‘Uber for fashion models’ can shake up old-fashioned $20b industry

Trend “Uber for” is coming for modeling industry too. Several new online services are trying to realize marketplace business model for fashion-related talents.

Market size and opportunities

According to IBISWorld report “Model agencies in the US”, only in the United States there are more than 6500 model agencies, which generate $1B of annual revenue. I didn’t find any reports about Asia, but, we can suggest that worldwide market (also UK, Japan, Italy, France, and regional hubs – China, Hong Kong, Singapore, South Korea, etc) will be about $4-5B. But it is only model agencies revenue – total turnover of models’ contracts will be about $10B (typically agency charges 20-40%, plus “mother agency” charges 10%). Also catwalks, advertorials and commercials include many other talents – hair and makeup artists, photographers, etc. – we can estimate a market opportunity of $20B. And the model agencies industry is anticipated to experience strengthened growth over the three years up to 2019.

Capital intensity and regulatory barriers in this industry are low and it is influence for that the model agencies area is highly fragmented. The top four model agencies expected to account for less than 17.0% of total industry revenue.

Social media are changing landscape very fast

The growing popularity of social media and online technology have made it easier for models to self-promote and independent agents to scout for new talents. Emerging technologies and high competition provided an incentive for model agencies to develop new revenue streams, such as online promotional campaigns. The growing use of social media has augmented this industry’s fragmentation and put pressure on already-thin profit margins for model agencies.

More models will be looking for representing and promoting themselves online, which will make it more difficult for agencies to sign the top talent. Foreign models have been increasingly hired to work in the United States over the past five years – and demand for this industry’s services will increase both domestically and abroad.

Small agencies will also find it easier to compete everywhere with the industry’s largest companies. And demand for employees among whom are skilled people in digital media campaigns also will increase.  Advances in social media have changed the ways agencies conduct business by broadening distribution channels – these advances have begun to cannibalize the industry’s traditional markets.

Old supermodels discover new revenue streams – new digital-generation is coming

Last generation of supermodels trying to leverage their brand-names: Natalia Vodianova launched Elbi (e-wallet for charity), Jessica Alba preparing her Honest Company for IPO, Jessica Hart promoting her LUMA Cosmetics, Lily Cole set up Impossible (“a social network for sharing economy”).

Burberry, Calvin Klein, Diane von Furstenberg and others are changing traditions of classic catwalk-shows: added VR-technologies, designed fashion shows specifically for Instagram or Periscope, featured 3D-painted dresses and holograms, sent models wearing Google Glass, consolidate its shows and make the collections available for purchase immediately afterward online.

And new generation of supermodels is coming from Instagram and YouTube: Kendall Jenner, Cara Delevigne and Gigi Hadid are currently valued between $125,000 and $300,000 for a single post across their social media. Karlie Kloss and Miranda Kerr can command between $25,000 to $50,000 for a single post across Facebook, Twitter, and Instagram.

New technologies for the old fashion industry

New IT systems have also lowered the costs of doing business and increased efficiency. Some of them offer agencies and models an all-inclusive front and backend technology solution. They provide clients with website creation and management services, combined with digital photo delivery, billing and accounting systems, all integrated under one platform.

Such services like Swipecast, ModelMayhem, Moko, Models.com, TalentMaven, ModelsHotel and iPort are trying to realize marketplace business model for modeling industry. New York based Swipecast (founded 2014, launched August 2015) has been developed by entrepreneur and model agency founder Peter Fitzpatrick in a bid to overcome the inefficiencies of the modeling world. But there is big difference between model agency, which launched mobile-version of their site and real marketplace. Moko, a Chinese online marketplace for models that’s combined with a fashion community, picked up $$8.1M of funding in December 2014. But they are focusing more on promo-models.

“Uber for models” as a measure of corruption and human rights

Paul Graham told: “Uber is so obviously a good thing, that you can measure how corrupt cities are by how hard they try to suppress it.” It was attacking a vulnerable market. In many cities, the taxi business was a customer-unfriendly protectionist racket that artificially inflated prices and cared little about customer service.

With any fashion week in full swing, images of beauty, glamour and jet-setting lifestyles are dominating over the fashion landscape. But for the average working model, fashion industry can mean a much darker reality. Beyond the low pay — the average annual wage for a runway model is $26,600 per year, — the industry is littered with stories of abuse and degradation. Starvation, child labor, sexual abuse, racism and grueling hours for almost no pay. Working conditions no one should experience are too often the hallmarks of a runway model’s career. Big issue with working visas for models (and an illegal work, as the result) we can see in China, Thailand, even in Singapore.