You know what they say, “If you’re a pulsating press that can generate 65 kbars of force and produce temperatures north of 1350°, the world looks like iron, nickel, manganese, and other transitory materials.” And here you thought I was just a media guy.
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I learn smart-sounding stuff from smart people. People like Michael. He’s really smart… went to Princeton *and* Harvard for advanced science stuff. As a kid, he could rattle off sigma and other Greek letters in mathematical proofs like kids today can rattle off sigma, skibidi rizz, and other brain rot. While he was at Harvard, buying things on the Internet was becoming a thing. Michael’s enterprising roommate decided to start a company selling diamonds online. Diamonds are forever. Taking the middle man out of selling them was all Blue Nile.
For, like, three billion years, the Earth has produced diamonds. Pressure and heat bring clarity to opaque things like, say, coal. It takes one billion years for the Earth to do its thing. Sometimes, much longer. Which doesn’t sit well with the industrious folks at big companies who have unearthly high-pressure, high-temperature equipment.
So, in 1954, the good folks at General Electric put their machines to work to speed up the diamond-forging process. They made a diamond in a lab. Today, lab-grown diamonds are virtually indistinguishable from the ones our planet makes.
It gets better. Labs can make diamonds in days. Sorry, evolving story. A lab can make a diamond in 15 minutes. Which makes diamonds… anyone… far less scarce. Which means they are… anyone… a whole lot less expensive.
If you’re a buyer, you love this. You can get a diamond made from the same material and created in the same way the Earth does for one-tenth of the price the ones the Earth makes. Why fork over ten grand for an earthly one-karat rock when you get the same thing for just over a thousand?
As usual there are two sides to every story. This influx of new supply sucks for the people who have a near-monopoly on the limited supply of diamonds that come from mines. They lose their pricing power. DeBeers is the diamond cartel. Prices for mined diamonds are at 14-year lows. Mined diamond prices have dropped 25% again this year.
Signet Jewellers owns just about every chain that sells diamonds — like KAY Jewelers, and yes, Blue Nile. Are we really surprised that Signet’s stock is down 16% today? No. Cheap diamonds are anathema to them.
It doesn’t matter how many times you say you’re optimistic and seeing momentum on your earnings call when you have to qualify every piece of good news with, “Heightened competitive discounting…” Naturally, in the Q&A with investors and analysts, someone asked about lab diamonds. The CEO answered, “Yeah. So it's our expectation that the pricing on lab created continues to decline. There's significant availability. The production has become much more efficient.”
So, what do you do if you’re DeBeers or Signet? You help set off a firestorm among the diamond-buying community.
When did you buy or get your last diamond? For most people, diamond buying coincides with pre-marriage things like, say, getting engaged. So, what do you do to stir up problems between bride- and groom-zillas? You throw chum in their wading pool.
In the last few days, things like this are finding their way to Reddit and other social media, “Women, if you accept a laboratory diamond from your boyfriend, you can be sure that one day he will give a natural diamond to another woman.” A woman who reads that is likely to come back with, “Lab diamonds are as fake and easy to replace as your love.”
Wedge. Inserted. It’s so deep that even a line like, “No. No, baby, saying ‘lab-grown diamonds are fake’ is like saying ice cubes are fake and only real ice is made outside.”
I happen to love this story for three reasons.
One, regulators seemed to have missed the part where they don’t let one player buy almost all the competition. So, it’s kind of nice to see this uppance come. Which must mean I’m understanding all that’s-wrong-with-bureaucracy stuff on Closest Point of Approach.
Two, it’s a classic supply and demand story. If the price of diamonds goes down, people should buy more. Maybe more people come into the market. Or, we buy bigger diamonds. Or, we buy more diamonds. We’ll be walking around with diamonds on the soles of our shoes. Well, that’s one way to lose those walking blues. Minus the Paul Simon ref, the CEO of diamond retailer, Pandora makes this point, “Lab-grown diamonds were opening up the sector to new consumers as they were typically one-third the price of the mined alternative.”
But, it’s number three that really turns my crank. You can fight technology all you want, but in the end, it’s going to win.
What takes the Earth billions of years, took us months. Then, days. Now, minutes. Tomorrow, seconds. It’s inevitable. We can quibble about sameness. But, in the end, it’s same enough for most people. Especially the young people who don’t have money to blow on diamonds when the price of everything is escalating. Young consumers don’t even seem to mind that it takes a large amount of energy to make. Money is money.
Unlike Signet, the diamond retailer, Pandora embraces lab-grown diamonds. “Young consumers were behind a boom in laboratory-grown diamonds.” Pandora gets that tech hat makes things cheaper is good — even/especially for luxury goods. Maybe that’s why their share price outperformed other lux rivals.
So, why did I write nearly a thousand words about diamonds when I’m a media guy? Well, because this is a media story. The parallels to AI producing content are too irresistibly impossible (for me) to ignore.
Under pressure and heat (from editors or underpaying freelance clients), real writers clarify opaque things. But along comes AI. Technology that can produce a reasonable enough facsimile of words for consumers who are hard pressed for time and money. The increase in the number of words that machines can spit out in moments for pennies adds virtually limitless supply that undercuts the price of organically produced words. We’ve talked about the power needed to power AI. No one cares. Not enough anyway.
In the world of media, real people who produce content never had even a tenuous monopoly on words. They are a weak version of a weakened DeBeers. And, they are getting pummeled. The big outlets are throwing chum in the wading pool. “You don’t want content produced by AI.” Or, “AI can lead to MFA.” To most of the reading public, it may as well say, “Chum is Fum.” They don’t care. AI is fine.
Articles on many media sites — like, Semafor — end with AI roundups. Almost every publisher is experimenting with AI from data collection to first draft for a person to edit.
DeBeers is set to introduce technology that can spot non-Earthly diamonds. In the end, it probably won’t matter. You can fight technology all you want, but in the end, it’s going to win. Because it’s a pulsating press that can generate 65 kbars of force and produce temperatures north of 1350°. To it, the world looks like iron, nickel, manganese, and other transitory materials.
Pressure pushin' down on me
Pressin' down on you, no man ask for
…
That's the terror of knowing what this world is about
Watchin' some good friends screamin', "Let me out"
…
Under pressure
Under pressure
Pressure