Taste Economics

Why are we paying for things?

Welcome to the Sociology of Business. If you are not subscribed, join the community by subscribing below and share it with everyone you think may find it useful. You can 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, titled The Web3 Playbook for Brands, I explored strategic brand and business growth scenarios that go beyond minting NFTs.

There’s a number of ways to assign value to something. On the most basic, economic, level, products perform and are priced based on their properties (materials, labor). Their value is a combination of this performance and price.

There’s also a number of ways to evaluate something, from looking only at an item’s price to knowing about its unique history and heritage. Some forms of evaluation are obvious, others are predicated on taste, knowledge, cultural savvy, or time and money investment, or belonging to a community.

In the framework that goes from products to services that accompany products to brand experiences and stories, I call out four different ways of creating, distributing and capturing value. The criteria range from purely economic to entirely intangible and symbolic, where the narrative that surrounds products is deemed more valuable than products themselves.

Ideally, a brand would have its products-service-experience-story figured out, as well as all four evaluative criteria mixed in their strategy. Success is in playing confidently across different value logics. Important to note here is that having multiple logics at play simultaneously yields multiple business and operational models: the social, cultural and economic side operates according to the logic of networks and increasing returns, and the economic side operates according to the logic of diminishing returns, cost reduction and economies of scale.

Products. In economic value layer, the value of products is in their price and performance. In the social layer, the value of products is their status signaling and signaling of belonging to a community or a social group. In the cultural layer, products are evaluated based on their uniqueness and/or associations with a celebrity or artistic vision. In the symbolic layer, there are products that transcend time and are firmly ingrained in culture - they are icons beyond any utility or monetary value.

Service. In the layer of economic value, there are services that provide pure utility, like AT&T and Amazon. In the social layer, these services offer a community component, like Netflix does with its taste communities, and Soho House does with its membership. In the cultural value layer, there is One Bond, Peloton, WeWork and Tracy Anderson Studio, which transcend communities and offer a further cult-like reverence and affinity. In the symbolic layer, we are in the domain of wellness religion with GOOP and innovation religion with SpaceX.

Experience. In the economic layer, experiences are straightforward and commodified: running on a treadmill or cooking and conducted via generic products. In the social layer, the experience is more brand-specific: there is a stable community around it with the shared values and interests. Examples: OpenSea, NBA TopShots, Supergucci. In the cultural layer, the experience increases in rarity and uniqueness and cultural impact. In the symbolic layer, experiences are one-of-a-kind, governed by ultra-rare and highly coveted objects that are synonymous for insider status. Examples: Crypto Punks, BOYC Bar, rare sneakers.

Story. In the economic layer, stories are information - instruction manuals and user guides. In the social layer, stories are content, either brand-produced or influencer-produced. In the cultural layer, stories become fan fiction - the original brand story is built upon, enacted, and changed through community interaction. Examples: Telfar TV, Fortnite, Roblox. In the symbolic layer, stories assume the strength of myths and sagas, with a messianic hero at the center. Examples: Steve Jobs, Coco Chanel, Ye, Virgil Abloh.

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I am currently in Copenhagen for the Fashion Week to participate in CPW talk series. The topic is “the role of talent in strengthening the fashion ecosystem.” You can watch in on CPW website on Thursday, February 3rd at 10:30am ET / 4:30pm CET / 7:30am PT.