    Canada Goose is cutting 17% of its corporate staff | Quartz

    What’s up with 10-year-old kids in Sephora? Why the question itself is driving controversy | CBC News

    US Luxury Purchases Fell 15 Percent in February, According to Citi Credit Card Data | BoF

    Why Frasers Group Shuttered Matchesfashion | BoF