Will Instagram do to brands what Facebook did to news?
Distribution of news used to be hard. You needed to print and hand deliver a paper or pay for a TV channel. Weigh those barriers to entry compared to today, where you can publish an article with a few clicks on the internet.
In the old model, news publishers had a lot of power. They were often the only supplier because reach was so hard. People used to read the entire paper, meaning newspapers had plenty of opportunities to sell your attention to advertisers.
Along came the internet, which commoditized news. Suddenly, I could find similar articles all over the internet. Individual publishers became replaceable, and people didn’t care if Facebook sent them to the New York Times or the San Francisco Chronicle. This meant that news publishers lost their leverage, advertisers, and revenue.
I predict that something similar will happen to brands as it becomes easier to transact directly on Instagram. Users will not think about opening nike.com when they want shoes, they will instead head to the Nike instagram page or browse the #shoes hashtag.
Instagram aggregates the demand, and thus has control over its suppliers. Perhaps the hashtag explorer shows brands who have agreed to give Instagram the highest rake at the top of the feed.
Like how we have digitally native vertical brands like Warby Paker, soon we’ll have Instagram native vertical brands that don’t even exist outside of Instagram.
So are Instagram and Amazon converging? Not necessarily. My theory is Amazon will be where you go to get commodities like house supplies and miscellaneous items. Instagram will be where you go to find clothes and accessories from brands.
Uber, Airbnb, Facebook, and dozens of other tech startups that have one thing in common. They modularized their suppliers – the drivers, the hosts, the news articles.
Brands were supposed to be the opposite of commodities – but Instagram may just do the unthinkable and commoditize brands.
Note: Inspiration on Aggregation Theory was drawn from Ben Thompson’s Stratechery