Weekly news and stories covering everything from the Fashion System, Investment, and AI to WEB3 and Crypto that truly matter in Metaverse Fashion
MFC AND PHYGITAL MINING: PROMOTING AND SPONSORING THE BEST FASHION DESIGNERS | [METAPHYSICS]
Alexis Beck for Metaverse Fashion MAGAZINE
🚀 We are building the fashion of the future, and confidently assert that in the coming years, no truly fashionable item will exist without its "continuation" in the metaverse—whether in AR, VR, XR, or gaming. Conversely, physical world items will evolve into extensions of experiences, collectibles, NFTs, and Web3 art objects.
👠 This technological connection is the foundation of a new fashion economy: buying a fashion item is no longer just an expense; it becomes an investment in a digital asset in the truest sense. Designers and creators essentially transform into startup entrepreneurs. MFC Fashion Week functions as a "demo day," where creators, artists, and designers meet investors, early adopters, and their community.
🤝 MFC proudly announces its partnership with PhygitalMining, a leader in embedding NFC technology into physical garments. PhygitalMining offers technology that enables the creation of a digital twin of your physical item in the form of an NFT. Now, your fashion item not only serves an aesthetic purpose but also becomes a crypto-mining tool, allowing you to earn cryptocurrency by scanning the NFC chip embedded in the garment. The entire supply is equally distributed across all designer collections partnered with PhygitalMining.
💡 PhygitalMining provides a unique opportunity for Metaverse fashion enthusiasts who believe that the future of fashion lies in the digitalization and tokenization of physical collections. It empowers designers to create their first phygital collection and supports them on their journey into Metaverse fashion. Phygital mining launchpad will promote and sponsor best contest creators
💰 To promote metaverse fashion, MFC is launching a contest for the best design in this realm. The top 10 designers will receive investments of up to $30,000 each for the production, promotion, and distribution of their collections. The winning designs will be showcased at MFC Fashion Week in November 2024.
DIGITAL FASHION WEEK IN SEARCH OF "CONSENSUS" | [FASHION SYSTEM]
Alexis Beck for Metaverse Fashion MAGAZINE
💡 On September 13th, amidst major Fashion Weeks occurring worldwide, London Digital Fashion Week took place at the Epic Games Innovation Lab. This event marked an extension of the New York edition of Digital Fashion Week, which had occurred on September 7th at the Westfield World Trade Center. As these events coincide with the Big4 Fashion Weeks, media coverage of Digital Fashion Week was largely overshadowed by news of London Fashion Week, leaving no significant media presence for the Digital one.
🎮 Luckily for enthusiasts of metaverse fashion, both events were supported by PixelCanvas's Metaverse, an immersive platform that allows anyone to access the live event through their devices. While we await official attendance data from the Digital Fashion Week team, it’s noteworthy that virtual attendance did not exceed 15 participants simultaneously on the Metaverse platform.
🎯 The same David Cash opened both the New York and London events, stating that the panel discussions aimed to “find consensus” on the intersection of digital technology and fashion within the industry. And it's still the same David Cash who has been involved with dubious Metaverse Fashion Week by Decentraland and UNXD in 2022-2023.
📢 Despite featuring many of the same speakers as last year, this year's Digital Fashion Weeks shifted their focus primarily to AI, departing from previous years that emphasized the Metaverse—a term that has rapidly lost its appeal this year. Speakers preferred discussing "Immersive Experiences" and "VR" rather than the Metaverse. At London Digital Fashion Week, during the panel titled “Can AI Help Us Buy the Right Clothes?”, EDA AGUILAR from Phygicode and Alexander Berend, CEO of Anthropics, explored how AI can help reduce returns and waste by providing a more personalized shopping experience based on customer preferences and previous purchase data.
📉 In addition to shortening the New York event to a one-day show instead of the usual two, many prominent figures were notably absent from this year’s conferences. The number of panel discussions and participants decreased significantly, with many New York participants also speaking in London just one week later. The New York runway show featured only three fashion designers: Loraine, K16, and Vivia Ferragamo. The London fashion show included Steven Vineburg and Rakee Chen, in collaboration with Louise Laing’s Phygital Twin.
9 THINGS YOU NEED TO KNOW ABOUT OPENAI’S POWERFUL NEW AI MODEL O1 | [SINGULAIRTY]
Jeremy Kahn for Fortune
🔥 OpenAI has announced a much-anticipated new family of AI models that can solve difficult reasoning and math questions better than previous large language models. On Thursday, it launched a “preview” version of two of these models, called o1-preview and o1-mini, to some of its paying users.
📈 AI with improved reasoning and math skills could help chemists, physicists, and engineers work out answers to complex problems, which might help them create new products. It could also help investors calculate options trading strategies or financial planners work through how to construct specific portfolios that better trade off risks and rewards.
🚀 Better reasoning, planning, and problem solving skills are also essential as tech companies try to build AI agents that can perform sophisticated tasks, such as writing entire computer programs or finding information on the web, importing it into a spreadsheet, and then performing analysis of that data and writing a report summarizing its findings.
💥 OpenAI published impressive benchmark results for the o1 models. On questions from the AIME mathematics competition, which is geared towards challenging high school students, o1 got 83.3% of the questions correct compared to just 13.4% for GPT-4o. On a different assessment, o1 answered 78% of PhD-level science questions accurately, compared to 56.1% for GPT-4o and 69.7% for human experts
THE WAY WE INTERACT WITH AI CHATBOTS IS CHANGING | [SINGULAIRTY]
Olivia Solon and Seth Fiegerman for Bloomberg
🤖 When OpenAI launched its ChatGPT chatbot in 2022, it looked as if a new generation of artificial intelligence tools was about to transform every corner of the economy and people’s lives. Fast-forward to 2024 and AI features have been added to countless services, but the impact has arguably not been quite so dramatic.
📉 AI has not created vibrant new professions. Neither has it yet laid waste to entire industries. A growing number of high-profile and well-funded startups have bowed out of the race to develop cutting-edge AI models. Much of the newsflow around the new generation of AI has focused on its downsides — a tendency to perpetuate harmful biases or amplify misinformation.
🦄 In September, Microsoft-backed OpenAI began rolling out an updated model that the company said can engage in human-like reasoning to work through more complex questions from users, including fielding complicated math and coding problems. Alphabet’s Google and Anthropic are also working on similar capabilities for their products. OpenAI Chief Executive Officer Sam Altman called it the “beginning of a new paradigm.”
🔬 The concept of reasoning is difficult to define and measure, but the goal for the tech companies is clear: They’re out to prove that AI tools can act as sophisticated “co-pilots” and “agents,” capable of helping people with personal and professional tasks. In doing so, they hope to shore up AI’s long-term potential.
💡 Generative AI’s ability to quickly acquire new skills and perform them at high speed means it could help with all kinds of work now done by humans, such as drafting legal contracts or debugging software. Fortune 500 companies are now using enterprise versions of chatbots from OpenAI and its rivals to summarize documents, speed up coding tasks and draft emails. Goldman Sachs Group Inc. said generative AI could do as much as a quarter of the work currently carried out by people. Analysts at UBS Group AG see the market for the technology easily exceeding $1 trillion.
💭 For much of the past two years, ChatGPT users have grown accustomed to having the chatbot spit out near-instantaneous responses — some accurate, some not so much — to a wide range of prompts. But OpenAI’s new 01 model will behave somewhat differently. Before responding, the new software will pause for a matter of seconds while, behind the scenes and invisible to the user, it considers a number of related prompts and then summarizes what appears to be the best response. This technique is sometimes referred to as “chain of thought” prompting.
OVERCOMING VIRTUAL CHALLENGES: GAMIFICATION'S IMPACT ON CULTURAL EVENTS IN THE METAVERSE | [METAPHYSICS]
Devdiscourse
📊 A study conducted by researchers from the University of Zaragoza, investigates the complexities and challenges of hosting cultural events in the metaverse, with a particular focus on the role of gamification in enhancing user engagement. Published in the International Journal of Information Management, this study aims to empirically analyze the user experience during a cultural event held in the metaverse, a concept that has gained traction due to the pandemic-driven shift towards virtual experiences.
🎮 The metaverse, widely regarded as a technological revolution, offers a highly immersive and interactive platform that has the potential to replicate and extend in-person cultural events. This virtual space provides opportunities to reach wider audiences and engage with communities beyond physical boundaries, allowing individuals to experience new cultures from the comfort of their homes. However, despite its potential, the metaverse presents several challenges, particularly in conveying the authenticity of cultural events and maintaining user attention in an environment filled with distractions.
🤖 The study began with an exploratory phase involving three focus groups. These groups were tasked with navigating a cultural event held in the metaverse, specifically a well-known traditional Spanish event, to assess their experiences and perceptions. Participants often reported feeling lost and confused in the virtual environment, as they struggled to focus on the key elements of the event. This confusion was compounded by the lack of clear instructions and guidance within the metaverse, which resulted in negative emotions such as frustration and anxiety. Many participants expressed that they were unsure of what to do or where to go within the virtual space, leading to a sense of disconnection from the event.
🏆 Despite these challenges, the focus groups highlighted the potential of gamification as a tool to improve the virtual event experience. Gamification, which involves the use of game-like elements such as challenges, rewards, and interactive activities, helped participants navigate the metaverse more effectively and provided a sense of purpose within the virtual environment. By engaging with these gamified elements, users were able to focus their attention on the event and feel more connected to the experience.
INSIDE LUXURY'S ITALIAN SWEATSHOPS PROBLEM | [FASHION SYSTEM]
Sarah Kent for The Business of Fashion
👩🏭 A 40 minute drive from the luxury flagships on Via Monte Napoleone, Milan’s handsome boulevards give way to strip malls and industrial parks. Here, in a nondescript building with bars covering the windows in the suburban municipality of Pieve Emanuele, workers allegedly toiled long hours under exploitative conditions to package bags for Armani, according to an ongoing investigation by the Milan Public Prosecutor’s Office that has linked luxury brands to sweatshop labour.
💭 The brands named in the probe have painted the incidents as an aberration, a glitch in the matrix of careful controls they say they have put in place to ensure operations they contract out live up to the expectations of high-quality, ethical craftsmanship that come with their high price points.
📢 “We had no idea about this situation,” Jean Jacques Guiony, chief financial officer of Dior-owner LVMH, told analysts on an earnings call in July. “We thought we were doing quite a lot already. Apparently, it’s not enough,” he added, referring to the company’s efforts to police its supply chain. Dior disputes some elements of the case.
👨⚖️ Prosecutors say the issues are systemic and entrenched: they are not a bug, but a feature in a luxury system designed to prioritise maximising profits over worker welfare. “In the course of the investigation, an illegal practice has emerged so entrenched and proven [that it could] be considered part of a broader business policy exclusively aimed at increasing profit,” Milan’s public prosecutor said in court documents reviewed by The Business of Fashion.
♻ Big luxury brands trade on a carefully constructed marketing image, underpinned by artful references to Europe’s history of artisanal craft. This romanticised picture helps to project an unassailable confidence in the industry’s standards so strong that LVMH head of image and environment, Antoine Arnault, has claimed that luxury is “sustainable by nature.”
AI VIDEO STARTUP RUNWAY SCORES A FIRST-OF-ITS-KIND DEAL WITH JOHN WICK STUDIO LIONSGATE | [SINGULAIRTY]
David Meyer for Fortune
🤝 The AI video startup Runway has struck a groundbreaking deal with the film and TV giant Lionsgate. Under the arrangement announced Wednesday, Runway will use Lionsgate’s vast catalog of content—including classics like the Twilight, John Wick and Hunger Games movies—to train an AI model that Lionsgate’s own filmmakers and creatives will then use as a tool in upcoming productions.
💭 Lionsgate will initially use the model for storyboarding, before eventually moving onto things like generating explosion effects, once the model has been sufficiently fine-tuned. “Several of our filmmakers are already excited about its potential applications to their pre-production and post-production process,” Lionsgate vice chair Mike Burns said in a statement, adding that it would save the studio money on production costs.
💥 Its most high-profile rival is probably OpenAI’s Sora, which is more of a straight text-to-video tool. But Runway’s more analogous peers include Metaphysic—whose AI tools have recently been used to recreate familiar faces in franchise entries like Alien: Romulus and Mad Max: Furiosa—as well as Odyssey and Flawless. Runway declined to discuss financial terms of the deal, but CEO Cristóbal Valenzuela told Fortune that the Lionsgate deal was “the first time any studio of this caliber has worked with a company to create different models.”
⚖ Alongside other AI imagery companies such as Stability AI and Midjourney, Runway has been sued by artists over copyright infringement—a judge last month refused to throw out the suit—and a 404 Media report in July accused Runway of training its models on popular YouTube videos without permission. Valenzuela, who claimed that “a lot of the conversations we’ve been having around use cases and implications and challenges are somehow imaginary,” hopes the kind of deal that was revealed on Wednesday will help to change the narrative around AI in art.
WHAT ROLE WILL ARTIFICIAL INTELLIGENCE PLAY FOR INTERNATIONAL RETAILERS? | [FASHION SYSTEM]
Matthieu Guinebault for The Fashion Network
📊 The majority of international retailers—79%—agree that artificial intelligence will fundamentally change the face of commerce in the years to come. However, despite its perceived potential, 54% of them have not yet introduced AI into their systems, according to a Havas survey conducted with 500 retailers in 21 countries*, revealed on September 17 during Paris Retail Week.
🤖 When asked about their investment strategies in the current challenging economic environment, 38% of respondents pointed to increased investment in digital transformation as their top priority. This was followed by the development of innovative products, mentioned by 30%, with 28% focusing more on artificial intelligence. Meanwhile, investment in the metaverse, NFTs, or augmented and virtual reality dropped to 15%, signalling the end of a hype cycle.
💵 Among retailers using AI, the primary benefits observed include improved operational efficiency (45%), cost reduction (38%), and enhanced product information (31%). To a lesser extent, AI has also contributed to increased sales and conversions (29%), improved customer satisfaction (28%), more informed decision-making (21%), and the development of new products or services (14%).
🗣 However, AI also presents challenges. Chief among them is the high cost of AI solutions and the lack of in-house expertise, cited by 36% and 35% of respondents, respectively. Other concerns include the difficulty of integrating existing AI systems (27%) and the lack of quality data to train AI models (16%). “This is where all the work done on data will have significant consequences,” said Vincent Mayet, founder and CEO of Havas Commerce. “Those who have lagged behind in managing and leveraging data will struggle the most to develop AI, simply because they lack the usable data necessary to power it.”
WHAT THE FED'S BIG RATE CUT MEANS FOR FASHION | [FASHION SYSTEM]
Joan Kennedy for The Business of Fashion
💰 On Wednesday, the US Federal Reserve made its first interest rate cut in four years, effectively declaring victory in its effort to bring down inflation that set in after the pandemic. Officials voted to lower the rate, used as a benchmark to set borrowing costs throughout the economy, by half a percentage point, to a range of 4.75 percent to 5 percent. That’s higher than the quarter point many economists expected.
👾 The hope is that by lowering rates, the Fed will officially usher in a so-called soft landing for the US economy, where inflation is brought down to target levels without triggering a recession. In August, consumer prices rose at their slowest pace since February 2021. But hiring has slowed dramatically, raising recession fears and contributing to the decision for a more aggressive cut.
👔 Much like their customers, many fashion brands and retailers have borrowed heavily and will welcome the chance to refinance their debt at lower interest rates. Among the large fashion companies analysts point to as carrying relatively higher levels of debt are Macy’s and Nordstrom, as well as Capri and VF Corp. The latter recently sold Supreme and is exploring the sale of other brands in part to reduce its debt load.
📈 Fashion start-ups and established brands looking for buyers may start to see more interest. When rates are high, investors tend to park more of their money in cash and cash-like investments, such as treasury bills and money-market funds. Each rate cut will reduce the returns on those holdings, and encourage investors to seek out riskier investments – consumer brands among them.
Weekly news and stories covering everything from the Fashion System, Investment, and AI to WEB3 and Crypto that truly matter in Metaverse Fashion
MFC AND PHYGITAL MINING: PROMOTING AND SPONSORING THE BEST FASHION DESIGNERS | [METAPHYSICS]
Alexis Beck for Metaverse Fashion MAGAZINE
🚀 We are building the fashion of the future, and confidently assert that in the coming years, no truly fashionable item will exist without its "continuation" in the metaverse—whether in AR, VR, XR, or gaming. Conversely, physical world items will evolve into extensions of experiences, collectibles, NFTs, and Web3 art objects.
👠 This technological connection is the foundation of a new fashion economy: buying a fashion item is no longer just an expense; it becomes an investment in a digital asset in the truest sense. Designers and creators essentially transform into startup entrepreneurs. MFC Fashion Week functions as a "demo day," where creators, artists, and designers meet investors, early adopters, and their community.
🤝 MFC proudly announces its partnership with PhygitalMining, a leader in embedding NFC technology into physical garments. PhygitalMining offers technology that enables the creation of a digital twin of your physical item in the form of an NFT. Now, your fashion item not only serves an aesthetic purpose but also becomes a crypto-mining tool, allowing you to earn cryptocurrency by scanning the NFC chip embedded in the garment. The entire supply is equally distributed across all designer collections partnered with PhygitalMining.
💡 PhygitalMining provides a unique opportunity for Metaverse fashion enthusiasts who believe that the future of fashion lies in the digitalization and tokenization of physical collections. It empowers designers to create their first phygital collection and supports them on their journey into Metaverse fashion. Phygital mining launchpad will promote and sponsor best contest creators
💰 To promote metaverse fashion, MFC is launching a contest for the best design in this realm. The top 10 designers will receive investments of up to $30,000 each for the production, promotion, and distribution of their collections. The winning designs will be showcased at MFC Fashion Week in November 2024.
DIGITAL FASHION WEEK IN SEARCH OF "CONSENSUS" | [FASHION SYSTEM]
Alexis Beck for Metaverse Fashion MAGAZINE
💡 On September 13th, amidst major Fashion Weeks occurring worldwide, London Digital Fashion Week took place at the Epic Games Innovation Lab. This event marked an extension of the New York edition of Digital Fashion Week, which had occurred on September 7th at the Westfield World Trade Center. As these events coincide with the Big4 Fashion Weeks, media coverage of Digital Fashion Week was largely overshadowed by news of London Fashion Week, leaving no significant media presence for the Digital one.
🎮 Luckily for enthusiasts of metaverse fashion, both events were supported by PixelCanvas's Metaverse, an immersive platform that allows anyone to access the live event through their devices. While we await official attendance data from the Digital Fashion Week team, it’s noteworthy that virtual attendance did not exceed 15 participants simultaneously on the Metaverse platform.
🎯 The same David Cash opened both the New York and London events, stating that the panel discussions aimed to “find consensus” on the intersection of digital technology and fashion within the industry. And it's still the same David Cash who has been involved with dubious Metaverse Fashion Week by Decentraland and UNXD in 2022-2023.
📢 Despite featuring many of the same speakers as last year, this year's Digital Fashion Weeks shifted their focus primarily to AI, departing from previous years that emphasized the Metaverse—a term that has rapidly lost its appeal this year. Speakers preferred discussing "Immersive Experiences" and "VR" rather than the Metaverse. At London Digital Fashion Week, during the panel titled “Can AI Help Us Buy the Right Clothes?”, EDA AGUILAR from Phygicode and Alexander Berend, CEO of Anthropics, explored how AI can help reduce returns and waste by providing a more personalized shopping experience based on customer preferences and previous purchase data.
📉 In addition to shortening the New York event to a one-day show instead of the usual two, many prominent figures were notably absent from this year’s conferences. The number of panel discussions and participants decreased significantly, with many New York participants also speaking in London just one week later. The New York runway show featured only three fashion designers: Loraine, K16, and Vivia Ferragamo. The London fashion show included Steven Vineburg and Rakee Chen, in collaboration with Louise Laing’s Phygital Twin.
9 THINGS YOU NEED TO KNOW ABOUT OPENAI’S POWERFUL NEW AI MODEL O1 | [SINGULAIRTY]
Jeremy Kahn for Fortune
🔥 OpenAI has announced a much-anticipated new family of AI models that can solve difficult reasoning and math questions better than previous large language models. On Thursday, it launched a “preview” version of two of these models, called o1-preview and o1-mini, to some of its paying users.
📈 AI with improved reasoning and math skills could help chemists, physicists, and engineers work out answers to complex problems, which might help them create new products. It could also help investors calculate options trading strategies or financial planners work through how to construct specific portfolios that better trade off risks and rewards.
🚀 Better reasoning, planning, and problem solving skills are also essential as tech companies try to build AI agents that can perform sophisticated tasks, such as writing entire computer programs or finding information on the web, importing it into a spreadsheet, and then performing analysis of that data and writing a report summarizing its findings.
💥 OpenAI published impressive benchmark results for the o1 models. On questions from the AIME mathematics competition, which is geared towards challenging high school students, o1 got 83.3% of the questions correct compared to just 13.4% for GPT-4o. On a different assessment, o1 answered 78% of PhD-level science questions accurately, compared to 56.1% for GPT-4o and 69.7% for human experts
THE WAY WE INTERACT WITH AI CHATBOTS IS CHANGING | [SINGULAIRTY]
Olivia Solon and Seth Fiegerman for Bloomberg
🤖 When OpenAI launched its ChatGPT chatbot in 2022, it looked as if a new generation of artificial intelligence tools was about to transform every corner of the economy and people’s lives. Fast-forward to 2024 and AI features have been added to countless services, but the impact has arguably not been quite so dramatic.
📉 AI has not created vibrant new professions. Neither has it yet laid waste to entire industries. A growing number of high-profile and well-funded startups have bowed out of the race to develop cutting-edge AI models. Much of the newsflow around the new generation of AI has focused on its downsides — a tendency to perpetuate harmful biases or amplify misinformation.
🦄 In September, Microsoft-backed OpenAI began rolling out an updated model that the company said can engage in human-like reasoning to work through more complex questions from users, including fielding complicated math and coding problems. Alphabet’s Google and Anthropic are also working on similar capabilities for their products. OpenAI Chief Executive Officer Sam Altman called it the “beginning of a new paradigm.”
🔬 The concept of reasoning is difficult to define and measure, but the goal for the tech companies is clear: They’re out to prove that AI tools can act as sophisticated “co-pilots” and “agents,” capable of helping people with personal and professional tasks. In doing so, they hope to shore up AI’s long-term potential.
💡 Generative AI’s ability to quickly acquire new skills and perform them at high speed means it could help with all kinds of work now done by humans, such as drafting legal contracts or debugging software. Fortune 500 companies are now using enterprise versions of chatbots from OpenAI and its rivals to summarize documents, speed up coding tasks and draft emails. Goldman Sachs Group Inc. said generative AI could do as much as a quarter of the work currently carried out by people. Analysts at UBS Group AG see the market for the technology easily exceeding $1 trillion.
💭 For much of the past two years, ChatGPT users have grown accustomed to having the chatbot spit out near-instantaneous responses — some accurate, some not so much — to a wide range of prompts. But OpenAI’s new 01 model will behave somewhat differently. Before responding, the new software will pause for a matter of seconds while, behind the scenes and invisible to the user, it considers a number of related prompts and then summarizes what appears to be the best response. This technique is sometimes referred to as “chain of thought” prompting.
OVERCOMING VIRTUAL CHALLENGES: GAMIFICATION'S IMPACT ON CULTURAL EVENTS IN THE METAVERSE | [METAPHYSICS]
Devdiscourse
📊 A study conducted by researchers from the University of Zaragoza, investigates the complexities and challenges of hosting cultural events in the metaverse, with a particular focus on the role of gamification in enhancing user engagement. Published in the International Journal of Information Management, this study aims to empirically analyze the user experience during a cultural event held in the metaverse, a concept that has gained traction due to the pandemic-driven shift towards virtual experiences.
🎮 The metaverse, widely regarded as a technological revolution, offers a highly immersive and interactive platform that has the potential to replicate and extend in-person cultural events. This virtual space provides opportunities to reach wider audiences and engage with communities beyond physical boundaries, allowing individuals to experience new cultures from the comfort of their homes. However, despite its potential, the metaverse presents several challenges, particularly in conveying the authenticity of cultural events and maintaining user attention in an environment filled with distractions.
🤖 The study began with an exploratory phase involving three focus groups. These groups were tasked with navigating a cultural event held in the metaverse, specifically a well-known traditional Spanish event, to assess their experiences and perceptions. Participants often reported feeling lost and confused in the virtual environment, as they struggled to focus on the key elements of the event. This confusion was compounded by the lack of clear instructions and guidance within the metaverse, which resulted in negative emotions such as frustration and anxiety. Many participants expressed that they were unsure of what to do or where to go within the virtual space, leading to a sense of disconnection from the event.
🏆 Despite these challenges, the focus groups highlighted the potential of gamification as a tool to improve the virtual event experience. Gamification, which involves the use of game-like elements such as challenges, rewards, and interactive activities, helped participants navigate the metaverse more effectively and provided a sense of purpose within the virtual environment. By engaging with these gamified elements, users were able to focus their attention on the event and feel more connected to the experience.
INSIDE LUXURY'S ITALIAN SWEATSHOPS PROBLEM | [FASHION SYSTEM]
Sarah Kent for The Business of Fashion
👩🏭 A 40 minute drive from the luxury flagships on Via Monte Napoleone, Milan’s handsome boulevards give way to strip malls and industrial parks. Here, in a nondescript building with bars covering the windows in the suburban municipality of Pieve Emanuele, workers allegedly toiled long hours under exploitative conditions to package bags for Armani, according to an ongoing investigation by the Milan Public Prosecutor’s Office that has linked luxury brands to sweatshop labour.
💭 The brands named in the probe have painted the incidents as an aberration, a glitch in the matrix of careful controls they say they have put in place to ensure operations they contract out live up to the expectations of high-quality, ethical craftsmanship that come with their high price points.
📢 “We had no idea about this situation,” Jean Jacques Guiony, chief financial officer of Dior-owner LVMH, told analysts on an earnings call in July. “We thought we were doing quite a lot already. Apparently, it’s not enough,” he added, referring to the company’s efforts to police its supply chain. Dior disputes some elements of the case.
👨⚖️ Prosecutors say the issues are systemic and entrenched: they are not a bug, but a feature in a luxury system designed to prioritise maximising profits over worker welfare. “In the course of the investigation, an illegal practice has emerged so entrenched and proven [that it could] be considered part of a broader business policy exclusively aimed at increasing profit,” Milan’s public prosecutor said in court documents reviewed by The Business of Fashion.
♻ Big luxury brands trade on a carefully constructed marketing image, underpinned by artful references to Europe’s history of artisanal craft. This romanticised picture helps to project an unassailable confidence in the industry’s standards so strong that LVMH head of image and environment, Antoine Arnault, has claimed that luxury is “sustainable by nature.”
AI VIDEO STARTUP RUNWAY SCORES A FIRST-OF-ITS-KIND DEAL WITH JOHN WICK STUDIO LIONSGATE | [SINGULAIRTY]
David Meyer for Fortune
🤝 The AI video startup Runway has struck a groundbreaking deal with the film and TV giant Lionsgate. Under the arrangement announced Wednesday, Runway will use Lionsgate’s vast catalog of content—including classics like the Twilight, John Wick and Hunger Games movies—to train an AI model that Lionsgate’s own filmmakers and creatives will then use as a tool in upcoming productions.
💭 Lionsgate will initially use the model for storyboarding, before eventually moving onto things like generating explosion effects, once the model has been sufficiently fine-tuned. “Several of our filmmakers are already excited about its potential applications to their pre-production and post-production process,” Lionsgate vice chair Mike Burns said in a statement, adding that it would save the studio money on production costs.
💥 Its most high-profile rival is probably OpenAI’s Sora, which is more of a straight text-to-video tool. But Runway’s more analogous peers include Metaphysic—whose AI tools have recently been used to recreate familiar faces in franchise entries like Alien: Romulus and Mad Max: Furiosa—as well as Odyssey and Flawless. Runway declined to discuss financial terms of the deal, but CEO Cristóbal Valenzuela told Fortune that the Lionsgate deal was “the first time any studio of this caliber has worked with a company to create different models.”
⚖ Alongside other AI imagery companies such as Stability AI and Midjourney, Runway has been sued by artists over copyright infringement—a judge last month refused to throw out the suit—and a 404 Media report in July accused Runway of training its models on popular YouTube videos without permission. Valenzuela, who claimed that “a lot of the conversations we’ve been having around use cases and implications and challenges are somehow imaginary,” hopes the kind of deal that was revealed on Wednesday will help to change the narrative around AI in art.
WHAT ROLE WILL ARTIFICIAL INTELLIGENCE PLAY FOR INTERNATIONAL RETAILERS? | [FASHION SYSTEM]
Matthieu Guinebault for The Fashion Network
📊 The majority of international retailers—79%—agree that artificial intelligence will fundamentally change the face of commerce in the years to come. However, despite its perceived potential, 54% of them have not yet introduced AI into their systems, according to a Havas survey conducted with 500 retailers in 21 countries*, revealed on September 17 during Paris Retail Week.
🤖 When asked about their investment strategies in the current challenging economic environment, 38% of respondents pointed to increased investment in digital transformation as their top priority. This was followed by the development of innovative products, mentioned by 30%, with 28% focusing more on artificial intelligence. Meanwhile, investment in the metaverse, NFTs, or augmented and virtual reality dropped to 15%, signalling the end of a hype cycle.
💵 Among retailers using AI, the primary benefits observed include improved operational efficiency (45%), cost reduction (38%), and enhanced product information (31%). To a lesser extent, AI has also contributed to increased sales and conversions (29%), improved customer satisfaction (28%), more informed decision-making (21%), and the development of new products or services (14%).
🗣 However, AI also presents challenges. Chief among them is the high cost of AI solutions and the lack of in-house expertise, cited by 36% and 35% of respondents, respectively. Other concerns include the difficulty of integrating existing AI systems (27%) and the lack of quality data to train AI models (16%). “This is where all the work done on data will have significant consequences,” said Vincent Mayet, founder and CEO of Havas Commerce. “Those who have lagged behind in managing and leveraging data will struggle the most to develop AI, simply because they lack the usable data necessary to power it.”
WHAT THE FED'S BIG RATE CUT MEANS FOR FASHION | [FASHION SYSTEM]
Joan Kennedy for The Business of Fashion
💰 On Wednesday, the US Federal Reserve made its first interest rate cut in four years, effectively declaring victory in its effort to bring down inflation that set in after the pandemic. Officials voted to lower the rate, used as a benchmark to set borrowing costs throughout the economy, by half a percentage point, to a range of 4.75 percent to 5 percent. That’s higher than the quarter point many economists expected.
👾 The hope is that by lowering rates, the Fed will officially usher in a so-called soft landing for the US economy, where inflation is brought down to target levels without triggering a recession. In August, consumer prices rose at their slowest pace since February 2021. But hiring has slowed dramatically, raising recession fears and contributing to the decision for a more aggressive cut.
👔 Much like their customers, many fashion brands and retailers have borrowed heavily and will welcome the chance to refinance their debt at lower interest rates. Among the large fashion companies analysts point to as carrying relatively higher levels of debt are Macy’s and Nordstrom, as well as Capri and VF Corp. The latter recently sold Supreme and is exploring the sale of other brands in part to reduce its debt load.
📈 Fashion start-ups and established brands looking for buyers may start to see more interest. When rates are high, investors tend to park more of their money in cash and cash-like investments, such as treasury bills and money-market funds. Each rate cut will reduce the returns on those holdings, and encourage investors to seek out riskier investments – consumer brands among them.
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