Morning Brew Daily - Mickey Mouse is Now Public Domain & NYT Sues Microsoft and OpenAI for Billions

Episode Date: January 2, 2024

Episode 226: Happy 2024! Neal and Toby are back and are discussing why the Steamboat Willie version of Mickey Mouse is now public domain and what that means for Disney. Plus, the New York Times is suing OpenAI and Microsoft and alleging billions in damages. Apple is selling their watch despite trademark issues and what can we expect from the stock market in the near future? Next, what new state laws take place in the new year and why are Pop-Tarts so viral right now? Finally, here is what to expect this week. Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices

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pwc.com slash US slash brew AI. That's pwc.com slash us slash brewaI. Good morning, Brew Daily Show. I'm Neil Fryman. And I'm Toby Howell. Today, how an anthropomorphic pop-tart won college football season. And a certain beloved character is entering the public domain. So you can bet some childhoods are about to be corrupted.

It's Tuesday, January 2nd. Let's ride. We are so back. Hope everyone had a relaxing holiday break and is excited as we are to kick off 20th. 24. Something to note about this year. It is a leap year, so all those babies born on February 29th, 2020 can finally turn one. 2024 is also an exact calendar match to 1996. So if you've got your 96 calendar laying around, you can dig that one up and use it for this year. No problem. Toby, you've got a full 366 days this year to complete your New Year's resolutions. What do you got?

So I have a secret fitness one I'm pursuing, but I'm not going to speak it out loud because I was doing some research. And when you say what your New Year's resolution is before actually even getting into the year at all, it gives you this little dopamine boost. So I'm going to keep it under wraps. Just know I got one cooking in the background. What about you? That is a total cop out, first of all. Well, Toby, we're breaking 85 in golf this year. Okay.

And then I also want to visit Kansas because it is one of just two states I have left to hit. And I don't think I'm getting to Alaska. Kansas. I went two years ago. To Ptapica. It's a beautiful place. Before we jump into the show, we have a quick word from our new sponsor, VIME. Veem has a new idea for the new year, and it's called radical resilience.

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mouse, which first appeared in the black and white cartoon Steamboat Willie. But as of the new year, Mickey and thousands of, of other copyrighted works published back in 1928 are now entering into the public domain. That means those characters or stories can be remade without permission from the original IP holder, which means I can finally make the Mickey Mouse Goes to Mars musical starring Elon Musk I've been sitting on for years. The public domain is sort of the final resting place for any copyrighted work. It is a compromise with artists and companies. Yes, you can own a character for a certain amount of time designated by law, but eventually you must give that

character up to the public, both for historical preservation, but also so other people can build upon the ideas themselves. For instance, like making an adaptation of Cinderella or the Brothers Grimm's Snow White, as Disney has done itself. So the very first version of Mickey has finally made its way to the public, but it wasn't an easy path, Neil. No, so Disney is really the symbol of intellectual property protections, because for the past few decades, they've been trying to keep Mickey Mouse under wraps, under their own... domain for so long. In 1998, there was an act that extended the protection for intellectual property from 75 years to 95 years. It wasn't technically called the Mickey Mouse Protection Act,

but that's what it was dubbed because of Disney's role in trying to make it happen. It's so ironic, too, because Disney has this complicated kind of love triangle with the public domain because they have profited immensely from the public domain. I already mentioned Cinderella, Snow White. I mean, Hamlet is, or Lion King is a Hamlet reinterpretation. So it's this love triangle of Disney is trying to fight from their own characters entering the public domain. And yet they've also built upon the public domain themselves. It's kind of like an oil company running their rigs using solar power in a way. It's just like this kind of double-sided sword that they're playing with.

We should mention that this version of Mickey is just the 1928 Steamboat Willie seven-minute animated film, which was pathbreaking in its own right. It's very black and white, this movie. You watched it. Mickey Mouse is definitely not the colorful, gloved character that we know him today. And that is still under Disney's protection. So this is just the black and white version of Mickey being kind of a scoundrel. Yeah, it's definitely not a free-for-all either.

You can't produce a work that kind of falsie represents itself as a Disney production. So my play, for instance, I can't make it seem like Disney put it on. And then you also, Disney, or Mickey Mouse, still a registered trademark of Disney. And so those other versions that you mentioned, the more colorful versions that we've come to know, that is still under ongoing protection. So it's not a free-for-all, but already we've seen things like video games, horror video games being developed that star this version of Mickey. So we saw it earlier this year with Winnie the Pooh entered the public domain, and immediately a horror movie came out. So we're going to see some stuff that I said

some weird stuff. Yeah, corrupt your childhood. We might see some childhood corruption. there's a lot of critics of this 95-year period because it is so long. And the critics say that it benefits huge companies like Disney that want to keep their, you know, their inventions underwap. The point of copyright protections is to spur innovation and reward creativity. But when you take something like F. Scott Fitzgerald, right, he died in 1940. But the Great Gatsby didn't enter the public domain until 2021. So he wasn't really incentivized to write another Great Gatsby from 1940 to 2021 because that dude was in his grave. So there are a lot of critics saying we should really shorten this period. The reason why Disney was so adamant about extending it was because

it wanted to pat its profits. It wanted to keep Mickey under wraps, which it's made $80 billion from the Mickey Mouse franchise. And honestly, the longevity of Mickey is crazy. I see kids watching Mickey Mouse today and I'm like, wow, bullish on Disney. Yeah, screw LeBron. Mickey Mouse is the true longevity king. So while we did not tape any live shows this past week, I'm here to report that yes, business news still happened. Let's do a quick sprint through the biggest stories from the holiday break. The first is a dangerous legal challenge to Open AI. The New York Times became the first major media company to sue the chat GPT maker and its backer, Microsoft, for illegally swiping its content to develop the chat bot. OpenAI has faced copyright lawsuits

before from the likes of authors like George RR.R. Martin, but the Times' suit is by far the most threatening one yet, and it could open open AI up to billions of dollars in damages. The reason this suit is different than the others and packs such a punch is the concept of memorization. The New York Times showed that ChatGBTGBT didn't just allegedly steal its articles for training purposes. It also reproduced them verbatim. Through a series of prompts, you could get Chat JPT to spit out a New York Times article. It had consumed nearly word for word, which of course is a problem because the Times requires a subscription to read those articles. And you can make the point that ChatGPT could cost the New York Times a lot of money if it just reproduces paid content for

free. So a long way to go here, but this represents the most consequential copyright battle we've seen between content creators and OpenAI. Yeah, if you look at some of the facts here, the New York Times reached out all the way back in April about this issue and tried to kind of get a deal done with Open AI, but then OpenAI ended up not going to the negotiation table, and now it's resulted in this lawsuit. And then if you also look at the fact that Open AI recently struck a licensing deal with Axel Springer, who owns Politico, Business Insider, et cetera. So it definitely sees the writing on the wall when it comes to these media companies.

And I think it was playing this dangerous game where they thought they could maybe wriggle out of this New York Times agreement with maybe a fine or something like that. But it looks like the New York Times is pursuing an ongoing. royalty thing, which would kind of upend Open AIs business model a little bit. Next update, you guys remember the Apple Watch ban story. The U.S. passed down a ban on Apple Watch imports back in October because Apple allegedly infringed on a blood-oxygen sensor trademark from another company called Massimo. It was a big deal expected to go in effect right after the holiday season, except the ban

has now been lifted. Here's the order of events. The International Trade Commission banned the watches in late October. Then the Biden administration upheld that ban after Christmas on the 26th. But then on the 30th, an appeals court instituted a pause, allowing Apple to resume sales temporarily. So that's where we're at, everyone, banned, upheld, unbanned. Despite Apple being allowed to sell its watches again and denying the fact that they infringed on any copyright, they certainly are up against it on this one, Neil.

This is definitely another case of this David versus Goliath, young, smaller tech company, going up against the behemus like Apple and Google. I mean, Massimo has spent $100 million on this battle, and that's because they don't just really... The thing is, when you spend $100 million and you pour all of your weight behind this battle, when you could probably figure out a settlement with Apple, is because you don't just want the money.

You want to prove a point. And I think the fact that they're so invested in this fight with Apple shows that they don't want to be bullied by the big dogs anymore. Yeah, definitely don't want to be bullied. I mean, Massimo is... smaller when it comes to Apple, but it still has been around the healthcare scene for a long time. So it's not some kind of like green in the, what's the phrase?

Green in the face. Young in the tooth? Something like that. Yeah, they're not some Gen Z in the healthcare space. They've had this technology for a while, and they obviously don't want to go down without a fight. And I do think that this temporary pause, it's not necessarily a good thing. It's a good thing because Apple can sell its washes again, but the appeals court is now weighing a longer halt on import in sales, and really the Biden administration declining to veto that import

band was a bad, kind of, I don't want to say nail in the coffin, but a real big strike against what Apple is trying to do here. And separately, Apple is working on a software fix so that this would not happen in the future, but that is not affecting the current legal proceedings that is going on. Finally, the stock market wrapped up the trading year on Friday, and you would have had to try really, really hard to lose money investing in 2023. The SMP 500 gained nearly 25% and the Dow jumped more than 13%. But the real MVP was the NASDAQ, which focuses on tech stocks. The NASDAQ had one of its strongest years in the past two decades, soaring more than 40% and reversing its 33% plunge from 2022. The strangest part about the market's epic year was

no one saw it coming. Remember, when we started 2023, inflation was ripped. the Fed was still hiking interest rates, and economists were certain the U.S. economy was headed into a recession. But inflation has come down to near typical levels. The economy has stayed robust, and companies still managed to rake in profits. On top of all that, the AI hype boosted the fortunes of the biggest tech companies known as the Magnificent Seven. So if you took Warren Buffett's advice and were greedy when others were fearful, you probably did pretty well last year. You probably did great. I think this is the perfect time to remember to not put stock in any predictions that come out around this season or this time of year because everyone with to last year.

Like no one saw a 20, 25% rally incoming. So whatever you see, I don't want to name any names, but it rhymes with him nameer. Jim Kramer. I named names. But whatever you see people saying online or on the television, just take it with a grain of salt. Yeah, I'm glad. Because I was going to research a bunch of 2024 market predictions, but I'm happy you said that because I left it out of my research. Meanwhile, it wasn't just stocks, though. Bitcoin had an

incredible year. It rose 150%. And just this morning, it topped $45,000 to hit its highest level in nearly 21 months. And that came during a year in which SBF and CZ of Binance, baby, the two biggest names in crypto, were both found guilty of wrongdoing. So crypto also had a big year. And I think this all comes back to the Fed stopping its interest rate hikes midway through the year. And now economists are projecting that there's going to be several, if not six interest rate cuts over the coming year. All right. Before we jump into our next story, we're going to take a quick break. You said this place was steps from the water.

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A slew of new laws at the federal, state, and local levels came into effect on January 1st, and Toby and I are going to highlight some of the ones that stuck out to us the most. The first is not great news for anyone, looking to buy an electric car. As new eligibility requirements hit yesterday, the number of EV models to qualify for the $7,500 federal tax credit has plummeted from 43 to just 19, including the cheapest Tesla Model 3, the Volkswagen ID4, and Ford's Mustang Mock E. This all goes back to Biden's Inflation Reduction Act of 2022, which aims to boost electric vehicle adoption while also spurring

domestic manufacturing. And that means automakers that source too many battery materials from China and other geopolitical rivals will have to start procuring them from the homeland or other trade allies if they want to offer the tax credit. The government released even stricter guidelines last month that leads us to where we are today with fewer than 20 models qualifying for the full credit. So now automakers are racing to rejigger their supply chains to wean themselves off of Chinese materials. But it could take some time before they're in compliance. Yeah, I mean, EV tax credits is certainly one that impacts the normal everyday person. There was also a bunch of new laws passed around minimum wages, which also affects the everyday person. 22 states are

raising their minimum wages at the start of the year, and around 40 cities and counties will do the same. This one's cool, too, for Alabama's employee working more than 40 hours a week will no longer be taxed on overtime, essentially. So you're essentially exempting overtime pay for state taxes. This one is less cool, an executive order in Nebraska, demanded that some state workers return to the office starting on Tuesday. I can't believe we're getting return to the office mandate still, but public employees unions have kind of pushed back against it. But those are some of the things going on in kind of the employment and labor sectors. It's going back to the minimum wage. So the federal minimum wage still stands at $7.25 an hour.

And that's been the same way since July 2009. But states are just completely racing ahead. I mean, in New Jersey, New York, California, Washington, Connecticut, the minimum wage is at least $15 an hour, which has been the kind of the threshold, the benchmark that activists wanted to see. And they're just racing ahead. I mean, some are even greater than $16 an hour now. And some cities are even higher than that. I want to talk about my favorite new law that was passed, though, and that is telemarketers

are finally getting targeted in New Jersey. So telemarketers now, within the first 30 seconds of a call, have to identify themselves who the representing and what they're selling as well as a phone number to reach their employer. And those who don't follow the rules in New Jersey can be charged with a disorderly person's offense. This is the funniest part about it, though. Well, first of all, I want to say it's called the Seinfeld law because of a Seinfeld episode.

Do you know it? Well, you can't. I didn't see this particular episode. It's actually the one I haven't seen. But the specific provision of this law that's called the Seinfeld one is you can't make unsolicited calls to customers between the overnight hours of 90s. PM and 8 a.m. So we got some sign-filled homework to do, but this law

passed 38 to 0 in the Senate and 74 to 0 in the general 70. So it might be kind of the best example of this consensus in government that we've seen so far in 2023 and 2024. So telemarkers, man, they bring the people together. Let's talk about the

Witches brew of American capitalism that was the Pop-Tart Bowl. For those off social media, the Pop-Tart Bowl took over the long weekend. Bull games at the end of the college football season are sponsored events, and this year, Kellanova Kellogg's snack brand decided to splash out around $2 million to attach their name to a bowl game featuring No. 25 Kansas State, number 18, North Carolina State. But what grabbed the headlines

was the ritualistic sacrifice of a life-size Pop-Tart mascot at the conclusion of the game. A human being dressed as a Pop-Tart was already making waves for playfully dancing, tapping the ref on the butt. But then the Pop-Tart man slowly descended into a gigantic toaster. And from that toaster, a real edible, still man-sized Pop-Tart emerged that the winning team then began to eat. From a business perspective, Apex Marketing Group calculated that Pop-Tart generated nearly $12.1 million in brand value from the stunt. Compare that to the 2 million price tag to sponsor the bowl. Not a bad return. Not a bad. I mean, there are 43 bowl games. There are so many bowl games sponsored by every type of company you can imagine. And this is when, you know, this is a marketer's dream to be able to stand

out and have your brand be the face of the conversation online for a few days, manage to stand out of the pack from more than a multiple dozen bowl games. I mean, this is a dream come true for Pop-Tart. And I don't think they could have expected it. It's just one of the kind of, one of those things like Barbenheimer or all these sort of viral marketing things that we've seen just take off online where you just have magic in a bottle and you just don't know, you don't know that it's going to be what it is until the people kind of do their own thing with it because this was meme to death and people just really reacted very, very strongly to this edible Pop-Tart. And I think it's because it just really wanted to be eaten. Yeah, no, it was very funny because the Pop-Tar had a face on it,

like this kind of cute, whimsical-looking face. And then seeing that face slowly being eaten by Kansas State players created the memes in and of themselves. Pop-Tarts also kind of competed with the Cheez-It's Bowl, which the winning coaches were doubt. with a bucket of the Cheez-It's as well. And Kelanova obviously owns both Cheez-It's and Pop-Tart. And so there was kind of like this interesting juxtaposition of people who were seeing like the Cheez-It Bull also had this man-sized Cheez-It mascot and saying, oh, you're not the Pop-Tart Bull.

So they ended up creating dialogue with both the bowl games that they own. So I think Kelanova executives are sitting back and are very happy right now. And this cheese-it when it came onto the field had a sign that said, I'm not edible. You got to love the continuity between the. the Kalanova brands. Meanwhile, while we're on the topic of college football, we should mention that Michigan beat Alabama last night in the Rose Bowl

and Washington beat Texas, both in great games, and they will face off next Monday in the college football championship. And that is a great segue to our week ahead. Let's preview the upcoming week. We'll hit the major events you need to know about as you crank through the backlog of emails that piled up over Christmas break. The first is the jobs report due Friday, which not only will give us the employment picture for December,

but also for the entirety of 2023. Expectations are for 170,000 new jobs added last month and the employment rate ticking up to 3.8% from 3.7%. If those numbers hit, it would mean another really solid month of jobs growth to cap off a year in which 2.7 million

new jobs were created in the U.S. economy. Again, defying pretty much everyone's expectations. This is finally when we can declare the soft landing complete. If this jobs report comes in, I'm going to say it right now. I know I told you to not listen to any predictions or any declarations, but I'm declaring the softland incomplete if this jobs report comes in.

Okay, then. Well, I will tell you this. If the unemployment rate stays below 4%, it would mark two straight years in which the unemployment rate has stayed below 4%. The last time that happened was the 1960s. So we are really living in a jobs boom right now. The next event to put on your calendar is on Tuesday when Tesla releases. That's today.

When Tesla releases its sales. figures for last quarter. And the reason this is important is not because of Tesla, but because of another EV maker, China's BYD. BYD is becoming a giant in the industry. And if Tesla didn't sell more than 526,000 EVs last quarter, and it's not expected to, it would mean BYD is now the top dog globally for EV sales on a quarterly basis. Pretty impressive. Pretty impressive. It is interesting to see BYD hasn't even cracked the U.S. market whatsoever. And I've been seeing some rumblings of them potentially eyeing the U.S. Obviously, it's a huge market to expand to. So if it's already the biggest, and it hasn't even entered the biggest auto market in the world, then you can already tell

that Tesla might be watching its back a little bit. Yeah. Well, China vehicles have never, you know, sold in any significant or any number here in the U.S. So we'll see if their prowess in EVs, helps them weasel into the market. Drive January kicked off this week, which is the annual pledge. Many take to lay off the booze for a whole month to kick off the year. It's good news for your gut, but more bad news for a beer industry that's getting more stale than the nattie lights left over in your trunk from college. 2023 saw the lowest level of beer consumed in the U.S. in a generation as Americans shifted to other types of liquor or just going the increasingly popular non-alcoholic root altogether.

I'm all in, Neil. Dry January is the truth. January also probably objectively the worst month of the year. So I think doing dry January makes it better. Makes you feel better about everything. All right. This weekend is the final regular season week of the NFL week. 18, which means lots of jockeying for playoff spots, home field advantage, and buys. The football season just flies by every year.

May I interest anybody without football in their lives in potentially the English Premier League, the greatest league on earth, just trying to convert some football fans into some football fans. Liverpool top of the table. Finally, if football is in your speed, both kinds, the Golden Globe Awards honoring the best of TV and movies from the past year are on Sunday night, giving us the highly anticipated Barbineheimer rematch from the summer. Barbie led the movie field with nine total nominations, while Oppenheimer was close behind with eight.

On the TV side, the final season of Succession had the most nominations with nine, followed by The Bear, and only murders in the building with five. I'm so bad on the TV side. I haven't seen any of those series. I got to up my TV game. Well, there wasn't a lot of TV last year. Well, I didn't watch any of it either, so I got to, maybe this is the year for TV for me. It's coming back after the strikes.

Okay, we're going to have to wrap it up there. Good luck readjusting to work today. As always, you can send your thoughts. on the show or just say bonjour. Yes, I went to Paris. At our email address, Morning Brew Daily at Morningbrew.com. Let's roll the credits. Emily Milliron is our editor and producer.

Samantha Velas and Raymond Lue are associate producers. Eugenwa Ogu is our technical director. Billy Minino is on audio. We will do everything we can to keep hair and makeup out of the public domain. Devin Emery is our chief content officer and our show is a production of Morning Brew. Great show today, Neil. Let's run it back tomorrow. Aw.

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