The rebirth of subculture
Welcome to the Sociology of Business. If you are not subscribed, join the community by subscribing below and joining the Sociology of Business Discord. You find my book, The Business of Aspiration on Amazon and you can find me on Instagram and Twitter. For those new here, in my last analysis, Entertainment x Shopping, I focused on Telfar to analyze a business model where brands turn communities into brand content and into the audience.
There are (at least) 3 models of demand that subvert the established economic logic. In the Bandwagon Model, demand increases as more people want the same thing. In the Snob Model, demand decreases when other people want the same thing. In the Veblen Model, where demand increases when the prices rises rather than falls. The Veblen Model ignores the fundamental law of demand, which observes that as the price of something increases, the substitution effect kicks in, and consumers turn to cheaper alternatives.
The Cortiez Model reverses this substitution effect. A Corteiz Good is something that gets more desirable if substitutable. In the Cortiez Model often exchange a more expensive, better-known good with lower cultural currency for a cheaper, lesser-known one with higher cultural currency. Cortiez Goods are the fuel of the collecting economy. We buy things knowing we will resell them on The Vestiaire Collective.
By turning commerce into culture, a Corteiz Good is an inversion of every known economic logic. The power of this inversion was on display a few weeks ago in London, where UK-based streetwear brand Corteiz Bolo staged “Da Great Bolo Exchange” event. Details of the event (time/place) were released only minutes before, via Corteiz Bolo’s private social media accounts and their website that requires a password to access. The ensuing frenzy resulted in £16,000-worth of exchanged goods, all donated to a charity for homeless.
The goods exchanged were 50 yet-unreleased CRTZ’s Bolo jackets that were directly swapped out of a parked van for North Face, Stussy, Moncler, Supreme, Canada Goose, Nike and Stone Island puffers. Priced at £250, CRTZ' jackets cost significantly less than the items they were exchanged for, even when they reappeared post-swap on the resale market (there, they retail for £500).
This would be the equivalent of swapping your Chanel for an item from an underground, if buzzy, bag company or your Gucci slippers for a pair of shoes from a brand largely unknown by the mainstream.
The Bolo Exchange worked, but to think of Cortiez Goods only as a marketing stunt would be a mistake. Cortiez Goods are a thorough reversal of the established brand power, and of its underlying economic logic.
As Bored Apes, Crypto Punks or Hermès Birkin show, exclusivity breeds desirability. As Telfar shows with his Bushwick Birkin, even the most accessible and reasonably price product achieves extreme desirability if it is hard to come by - and if it has to be waited for. Or, as one Cortiez fan put it on Reddit, “Starting to think this jacket is a myth.” Exclusivity and rarity are the fuel of desirability. Price is secondary.
The power of established brands is expressed through price, and through ability of brands to protect it in the competitive setting. The power of emerging brands is in their desirability strategy, and their ability to not compete on price. This strategy rests less on market positioning and more on savviness of brands to create cultural and social capital.
Corteiz Goods are the pillar of the modern aspirational economy. In addition to Bolo puffers, examples are NFTs, handcrafted items, vintage finds, recycled products, collectibles, Zero Bond membership. Their success has everything to do with “you had to be there” and “you have to know about it” social demand and very little with cost of their production (e.g. a Bored Ape). In that, they are comparable with other forms of cultural expression - a concert, a club, a party, a piece of art, a Burning Man experience. They are also comparable to memes and merch, where social shareablity and imitability of something is what makes it economically valuable.
On a more commercial level, any experimentation in retail’s business models and distribution channels is welcome. Cortiez Bolo opened up a new exchange market, where the most valuable thing of recognized global brands is measured in whether they can be exchanged for a Bolo. Like cryptocurrencies, Bolo is a unit of exchange.
It is a relevant concept as we move away from traditional to decentralized finance and from traditional organizations to DAOs, and towards the world where token-powered items can be exchanged directly and not via money. (Through Bolo exchange, the homeless got North Face and Nike.) At the moment, the most noteworthy aspect of Bolo exchange is that - just like with Telfar - one does need to spend a fortune to feel like a cultural participant. Quite the contrary: the culture that matters is economically cheap but socially exclusive. In another reversal, this culture excludes everyone who dominates the mainstream. It is rare and invisible to those who are not in the know, and this is why it’d cost you a Moncler to access it.