#010 What is Web3 luxury?

and how I think about building DRAUP

Apr 24, 2023

“Since the dawn of humanity right up to the turn of the 19th century, the world of luxury has been virtually isolated from the rest of the economy. Its pleasures and delights reserved for a very small elite”

- Deluxe: How Luxury Lost Its Luster, Dana Thomas

#OOTW by DRAUP via Instagram

Over the past 2 years every traditional brand and their mother has done a digital fashion drop.

But, after delving into discussions, you’ll discover that in reality the majority of fashion people just don’t like digital clothing. This is in part because a lot of digital clothes are, unfortunately, ugly. As I said in Vogue Business, this stems from a split in the market between those who should be buying high end digital fashion (Gen-Z girls), and those who actually are (dudes with ETH).

Other gripes with digital outfits include the necessity for nerdiness (even minting the most high quality NFT is a nightmare) and the janky wearership experience. But the thing that leads to Web3’s incompatibilities with fashion the most is a clear misalignment in values.

Look at Haute Couture, the oldest and most prestigious form of high fashion. For centuries, worth in the couture space has been defined by three things: artisanship, skill, and exclusivity. If you glance over at our digital world, Web3 evangelists are pioneering what seems like the opposite approach. In the place of artisanship we covet automation, in the place of skill we stan scale, and in the place of exclusivity its accessibility that underlies a world where crypto is king.

So how to resolve this conflict?

Launching tomorrow, my digital fashion platform DRAUP endeavors to find the answer.

Rather than subverting what fashion has traditionally stood for, DRAUP will both maintain fashion’s first principles, and carry them through to the new, digital age.

Below I’ll run you through both the how and the why.

Proving the value in (digital) objects:

When I tell people I work in digital fashion they often look at a digital dress and ask “so how do you plan to make this in real life?” When I tell them that the majority of these clothes will never be physically manufactured they become confused, skeptical, or even (in the case of many over 40’s) scoff. In return, I smile and make the following argument. Like it or not, we live in the age of digital objects. In fact, we’ve been living in the age of digital objects for quite some time.

Be it text messages, baseball cards, CS GO skins, or social media posts, digital objects have become the repositories in which we place our time. 1 in 5 smartphone users spend 4.5+ hours on their phone a day. That’s 68 and a half days straight of screen time each year, discounting the computer.

But what makes one digital object valuable and another worthless?

On a recent podcast Ian Rogers and Derek Edwards argue that the answer is attention. In a world of abundance our attention is a resource which remains impossible to scale. So the attention an object can attract and retain is what determines its value.

Getting digital clothes the attention they deserve:

Taking attention as the mark of value, the question stands: What drives and keeps attention?

I’d argue that in both the context of fashion, and digital objects as a whole, the following 3 things hold sway:

brand - an object’s narrative
scarcity - how hard people believe an object is to acquire
craft - the skill behind how an object is made
To explore these further:

BRAND (MAKES BLUECHIPS)
Last month I spent 3 and a half hours listening to the LVMH Acquired podcast. Unpacking the LVMH narrative, the podcast explores the story of the conglomerate’s growth, from a $15M company at Bernard Arnault’s first funding, to one worth over $494 billion today. As tech bros, the two presenters are startled by what’s driven the Louis Vuitton Moet Hennessy group to accrue such substantial value. Indeed, as the 15th largest company in the world by market cap, and the only company in that top 15 that is not technology or oil (besides Berkshire Hathaway which is 39% apple) this is understandably a bewildering feat. Whilst LVMH has grown through business practices that cover most companies — leveraging economies of scale, building moats around distribution etc. their unique selling point, and deepest distinguisher, is brand.

On the podcast band is defined as “a unique attribute that will cause people to pay more for a product because it has a certain name or logo on it” and, in the world of the podcast host David, it is “so famously squishy”.

Cutting to the core, however, I would argue that brand’s “squishyness” is nothing more than narrative. Take Louis Vuitton as an example. The French luxury house was established in 1854 as a leather goods provider, and became renowned for the craft behind its creations. However, today, a Louis Vuitton phone case (realistically made of $2 plastic) is not all that craftful. Yet, it still retains a 100x markup.

This is because the narrative of craft around Louis Vuitton has been successfully spread with such strength that both the consumer, and everyone the consumer interacts with, sees the monogrammed LV and automatically assumes the case holds inherited quality.

When it comes to digital objects, this same influence of ‘brand’ is present, and arguably more so in their worlds where the tangible is of no concern. Whether through PFPs or Fortnite skins, companies work continuously to create context around what an object stands for in order to make consumer association with that object a persistent point of pride.
(SYNTHETIC) SCARCITY
Brand is closely aligned with the perception of scarcity. And, indeed in a world of necessary narratives, perception is key.

In the words of Ian Rogers (former Chief Digital Officer at LVMH, current Chief Experience Officer at Ledger) “scarcity is fake all over the place… if Hublot makes 250 watches they decided to make 250 watches it's not like they couldn’t have made more.”

As Ian succinctly states, scarcity is synthetic. Once upon a time the mass of materials may have been impossible to source, or the opportunity cost of labor too high to churn out more than a specific volume of products, but in our age post mass-automation these constraints are increasingly unlikely. We live in a world of on-demand, which applies to the vast majority of our physical assets, just as it does our digital ones.

Fashion in particular has seen these shifts from an artisanal practice, to mass production, to the current state where ultra-fast fashion is churned out by the likes of Shein to the tune of 700 to 1,000 new items a day. The fashion industry's response to this appearance of abundance has been synthesizing scarcity based on location (flagship drops), time (limited-edition drops) as well as increasing quantities of personalisation plays. This is not dissimilar to how scarcity is manufactured in video games as you can read in one of my favorite articles.

Integral to note here is that in the luxury fashion space, personalisation must have parameters. For the vast majority of luxury buyers, demonstrating their association with the narrative of a branded item is equally as important as possessing a product personal to them. In essence, brand is the difference between a $100,000 haute couture dress, a $1,000 embossed Goyard wallet, and a $10 phone case from Etsy. While 1 of 1’s (unique pieces from an artist) have been surging in popularity, the most successful of these works have often come from artists with history, alongside significantly large, and easily recognizable, bodies of work, meaning brand recognition carries through.

Take XCOPY as an example. The anonymous artist sold his unique work “All Time High In the City” for $6.2 million in January 2022. Yet integral to note is that this digital object was part of a larger body of unique works spanning over 600 pieces. With a very recognizable ‘glitch art style’, it's easy to identify an XCOPY and the status it conveys. After he broke records, the artist went on to produce an ‘Open Edition’ further expanding his base with 7,394 pieces sold at 1ETH apiece (bringing in $23 million in a mere 10 minutes).
CRAFT NEEDS COMPREHENSION
Finally, we come on to the idea of craft. If you look at Paris couture week, the clothes’ $50,000+ price tag is justified by thousands of hours of work. A Zuhair Murad dress boasts 1,500 hours of needlework across a team of 12 and a Schiaparelli Coat, 500 hours of embroidery to fasten 54,795 synthetic pearls.

The Federation Haute Couture de La Mode only certifies 14 designers who demonstrate the craft needed to get its credentials. This certifying body brings values to these goods, just as much as the hours of craft which go into them.

In my earlier analysis of brand I spoke of narrative. When it comes to craft, narrative is a necessity, albeit in a slightly different form. Where brands need narrative akin to storytelling, craft commands narrative akin to justification. Craft needs narrative proof that the process of creating an object is proprietary and hard to do.
When it comes to digital objects, what constitutes craft is still in the process of being figured out. In an episode of PROOF Derek Edwards speaks of founders needing to be ‘dungeon masters’ — and so explain the rules of the game (the new craft) to those around them.

Just as the Federation Haute Couture de La Mode not only certifies designers but educates the world on the level of talent required to become certified, when it comes to digital objects we too need to educate the wider world on what constitutes craft in a digital context.

Bringing this all together (the DRAUP dynamic)

Taking inspiration from those who have led before us, DRAUP has built itself out of these three pillars — brand, scarcity, and craft — placing them at the fore in their digitally native forms.

BRAND - DRAUP takes the form of both a platform and a label. In the words of Arnault this is because "If you control your factories, you control your quality. If you control your distribution, you control your image." Under the slogan “code is the couture” our in-house brand aims to be an exemplar of what digital fashion can be in a collectible context.
A key part of this story is conveyed through co-creating. We design each collection with a digital artist who sees fashion as an extension of their existing artistic practice. This allows us to integrate elements of their craft into our clothing, but equally to build on their history of their work as we tell our own story. Where our brand's narrative is around what constitutes craft, the wider DRAUP platform is an exploration of quality. Rather than optimizing for fashion as simply wearable it puts structures in place to reposition clothes as collectibles, explored within our virtual wardrobe and throughout the site.

SYNTHETIC SCARCITY - each item in our collection is sold as an NFT. Though NFTs have gotten a bad rep, we see them as an underlying standard for digital objects which are not nice to haves but necessities.

Derek Edwards puts it well, stating that the relevance of blockchain based digital objects is the way they “allow you to take a digital wrapper, wrap it around a digital object and prove that that’s the only digital object that has been created, or prove that a creator actually created that piece”.

As outlined in the argument above, being able to prove an object’s scarcity goes a long way in proving its worth, especially when it comes to fashion.

COMPREHENDED CRAFT - DRAUP is fashioned from couture’s two principles — craft and customization. In each collection, these two principles are brought squarely into the digital space.

When it comes to craft, where fashion houses have traditionally enlisted the most talented seamstresses, embroiderers and creative directors to help them bring their work to life, we enlist highly skilled digital artists to craft components of our collections.

And when it comes to customization, we use the algorithms in our atelier.

To personalize our pieces, we've bought the centuries old practice of generative art making — using autonomous systems, mixed with chance, to create art — into the context of fashion.

Though now most closely associated with computers, generative creative processes have been around for centuries, and simply consist of building systems that go on to automatically create art.

In the case of DRAUP, our team has coded systems which define the limits of our collection’s design through sets of qualities known as ‘traits’. At the time a piece is sold, these traits are randomly selected by the program to create aspects of our clothes that are both unique and unexpected. From color and cut, to print and material all these elements are defined by algorithms at point of purchase.

Bringing it back to the importance of both brand and personalisation, in a world of diminishing scarcity, generative systems find their perfect fit in high fashion. And with craft within their code here, generative systems produce garments which are both utterly unique, yet tied to the wider collection. Exactly like couture.

About our first collection:

Created in collaboration with Nicolas Sassoon, our inaugural collection, SEEN ON SCREEN, is a generative collection which brings our elements of brand, scarcity and craft together, prioritizing their translation into the digital.

Framed in the setting of our contemporary relationship with clothes — which are bought online to be worn on social media — SEEN ON SCREEN asks what clothes might become if they embraced the digital image as their new material.

Extending his practice into digital clothes for the first time, Sassoon’s pixel patterns find their perfect fit as the collection’s fabric focus. Generated at the time of purchase, each pixel pattern is completely unique, made from layers processed by our generative systems.

In each step of its creation, our first collection thinks beyond clothing in the physical. It works to take the three elements — brand, scarcity, and craft — fully into the digital space. And, ultimately, through creative use of the digital medium, it places the garment in a new framework, as a digital object, digital sculpture and digital art form.

The long road ahead:

Elevating a digital fashion brand will not be easy. Its value is challenged from every side. Many digital art collectors will continue to see fashion as a wearable good, and some fashion people will never be able to give up tangibility. Yet, I hope by accompanying education with a strong narrative and prestige products, DRAUP will be able to slowly shift social conceptions.

For those who are at least partially convinced by this argument I’d encourage you to check out DRAUP’s Mirror — which focuses on “code as the couture'' in far greater depth than anything I’ll ever write here.

And for those who have been bought in from the start, you can sign up here to participate in our first drop on Tuesday. Where 648 unique digital garments, all tied together with a shared algorithmic thread, will be sold on the DRAUP platform.

Finally, as the future of digital fashion is building in the open, if there were any arguments here that you found exciting, convincing, questionable or confusing, I’d love for you to DM me on Twitter and we can discuss.

#codeisthecouture

- Dani, This Outfit Does Not Exist

This Outfit Does Not Exist is a bi-weekly newsletter on the future of imaginary clothing. Love it? hate it? don’t understand it?