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Walmart is acquiring a lot more than Bonobos

by Isabelle Styslinger on June 23, 2017

Walmart is acquiring Bonobos, the menswear site, for $310 million. In honor of the 30th anniversary of the GIF, let me use one to communicate my reaction to this new partnership:

And that’s coming from me – someone who loves all things retail, particularly when they involve dapper men in suits.

My underwhelming reaction is due to the fact that this is one of many online retail acquisitions Walmart has shepherded over the last few months. For starters, it acquired ModCloth in March, as well as Hayneedle and ShoeBuy, and in February it acquired Moosejaw (an outdoor apparel company – not a dental insurance agency for moose). It also acquired Jet.com for $3 billion in 2016.

Although this acquisition may not come as a surprise, Walmart’s transition towards online retail does remain a strategic one. As DisCo has previously noted, retail closings are expected to break a 20-year record in 2017, topping 6,000 unit closings. E-Commerce, conversely, is surging, with sales totaling almost $400 billion in 2016. Though this is a small percentage of the total retail revenue, it reflects a broader movement that doesn’t seem to be wavering.

And yet, we are not seeing companies adopt digital platforms in lieu of traditional storefronts. Rather, a hybrid model, that offers the immediacy of brick-and-mortar with the efficiency of e-Commerce, is all the rage.

What Do WhatsApp and AIM Have in Common?

by John Howes, Jr. on June 22, 2017

This is part of a series of posts on the impact of Rich Interaction Applications (RIAs).

Rich interaction applications (RIAs) are constantly evolving, employing new features and functionalities, and new ones are popping up everyday. For example, DisCo recently explained how Zelle, a new person-to-person (P2P) payments network, could challenge Venmo, which has been a P2P leader, processing $6.8 billion in payments in Q1 2017 (up 114% from 2016). That post pointed out a key difference though:

In addition to its obviously large user base, Venmo may also have something Zelle (currently) does not: a social component. Dan Schulman, the CEO of PayPal (which acquired Venmo in 2013), regards this social component as crucial to Venmo’s success.

Venmo has been able to distinguish itself because it facilitates interactions between users. If I want to pay back a friend for pizza or beer, Venmo lets me comment on my transaction by entering text or emojis like ‘🍕🍺💸 ’ explaining what the transaction was for. Venmo has focused on making a payment transferring money from one account to another more of a social experience.

Venmo and other RIAs offer lots of different functions, and they keep adding new ones. WIK recently studied 139 different RIAs and found that RIAs feature an average of nine functions with WeChat providing the most — 23. They provide a wide range of opportunities for interaction.

The Rise of Streaming in 2017

by Ali Sternburg on June 21, 2017

Emerging artists continue to use the Internet and music streaming services to launch and sustain their careers.

According to a recent article in the Washington Post, in November 2014, country singer Luke Combs co-wrote the hit song Hurricane with two friends. He recorded and mastered the song at his own expense (the mastering cost $200) in May 2015. He then uploaded it to iTunes via TuneCore, a digital distribution service that allows anyone to sell or license music on digital media stores and streaming services. Within a week, Hurricane sold 15,000 downloads, and as of this week, it has sold over 487,000 copies. It was also the top playing song on terrestrial radio for two weeks in May.

The success of Hurricane led to an independent label deal, then a contract with Columbia Nashville. Combs attributes the success of Hurricane in part to his building a small fan base while playing shows as a college student in North Carolina. The fan base provided an initial market for Hurricane, which then grew virally.

But a traditional label deal isn’t always the goal for artists who make a name for themselves online — nor is selling music. Take for example Chicago native Chance the Rapper (born Chancelor Johnathan Bennett), a favorite of former President Obama, who distributes his music for free over the Internet. This year Chance became the first artist to win a Grammy without selling physical copies of his music, as he only releases it via streaming services. This was possible due to a change in Grammy rules last year to include albums released on “applicable streaming services.”

How Can the Fashion Industry Compete with 3D Printing?

by Isabelle Styslinger on June 20, 2017

In a society where individuality is increasingly lauded and (not unrelatedly) personalized products are more coveted than ever, the pervasiveness of 3D printing could disrupt the very industries currently leveraging this technology for personalization.

Although the definition of “personalization” continues to evolve, the term has typically “signified exclusivity,” and is used as a “status symbol, a way of making consumers feel special, enabling them to stand out from the crowd.”

Consumers’ desire for this exclusivity is well documented and has only continued to rise in recent years. The Deloitte Consumer Review found that, “in some categories more than 50 percent of consumers expressed interest in purchasing customized products or services.” What’s more, “48 percent reported they were willing to wait longer for a personalized product or service.”

Some trace consumers’ growing interest in personalized products, and involvement in this specialization process, to the popularity of social networks and devices that enable users to control their image and obtain what/where/when they want something with greater efficiency.

With interest in personalization not expected to die down anytime soon, businesses that do not incorporate elements of personalization into their products may risk losing customers and revenue – especially since customers report they are willing to pay more for customized products, “particularly in the more expensive or fashion related categories.”

Venmo won my heart, but can it keep it?

by Isabelle Styslinger on June 19, 2017

I’m not sure what people did before Venmo. Seriously, what did you do when you went to brunch with six other people? By offering users the ability to seamlessly transfer money from one user to another, Venmo certainly seized on inefficiency in the market – which, I’m sure, brought sighs of relief from waiters everywhere. But a new app, backed by over thirty banks and counting, could disrupt Venmo’s success in mobile finance.

Zelle, short for gazelle, is a new person-to-person (P2P) payments network that allows consumers to send money to one another, online and via mobile app, using the email address or phone number registered with their financial institution. This real-time payment network is currently backed by some top U.S. financial firms, including JPMorgan Chase, Bank of America, and Wells Fargo.

Although this partnership between some of the world’s leading banks is certainly something to take notice of, Zelle’s mobile banking feature only became available on June 12, so it may be too early to tell how much competition they will be for Venmo. The more than thirty banks backing the app do, however, have 86-million U.S. mobile banking consumers between them. By contrast, Venmo is estimated to have a little over 7 million active monthly users. This translated to $18 billion in transfers last year, however.

Digital Issues in NAFTA: NAFTA and The Great Gatsby

by Jonathan Band on June 16, 2017

This is part of a series of posts on digital issues in NAFTA.

The renegotiated North American Free Trade Agreement (NAFTA) will probably include a chapter on intellectual property. One of the more contentious issues in the negotiations may be the term of copyright protection, a subject I have explored previously here on DisCo. The example of F. Scott Fitzgerald’s The Great Gatsby demonstrates the stakes involved.

In Canada, the term of copyright protection is the life of the author plus 50 years. In the United States, the term of protection is the life of the author plus 70 years. And in Mexico, it is the life of the author plus 100 years. During the negotiations on the Trans Pacific Partnership (TPP), the term of copyright protection proved to be a major stumbling block. Countries like Chile and Canada sought a term of life plus 50, while the United States demanded life plus 70. The United States prevailed; the final agreement required Parties to provide a minimum of life plus 70.

The Great Gatsby was published in 1925, and Fitzgerald died in 1940. Because of the differences in copyright term, Gatsby entered into the public domain in Canada, while it will remain in copyright until 2040 in Mexico. Under a life plus 70 regime, Gatsby should have entered the public domain in the United States at the end of 2010, seventy years after Fitzgerald’s death. However, the Sonny Bono Copyright Term Extension Act, enacted in 1998, contained a clause providing a term of 95 years from publication for works published between 1923 and 1962. Thus, Gatsby will not enter the public domain in the United States until the end of 2020, 95 years after its publication in 1925.

Depending on the term of protection included in NAFTA, Gatsby could be pulled back under copyright in Canada, or could receive an additional 20 years of protection in the United States. There is no policy justification for Gatsby receiving this additional protection. Indeed, there is no policy justification for Gatsby currently remaining in copyright here and in Mexico.

Internet Trends 2017: Brick-and-mortar isn’t dead, it just got cooler

by Isabelle Styslinger on June 16, 2017

This is part of a series focusing on data from Mary Meeker’s 2017 Internet Trends report.

Meeker’s Internet Trends 2017 report predicted retail closings may break a 20-year record with almost 6,000 unit closings predicted in 2017. In 2016 the number of units closed was just over 5,000. The culprit? Many point to e-Commerce, which made almost $400 billion in sales in 2016 – marking +15% Y/Y growth.

With e-Commerce surging, and retail stores closing at an anticipated record-breaking rate, you may think physical retail stores could soon be a thing of the past. But, many leaders in the e-Commerce space beg to differ.

“I don’t think retail is dead,” says Neil Blumenthal, Co-CEO at Warby Parker, “Mediocre retail experiences are dead.” And, by mediocre, it’s safe to assume Blumenthal means sans technological integration.

This has certainly not been true for Warby Parker, which has been disrupting the $140 billion eyewear industry since it entered the scene in 2010 and began enabling consumers to purchase glasses online. To make online eyewear purchase feasible, Warby Parker relies on technology, namely: an easy to navigate interface; fast and reliable customer service; and quickly shipping frames to consumers to try on at home, then return, free of charge.

Yet, despite its online success, Warby Parker continues opening brick-and-mortar stores throughout the U.S. It opened its first store in 2013 and plans to open at least 25 outlets this year, bringing the total number of storefronts to 70.

Digital Issues in NAFTA: Cross-Border Data Flows and Cybersecurity

by Bijan Madhani on June 15, 2017

This is part of a series of posts on digital issues in NAFTA.

Imagining bits and bytes crossing borders around the world is perhaps the quintessential visualization of the Internet. And for good reason! This flow of information across borders is the lifeblood of the digital economy and by extension the array of traditionally non-digital industries that now rely on the Internet to compete globally.

The Data Must Flow

In the U.S., the productivity gains and efficiencies enabled by data flows have boosted the economy by hundreds of billions of dollars. Cross-border data flows allow Internet platforms and providers to connect small and medium-sized U.S. businesses to a global marketplace.

Internet Trends 2017: It’s the end of sports as we know it?

by Isabelle Styslinger on June 15, 2017

This is part of a series focusing on data from Mary Meeker’s 2017 Internet Trends report.

Last year over 20,000 people crowded into the Staples Center in LA, and 43 million tuned in online, to watch one of the most anticipated finals of the year. No, it was not the Los Angeles Lakers. It was the 2016 League of Legends World Final.

League of Legends, if you don’t already know, is a multiplayer online battle arena video game in which players fight against teams and other users to destroy opponents’ defensive structures. After its initial release in 2009 it quickly became one of the most played strategy games of all time, surpassing 100 million monthly players in September 2016. League of Legends was first broadcasted well before this milestone, however; in 2012 OnGameNet (OGN), a South Korean cable television channel that airs primarily video game content, began televising League of Legend tournaments – making it the first major Korean tournament on TV.

League of Legends’ explosive growth, and foray into broadcasting, is indicative of the rising popularity of e-Sports at large. E-Sports – i.e. professional competition facilitated by electronic systems, in particular video games – totaled approximately 161 million monthly users in 2016 – a 40% Y/Y growth according to Meeker’s Internet trends 2017 report. The composition of these users is as you would expect: 79% are under 35, and of them only 29% of them are female.

What you would perhaps not expect, however, is the equivalent preference for e-Sports relative to traditional sports; that is, 27% of millennials reported a ‘significant preference’ for e-Sports and another 27% preferred traditional sports. Among non-millennials, however, division was not as balanced: 45% reported to be in favor of traditional sports compared to only 13% who reported to prefer e-Sports. But, with global awareness of e-Sports predicted to reach 1.3 billion this year (up from 1.1 billion in 2016), and the global number of e-Sports enthusiasts expected to grow by 50% by 2020, totaling 286 million, preferences could very well tilt towards e-Sports.

Amicus Briefs in Support of Fair Use in Oracle v. Google

by Jonathan Band on June 14, 2017

Just after Memorial Day, entities and individuals supporting affirmance of the jury’s fair use verdict in the Oracle v. Google litigation filed amicus briefs with the U.S. Court of Appeals for the Federal Circuit (“CAFC”). DisCo previously discussed the jury’s May 2016 verdict here and the district court’s denial of Oracle’s motions for a new trial here and here. DisCo then reviewed Oracle’s March 2017 brief on appeal here, and how even Oracle’s amici recognized the essential nature of fair use here.

Of course, this is the second round of this case before the CAFC. In 2014, the CAFC reversed the district court’s 2012 holding that the declaring code of the Java Application Programming Interfaces (APIs) replicated by Google in the Android operating system. DisCo criticized the many flaws of the CAFC’s decision here, here, here, and here. Google petitioned the Supreme Court to review the CAFC’s decision, but the Supreme Court declined to do so, perhaps persuaded by a poorly reasoned brief by the U.S. Solicitor General. Thus, the case was remanded back to the district court for consideration of the fair use issue, bringing us to the current appeal.

Eight amicus briefs were filed in support of Google:

42 Intellectual Property Law Professors
76 Computer Scientists
American Antitrust Institute
Computer & Communications Industry Association
Electronic Frontier Foundation and Public Knowledge
Engine Advocacy, the App Developer Alliance and GitHub
Microsoft, Red Hat and Hewlett Packard
Mozilla

Some of the highlights of these briefs are discussed below.

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