If I were to choose just one meta-narrative for the metaverse I think it would need to be the old-fashioned department store or shopping mall. These institutions exist to bring buyers and sellers together in a marketplace for mutual benefit. The consumer has “one-stop shopping” (never really the case) and the seller has a lower cost of promotion. Both the department store owner and the shopping mall owner are middlemen in this transaction and derive value by reducing the friction involved in shopping and buying. This is an instance of the more general class of markets.
The US economy is driven by consumerism. As of March 2024, consumer spending, or personal consumption expenditures, accounted for 68.14% of the US GDP, which is higher than the long-term average of 64.31%. This is according to the Bureau of Economic Analysis. This reality informs a great deal of current cyberspace, by which I mean what happens online, and by extension is an important indicator of where the metaverse will go as I believe it inevitably will.
I take it as a matter of faith that free market capitalism will continue to dominate human economic activity for the foreseeable future. And on analysis we see that it is the interests of producers of consumer goods that drives the shape of the current cyberspace. Again, I will continue to use the general term cyberspace to represent online activity of both producers and consumers in our economy and not as a synonym for any kind of virtual reality or metaverse.
Shopify via their Oberlo.com webpage said: “The global digital advertising market in 2024 is valued at $667.6 billion—68.9% of the overall expenditure on media ads. This refers to advertising on internet-connected devices such as computers, mobile devices, and smart devices. Media ads include everything from email marketing and video content to search engine results and more.” Give or take a billion USD this is still an enormous flow of money and it powers the likes of Alphabet (Google, et al) and Meta (Facebook). These tech giants do not gain revenue by selling their online products to consumers. They raise revenue by selling advertising.
The innovation of the past generation in online advertising is the ability to target market. To more narrowly identify customers improves the efficiency of the advertising dollars a producer spends to market their product. And these tech giants have found how to gather information about the individuals using their free services to help advertisers focus their attention. And when I say free, I mean monetarily free as we clearly are trading information for access to their services.
It is no secret that the department stores and shopping malls are dying with the growth of online commerce which was only accelerated by the COVID pandemic. (https://www.ft.com/content/700164de-30e8-11ea-a329-0bcf87a328f2) This graph shows mall vaccancy rates were already at historic highs BEFORE the COVID event. All mall owners are either closing up or rethinking how to get consumers back into their spaces. Their thinking offers insights into what people want in their shopping experience and what might be duplicated in any online mall.
Perhaps the best example of the success of online shopping has been Amazon. An in-depth analysis of their value proposition and the history of how they achieved it is due. But for the moment the only point I want to make is that the experience of shopping there is largely a matter of search-and-buy. This is qualitatively different than the shopping mall which has always offered a rich browsing experience together with entertainment and social interaction. Amazon has the means and motivation to create a metaverse that would be far more compelling than anything Meta has floated.
Creating a metaverse, by which I mean an immersive, visual, persistent cyberspace experienced wither on monitors or head mounted displays (HMD), will require enormous capital investment. I intend to dive into what that might look like but the point today is simply that it takes deep pockets and a long-term commitment, something I doubt Meta can muster when you see how quickly they shelved their metaverse project once AI became the shiny new thing. So without evidence, I believe Amazon may prove to be the player that could make it happen as they have the insight into consumer marketing, the infrastructure to power it and the motivation to further dominate the consumer market.
How much a company is worth is typically represented by its market capitalization, or the current stock price multiplied by the number of shares outstanding. Amazon net worth as of July 10, 2024 is $2074.46B, ($2 trillion) [https://www.macrotrends.net/stocks/charts/AMZN/amazon/net-worth] So if Amazon wants to play, they could define what the metaverse will be.
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Tangentially related to who has the power and will to create a metaverse is my interest in the emergent properties of markets. Above it is price which is determined by the recursive application of offer and buy in the marketplace. But this type of emergent property can come from any complex system with many independent actors. This describes what a metaverse will offer. I am just beginning to consider a project to simulate that behavior. GitHub has many projects in Python that purport to offer this. Should I pursue this?
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