Plain English with Derek Thompson - Media Gossip Hour: Spotify's Joe Rogan Problem, Facebook's TikTok Crisis, and Crypto's Anonymity Conundrum

Episode Date: February 8, 2022

Kevin Roose of The New York Times returns to our pod, which is owned by Spotify, to talk about Joe Rogan’s podcast, which is exclusively licensed by Spotify. (That's transparency, folks.) Then we talk about Mark Zuckerberg’s big stock market wipeout, and Kevin explains the latest NFT controversy to Derek like he’s 5 years old. Host: Derek Thompson Guest: Kevin Roose Producer: Devon Manze Learn more about your ad choices. Visit podcastchoices.com/adchoices

Head into the Ringiverse to stay up to date with all things superheroes and nerd culture entertainment. Hosted by a rotating lineup of superfans at The Ringer, including Mallory Rubin and Van Lathen, shows will provide instant reactions to blockbuster releases, insightful backstories on canon, and mind-bending theories, as well as fresh takes on the latest news and rumors. Check out the Ringerverse on Spotify or wherever you get your podcasts. Today is Media Gossip Day on the Plain English podcast. Kevin Rousse for The New York Times is back to talk to us to the latest show to in the crypto world, Facebook's big wipeout. But first, the story that has dominated my world,

my Twitter timeline, my sliver of the internet, Joe Rogan. Joe Rogan hosts an immensely popular podcast that is broadcast exclusively on Spotify. This is a very good time to tell you that Spotify is the parent company of the Ringer Podcast Network, which includes the podcast you are listening to. So, with that disclosure behind us, I'm going to be honest, this is, an open that I have written and rewritten, I think, like, 10 times. So here's the way I want to play this. I'm going to tell you the facts, as I see them, about the Joe Rogan Spotify controversy, because I always think it's best to lay down the facts before we start sprinkling on interpretation.

Then I'm going to tell you what outcome I'm rooting for. Then I'm going to tell you why that outcome is likely to make nobody happy, including Joe Rogan, including Spotify, including me. And then I'm going to bring on Kevin, and he's going to tell me if I've got it all wrong anyway. So here we go. Joe Rogan has the most popular podcast in the world. If you don't listen to the podcast, I would describe it as all over the place. Delightfully, sometimes offensively, sometimes extremely wrongly, all over the place. In 2020, Spotify, hello again, corporate overlords, knew that it needed exclusive content to differentiate itself from all the other streaming music platforms out there. The number one search for a podcast in Spotify was the Joe Rogan experience. So for $100 million, they signed to, Rogan to an exclusive licensing deal. This is not ownership, it's licensing. Think about ESPN renting exclusive rights to broadcast Monday Night Football because it will make the channel more valuable to viewers and cable companies. It's the same basic economic principle. So throughout

the pandemic, Rogan, owned by Spotify, licensed through Spotify, I should say, has been super skeptical of the vaccines. He downplays their obvious benefits. He plays up their flaws. And sometimes he brings on people who just spouts straight up bullshit about their risks. A few weeks ago, the artist Neil Young, Joni Mitchell, and several other musicians pulled their music from Spotify to protest all these anti-vaccine guests he was having on the show. Other podcasters did the same. More news about Rogan's worst moments in the pot are coming to light, his liberal use of the N-word, for example, and it sparks a flood of people loudly announcing their intent to cancel subscriptions. Not to mention, by the way, reportedly pissing off a lot of people

within the company who, you know, might not be pumped about their employer paying $100 million to someone fanning the flames of vaccine denial. On Sunday, this past Sunday, Daniel Eck, who is the CEO of Spotify, published his latest memo to the company, and Kevin and I are going to talk about that memo in just a few minutes. But first, I want to make two points. I want to talk about responsibility and consequences. Number one, responsibility. Joe Rogan is a kind of genius. He has earned all by himself the largest one-man independent news audience in the world. But the price of an audience is responsibility. Rogan is responsible to his listeners.

He is an obligation on their behalf to seek out the truth, just as I do. And this is the truth. At this moment, unvaccinated Americans are dying at a rate 20 to 80 times higher than the boosted. A person as curious as Joe Rogan should be awfully frigging curious why his guests keep saying the vaccine doesn't work, just as unvaccinated Americans are dying of COVID 70 times more than the boosted. Number two is consequences. It's very easy for people like me to be angry at the worst things Joe Rogan has ever said, because there are a lot of things that can arouse that particular emotion.

But at some point, people like me spending their time, for the worst recorded moment in Rogan history, need to ask themselves the following question. What do we want? What is the outcome that we're rooting for? I'll go first. I just want more people vaccinated. That's my North Star.

And if liberals succeed in kicking Joe Rogan off Spotify, what's going to happen is something like this, Rogan, unbound, pissed off, becomes a louder, more contrarian version of himself with a bigger audience. Rogan remaining on Spotify, within a publicly accountable company whose leadership is clearly

at least somewhat sensitive to critique and is willing to impress those criticisms on Rogan. That is our best case scenario. That is the best case scenario for people like me who want Rogan nudged toward responsibility.

Because this is the bottom line of fame. Joe Rogan has 11 million listeners and I do not. And you do. not. We can't change his audience. I just hope we can change his mind. I'm Derek Thompson. This is Plain English. Kevin Ruse, our first three-time return guest to the Plain English podcast. Welcome back, sir. Wow, I feel like I should have a special equity in the show or something like that at this point. I mean, it's basically our show. Yeah, we're going to send you some merch, some Plain English hats

and t-shirts. Expect that in the mail very, very soon. Let's jump right into the news. I want to start with the latest chapter of the Joe Rogan Spotify saga. Daniel Eck, CEO of Spotify, which again owns the Ringer Podcast Network, sent a memo to his staff on Sunday.

And he called Joe Rogan's comments, including his use of the N-word, incredibly harmful. He said he strongly condemns what Joe Rogan has said. He said he had conversations with Rogan and his team about the content of the show, but also said, Quote, I do not believe that silencing Joe is the answer and that canceling voices is a slippery slope.

He announced he's committing $100 million for historically marginalized voices on the audio platform. And as I say these words to you now, Kevin, my timeline is still melting down with new Joe Rogan news, including the fact that Donald Trump's new media firm has offered Rogan $100 million to jump to their somewhat make-believe platform. So taking all of this in and synthesizing it incredibly efficiently, Kevin, what did you make of Daniel X statement. Well, I think in general, I mean, we've watched enough of these kind of content moderation controversies over the years that I've sort of developed like a kind of framework for understanding them, like almost like anatomy of a cancellation.

And I think, you know, from where I sit, like there are basically three stages to every content moderation, backlash, controversy, etc. at. First, and I made sure they all started with the same letter because I know you love a good alliteration. Oh, I love a good alliteration. Thank you so much, Kevin. So the first stage is the splash. And that is, you know, we are past that stage. That is basically where something that someone high profile says on their YouTube channel or their podcast or their TV show sort of attracts an audience that is not their typical audience. So there's sort of a crossover moment. And I saw this most clearly a few years ago with PewDiePie,

who was the big, big time YouTuber and kind of had a mini version of what's happening to Joe Rogan now. He says something, someone outside his audience, in this case, reporters sort of notice and, you know, it becomes a story. And that's sort of the crossover moment that we had with this Robert Malone episode of the Joe Rogan podcast that initially got the attention of Neil Young and Joni Mitchell and all these people who wrote in saying that he needed to do a better job of policing COVID misinformation. And let me just quickly stop you there just to elaborate there

before you keep on going with the yeses. Robert Malone is a self-described inventor of the mRNA vaccines. He did publish a paper in 1989 showing how RNA could be delivered into cells using lipids, tiny pieces of fat. The papers are important works, but he now is using his tiny, station along the assembly line of progress for MRNA vaccines to give people a bunch of, frankly, totally bullshitty warnings about how the vaccines are going to kill you. That's Robert Malone.

Please, Kevin, continue. Yes. So that stage one is the splash. Stage two is the snowball. And we are firmly in snowball territory now. This is, you know, Neil Young, Joni Mitchell, Bernay Brown, all kinds of people. You know, India R.E was the most recent one I saw who pulled. her catalog off Spotify or at least registered some displeasure with their decisions about Joe Rogan.

And so I think, you know, that's the stage we find ourselves in now. I think Daniel Eck is trying to basically get out of this without having to make a costly decision one way or the other. And so he's doing, you know, I don't know if you remember a few years ago, Mark Zuckerberg was under a ton of pressure to do something about political speech on Facebook. and politicians lying in posts and ads. And he went out and he sort of gave this big, like, speech at Georgetown, where he stood up on a podium and he said, you know, I am a defender of free expression and we will not be policing the speech of politicians.

The answer to bad speech is good speech, you know, et cetera, et cetera. All the things that we see every time one of these controversies comes up from the CEO of the platform. And so I think in a lot of ways this letter that came out over the weekend was kind of Daniel X. George Town speech. It was his attempt to say, here are our principles, we are going to stick to them, we are not going to back down, and we are not going to de-platform one of our most popular voices. And that strategy works until it doesn't. Because in many cases, what happens is from there, the snowball keeps rolling. The pressure keeps mounting. The board gets involved. They're advertisers that are objecting employees, including, you know, what we're seeing at Spotify now is a lot of the

discontent is being driven by employees. You notice Daniel X letter was addressed to employees. So they have a lot of leverage, and they're going to keep pressing, I imagine. And so then you have the third stage, the final stage of the content moderation controversy, which is the surrender. And this is the point at which things become so intolerable for the people or person in charge of the platform or the person who, you know, in this case, Joe Rogan, that someone backs down. It becomes untenable to do anything other than sort of let one person fall by the wayside. So in this case, I think there are a couple options.

One option is Joe Rogan surrenders. He basically says, look, I cross the line. I need to dial it back. I will bring on more mainstream vaccine experiments. I will make sure that everything on my show is fact-checked. I will make sure that I'm not disseminating incorrect information that could cause people to make bad decisions about this pandemic. Or Spotify backs down.

They surrender. They say, you know what? It's not really like this guy's very popular, but he's causing us so much damage that actually the cost of doing nothing is higher than the cost of just letting him out of his contract. You know, they let him out. He goes back to YouTube and Apple and all the other. places that he used to distribute his podcast and Spotify moves on.

So you have the splash, the snowball, and the surrender. There's aspects of this that I think are absolutely brilliant. There's actually aspects of it that I kind of disagree with, but let me build up to it. So first off, you're like, when I look at the Spotify announcement, the first thing that I thought when I saw it was I was like, this announcement is so Spotify. Like Spotify is big and successful because every musical genre in the world exists simultaneously within the same platform. And Daniel Leck's statement was kind of like an attempt to represent every single political agenda within the same platform. Like, there are certain choices that the

company has to make. Do you condemn Joe Rogan or do you stand by him? Well, this was a statement that kind of both condemned him and stood by him. Do you censor Joe Rogan or do you not censor him? Well, again, there's a bit of cake eating it too. They didn't censor him. They did not censor him, but they did speak to him and he chose, by his own account, to remove. more than 100 episodes of his own podcast. He chose self-censorship. Another question, is Spotify an editorial publisher of Joe Rogan? Or are they not a publisher of Joe Rogan? Well, again, they're a neutral platform, okay, that also pays individual creators $100 million to license their work exclusively, okay, that also holds conversations with them in ways that

causes the talent to delete several hundred hours of content. Like, that sounds kind of publishery? So, like, what I see when I think about Spotify is this, like, incredible, impossible tension that is made bare by the letter itself. A commitment to free speech and a commitment to being a neutral platform and a commitment to some kind of truth is just really difficult to hold in the air at the same time without slamming against each other. And right now, they're slamming against each other in a very snowbally kind of way. But Kevin, as a media historian who has seen these things play out before, sometimes it's a Facebook Alex Jones situation

where the person's kicked off the platform. But there are some cases, aren't there? Where the star remains on the platform where rather than the surrender, it's the forgetting, I don't know what the S synonym is, but it's the appeasement, the forgetting, the slow end of the controversy

where people complain, they complain, they complain, but then Dave Chappelle remains on Netflix and the media cycle moves on, is it possible that that is the end of the Joe Rogan controversy? It is. Certainly, that's what we saw with Netflix and Dave Chappelle. People were very mad for a couple of weeks, and then they seemed to have moved on, and he's still on the platform. And they got out of that one without having to make any hard decisions that could cost them business or employee loyalty or anything like that.

I think what that sort of, why I don't think that's likely this time is because I think that Joe Rogan himself is less like Dave Chappelle than he is like Donald Trump or Alex Jones. And what I mean by that, I'm not, I don't mean ideologically. I more mean like temperamentally. I think that Joe Rogan is someone who, you know, and I've been listening to his show for a long time and I have sort of watched him evolve from kind of this like, every man comedian into really a committed and bought in sort of culture war participant and general in the culture wars. And I think now he has a substantial part of his audience, his

11 million listeners to every episode or whatever, that expects that from him, that doesn't want him to back down, that doesn't want him to moderate himself, that doesn't want him to invite Dr. Fauci on and moderate his stance on the vaccines. And so I think he will face enormous pressure from his own audience if he does moderate himself in the way that he would need to in order to sort of pacify the folks who are mad at him now. So I think they can hope that this sort of blows over for a while, but there's going to be a next time because this guy is putting out hours and hours of podcasting every week. He's having, you know, controversial guests on all the time somebody's going to say something and then we will be right back here at the at phase one.

The Netflix analogy is really interesting to me for two reasons. The first reason is an economic reason and the second reason is more of a cultural personality reason. So first, we are in the position that we're in because of the media economics of companies like Spotify and Netflix. These are really similar companies with a very similar content challenge. Like when Spotify, Spotify IPOed, a lot of people were skeptical about its long-term value because the company didn't own any music. Like the music labels were paid a fixed share of the revenue that Spotify earned, and Spotify didn't have exclusive access to anything. So you could just switch to Apple Music and listen to the exact same stuff with a slightly different user experience. So Netflix had this problem over a decade ago.

It was a buyer of all this content, but it did not own its own stuff. And the Netflix solution to this problem was to buy exclusive shows that were popular. And so Spotify essentially pursued the audio version of this strategy, buy exclusive podcasts that are popular. What's the most popular or most searched for a podcast in the world? It's Joe Rogan, at least I believe it is. Give him $100 million. They rent exclusivity rights to his podcast, kind of the same way that television channels rent sports rights. Like TNT or NBC doesn't buy the NFL or buy the NBA.

They rent for a nine-year period the right to broadcast those games exclusively. that's kind of similar to how Spotify structured this deal. And now we're in this position where they bought his popularity, but they also essentially bought the migraines that come with his popularity. And that brings me to similarity number two, which is that both Rogan and Chappelle

are what I've come to think of as don't give a fuck populists or DGAF populists. There's this brand of very online, kind of centrist populist contrarian that is anti-PC, anti-GOP, anti-left, anti-woke, pro-do-your-own thing, culturally libertarian, often rude, and it's a really, really popular mode of political commentary. So if you're Spotify or Netflix and you want people hooked onto your big platform,

it makes sense to fish in this pond. But when you fish in this pond, what you pull out is not just a bunch of subscribers that are super happy to listen to or watch Rogan or Chappelle, but you pull out all that public relations nightmare that comes from the very first thing that you said. People who are not the Rogan Chappelle audience being exposed

to their, sometimes merely rude, sometimes worse than rude, anti-vax, anti-trans commentary, and it creates the public relations nightmare that we're in today. So just, I guess maybe one more question to you because as I pull up this Spotify-Nephy-Nephyx comparison, I think,

well, why can't, if if this matches beat for beat, the Chappelle thing so closely, why doesn't Rogan's capitulations already? The fact he's apologized, the fact he's taken down these episodes already, why doesn't that auger a resolution to this problem that is really, really similar to Netflix and Dave Chappelle? I think part of it is because the nature of what Joe Rogan and Dave Chappelle do is very different. I mean, Dave Chappelle might come out with one comment.

special every year. So his sort of feedback loop of like, I said something, people got mad at me for saying something. So now I'm going to, like, show them that I don't bow to pressure by like going by doubling down on the thing that I said that pissed them off in the first place. Like that happens like on a very slow time frame if you're Dave Chappelle because you have to wait for like your next comedy special and that could, you know, take months. And whereas like Joe Rogan can be out there every day if he wants to be.

sort of inflaming this, prodding, you know, people who are in his audience to, like, take up, you know, sort of his cause. Like, it's a much tighter feedback loop. And so I think he has much more, you know, and he also, like, just spends a lot more time talking on a microphone than Dave Chappelle does. So I think, I mean, you could be right. It could blow over. And that seems like it is a likely sort of short-term scenario. But I think long-term, this just keeps coming back. And I was actually like, yeah, you called me a media historian, which I am not, but I did go back and I did do some reading the other day when all this was going on about Howard Stern, who was essentially the Joe Rogan of the 90s. You know, he had the most popular talk radio show in America by like Leaps and Bounds, hugely loyal audience, you know, obviously like a shock jock and had a penchant for kind of tweaking political correctness and like saying the thing that people didn't want him to say. And Howard Stern was like fined millions of dollars by the FCC. And, well, to be more specific, the stations that broadcast Howard Stern's show were fined millions of dollars by the FCC. Because on radio, those are publicly owned airwaves, and we've sort of decided that like the government should establish some content guardrails.

You know, you can't curse. You can't, you know, there are certain lines you can't cross on the radio. With podcasting, that all goes away. There is no FCC for podcasts, and I think that's arguably a good thing. But it does mean that those guardrails need to come from somewhere else. They're not going to come from the government finding the radio station, you know, or Spotify in this case, millions of dollars for what Joe Rogan says. Effectively, the FCC is now just Twitter. Twitter is the FCC.

And so when someone like Joe Rogan crosses a line, they are going to, to do whatever the FCC used to do, maybe not finding Spotify monetarily, but causing economic consequences for this company in hopes that they will then reel in their big star. So I thought the parallel there was a little bit interesting. Before we move on, I want to make sure that I get your perspective on what I think might be the most important question here,

not just how will this end between Joe Rogan and Spotify, but how should we want it to end? Like, just very limitedly, how should you, Kevin and I, Derek, hope that this ends? And when I think about this consequentially, how do I want this to end? I want Joe Rogan to remain on Spotify. And I want to tell you why, and you tell me if you think I'm wrong. If Joe Rogan leaves Spotify, he will be unbound, untethered, and pissed the fuck off at the left. his attitude toward the vaccines

or toward all sorts of other cultural sensitivities that I care about will not be tethered to liberal complaints he simply won't have to listen to anybody to his left but as long as he is bound and tethered to a entangled with a publicly traded company that is sensitive to public criticism then there is a

there is a channel for pro-vaccine sentiment, for example, to actually weigh on Joe Rogan, to actually affect his content. If you, like, the whole calculus here is liberals got upset, led by whatever, Neil Young, pro-vaccine people got upset. They complained to Spotify. Spotify talked to Joe Rogan.

Joe Rogan apologized publicly, looking into his iPhone to millions of people around the world for an unbalanced coverage of vaccines. I don't know if he was sincere or not, but that's just what happened. There's no way that that chain of events happens if he's untethered from Spotify. And so I think there is something consequentially beneficial, ironically, about his relationship to Spotify, that maybe even a lot of liberals don't recognize that they are screaming, begging for an outcome, Rogan being essentially fired, that would be worse for their interest, worse for the end of the pandemic,

worse for people getting their shots. How do you feel about that argument? I buy it. I mean, I also am worried about a situation in which Joe Rogan, you know, gets deplatformed and becomes, you know, ungoverned and ungovernable and just goes off the deep. And we've seen that, you know, time and time again with people, people being, you know, censored and deplatformed has, you know, a radicalizing effect on them. And they... What's a good example of that? I mean, I think you saw this with someone like Donald Trump, where when he started to get you know, sort of slaps on the wrist from Facebook, from Twitter, from other platforms.

Instead of backing away from the edge, he kind of said, well, I'm going to show them. I'm going to go even further until they were sort of forced to do something about him. I actually think that, you know, Joe Rogan is somewhat of an outlier in the media universe because I think that his audience is genuinely portable. I do think that millions of people will listen to him wherever he is. I think he's just that popular. And so I think, you know, he actually has some leverage in this situation that someone like PewDiePie, for example, the YouTuber, if he loses his YouTube channel, like, it's over for him. And so he's highly dependent on keeping himself in the good graces of the platform, whereas Joe Rogan, I think, can sort of take his listeners with him. But I do think you're right to look for solutions that are not just kick this guy off or keep him on with no modification. And I think progressives in general should have been trying to persuade Joe Rogan much earlier than they were.

There was this very strange thing that happened, I think it was in 2019, when Bernie Sanders would go on Joe Rogan's show or some other sort of like leftists would go on Joe Rogan's show. And people would be mad. People would be mad that they went on Joe Rogan's show. Why are you giving this guy content? Why are you, you know, why are you sort of making his show more prestigious by appearing on it? And I always thought that was such a strange argument. Like, this is a guy who, you know, it's not like your platform. He has the biggest platform in America. I think instead of trying, and he is genuinely, he has demonstrated in the past that he is, like,

genuinely open-minded to learning and to being persuaded. I don't know if he still is. He may have sort of passed a point of no return on that. But I think that what you. what you saw was sort of a, yeah, a reluctance to treat him as a person who could be persuaded with good arguments and with, you know, sort of winning rationale. And so I think basically the left kind of gave up on him. And I think that had a really detrimental effect and may have, you know, in fact, pushed him, you know, further toward the sort of conspiratorial fringe.

I totally agree. Last point on this. Just biggest picture, Joe Rogan is an adult. He has an audience in the millions and a responsibility commensurate to that audience size, which is to say an enormous responsibility to find and tell the truth. And he's not doing it with the vaccines. He's neither finding nor telling the truth when it comes to the vaccines. And it just sucks. It just sucks because thousands of people are dying every single week of this disease, wherein they would be alive if they had two shots in their deltoid or three. And we just need all the help that we can get to end this thing. And in the biggest picture, I suppose, I just think that Rogan inside of Spotify is more

easily influenced than a Rogan unconstrained, booted out of Spotify, setting up his own media company where he just rails against the left with no recourse from people like me. All right. Well, closing the Rogan door for now. Next media gossip item is Meta, the company formerly known as Facebook. Last week, Meta revealed in its earnings report that global users had peaked that TikTok is basically eating its lunch in high revenue markets like the U.S. and that new Apple privacy rules are hurting the ad business on iPhones. The company suffered the worst one-day market cap wipe out in American corporate history. This is a fact. $250 billion in stock value in one day. That is equal to this total market cap of Cisco or Salesforce disappearing in 24 hours. Kevin, what the hell happened here? Meta, the artist formerly known as Facebook, is having a real product problem and has for a long time.

I mean, it's most popular app. Facebook is collapsing. Organic content posting has been collapsing for a long time. time, you know, sessions are down across most of its apps. And the, you know, the highlight that they, you know, their attempt to kind of find a silver lining in these disastrous results that they shared a few days ago was to point to the success of Instagram Reels, which like, I don't know if you've ever, like, wandered onto Instagram Reels, but it is, like, truly dystopian. It is like 90%.

Why? What makes it dystopia? So like 90% of the videos on Instagram Reels are just TikToks, right? They're just TikToks with like the watermarks removed that were posted to TikToks. You know, TikTok like months or years ago, just sort of being refreshed for the boomers and the older millennials on Instagram. And then the rest are like these weird, like, you know, bottom of the barrel like comedy skits. and like staged prank videos and like people having meltdowns in the airport and like it's just like the lowest quality garbage.

And like there are no native reels producers. Like no one is like making stuff for Instagram reels. It's like stuff that they made for YouTube and TikTok and that they just are cross-posting there. And so like the fact that that was the kind of thing that they were able to point to and say like, this is our fastest growing product. It's like, oh, this company's in much worse shape than I thought.

I love the idea that Reels is like Turner Classic Movies for TikToks. It's like, here are TikToks. 100%. Here are TikToks from the days of yore from the black and white early talkies days of TikToks, rebroadcast for geriatric millennials and 47-year-olds. God bless all the geriatric millennials like me out there. I'm not dissing the generation. I'm just saying it's a product that doesn't sound exactly hip.

Can you go back just a half step? Yes. Do we know why Facebook is, why the app itself is collapsing? I mean, is the answer just as simple as Facebook needs new users to keep going, and new users are way more into TikTok than they are into Facebook products? Yeah, that's a big piece of it. I mean, Facebook's been struggling to compete with TikTok for years, but that has really accelerated, especially with younger people in North America,

who are its kind of most coveted audience demographic. Facebook, I should say, is still. very strong. Like, even its weak results, I was looking at their financials the other day when they came out with their earnings report. This horrible, you know, no good, very bad quarter that they had, they still made $10 billion in profit. Like, that is a bad quarter to be Facebook. This is a company that's still worth $632.52 billion dollars as I check in right now at 335 p.m. Eastern Standard Time on Monday. I mean, it's still the six or seventh biggest tech company in the world. larger than any tech company, I believe, in the entire continent of Europe. So, you know,

decline is always relative, right? The fact that it had a huge, this terrible day in the stock market doesn't mean that either of us are predicting, like, the end for this company, but it's just, it's fallen from, it's fallen very far from a high, yeah. Right, exactly. And and I think to some extent Facebook has brought this on itself by treating kind of growth as the core metric for many, many years. And their argument was, you know, net, networks get more valuable as more people join them. Therefore, like every incremental, you know, 100 million users we attract to our platforms, makes the experience better for everyone. And now they're seeing the flip side of that, which is that, you know, on the way down, the network effect collapses the network. As people leave, you know, I don't go on Facebook as much because, in part, none of my friends go on Facebook anymore. So there's sort of the other side of the network effect, which is what they're experiencing now. And I should say, Facebook would say that most of this results, most of its headwinds, as they like to say, are due to Apple and some of the changing transparency tools and tracking tools that Apple has implemented. And so they would say that that's a big factor in it as well.

Right. Yeah. Just to unpack that a bit, Apple introduced something called app tracking transparency, otherwise known as ATT, not to be confused with AT&T. But basically it's a privacy program that makes it a little bit harder for Facebook to track users and make money through direct response advertising. And so this is one interesting way that Apple's sort of public-facing marketing of the company being pro-privacy is also somewhat surreptitiously or maybe even purposefully a way for Tim Cook to fuck over Mark Zuckerberg. I'm not suggesting that that's an overriding motivation, but it's definitely an outcome of that decision. Is there anything else going on that's important that we should point to when looking at Facebook's headwinds? You've got user growth hitting a ceiling, the ATT changes that have made it harder for Facebook to advertise, especially on iPhones. You've got TikTok and Reels being essentially Turner Classic movies for old TikToks. What about all the spending on the Metaverse, in what Facebook calls reality labs, which is basically its R&D sector where it's trying to build out this next.

internet. Is it meaningful that the company is spending so much money on a metaverse that may or may not materialize that it's hurting its profitability in the next few quarters? Absolutely. I mean, the numbers every time I see them for this metaverse push are shocking. I mean, they're spending billions and billions of dollars. They have something like 20,000 people working on AR and VR technologies at this point, which is like significantly larger than the entire employee base of the New York Times where I work. So they've got enormous teams working on this stuff. They're spending an inordinate amount of money developing it. And to me, like, that suggests that this is their only way out, that they see the metaverse as kind of the only

sort of plausible way that they can maintain their dominance into the next era of computing. You know, very few tech companies sort of survive make the leap from one technological era to another. You know, Cisco, Oracle, you know, Sun Microsystems, IBM. You know, these companies, some of them are still around, but they're slivers of the companies that they once were. And I think Facebook sees that, you know, its growth in its core social networking products has plateaued and is starting to decline. and now this is their big bet. This is what they think will sort of save them from obsolescence. And if you want to make a big bet like that, it's going to cost you a lot of money.

And so they're shoveling money out the door. They are – and I think there's basically an equal – I think there are basically two outcomes of this. One is, you know, Facebook, its Metaverse strategy works, and it is a dominant player in the next phase of computing. and even more dominant somehow than it was over social networking. I mean, it will own not only the most popular software, it will own the operating system and the hardware, and it will have much, much more behavioral data with which to target ads.

It will somehow grow even larger and more powerful. The other option is that this Metaverse push just absolutely bankrupts them, like that they spend so much money on it. that it just puts the company out of business. And I think that those things are basically equally likely. That's a 50-50 shot. The image that I have in my head, and I haven't, I haven't,

isn't quite crystallized like this until you were just talking. But it's like, I'm imagining a city, let's call it San Francisco, that's like slowly being eaten away by climate change, like a combination of the seas are rising and there's whipping winds and tornadoes constantly over the peninsula. The island itself is rich, but it's slowly being destroyed by these cosmic forces. And they're like, we're going to build a new San Francisco on the water, on the ocean. It's going to be a brand new city.

We won't have the homeless problems. We won't have the NIMBY problems. We won't have any of the problems that San Francisco has. We're going to build this on the ocean. And meanwhile, you have people whispering like, wait, no one's ever successfully built a city on the ocean like this. We have no idea if building San Francisco in the ocean is even going to work. And so it's just this, like, fascinating utopian vision for building an entire new Facebook

in this world, in this layer of reality, the metaverse, that may or may not exist in the future at all. If it works, they own the whole city. They built San Francisco on the ocean. It's the New American Utopia. But of course, there's just so little evidence from today, February 2022, that the metaverse is a real thing that people want. And I just find it fascinating. Like, as a matter of corporate history, it's really, really difficult to find a business that is this successful and this big and this well-known and this important publicly announcing that they're kind of scrapping the land on which they are currently building and trying to build this whole new city in the sky. It's really a fascinating experiment, even if you think there's a 50% chance

that it ends in humiliation and bankruptcy. It's totally fascinating. And I think it is a direct result of Facebook's concentrated governance. I mean, most public companies, you know, with Facebook's size and wealth would face enormous pressure from shareholders and, you know, and to cut their costs, to trim the sales, to, you know, stop bleeding money in these like, you know, far-fetched VR and AR projects, which is why the most sort of frequent sort of result of a company that has passed its peak technologically is that it just sort of bleeds out slowly. You know, it's got this sort of terminal decline, you know, it's sort of doing everything it can to, like, conserve cash and do layoffs. And Facebook is basically saying, no, like, we are not, like, it's like,

it's almost like, you know, a patient with a terminal diagnosis. And the doctor says, you know, you have, you have five years to live unless you, like, try this incredibly risky experimental procedure, which might just kill you on the operating table, or it might grant you another 40 years of life. And the patient, in this case, Facebook is basically, saying like, yeah, let's go for it. Like, let's try the super weird, dangerous experimental thing because the alternative is becoming Friends to her or Myspace, and we can't have that.

And just like that, we're another Spotify podcast recommending alternative therapies. I'm going to put a disclosure at the top to make absolutely sure that Daniel doesn't end up having to write about this episode as well. Very last media gossip piece, Kevin, that I want you to comment on. there was a blockbuster report and BuzzFeed News that revealed the names of the founders of the Bored Ape Yacht Club. That is the most expensive NFT collection in the world, a collection of Simeon ape avatars, essentially, that celebrities often buy for hundreds of thousands of dollars apiece. And the publication of these founders' names kicked off a big debate about this tension that exists between Web3's NFT's promise of anonymity. on the one hand, and the reality, on the other hand, that the job of journalism and the media

is often to report on powerful, rich, famous people, which in this case means revealing the names of the founders of an organization that probably wish to stay anonymous or pseudonymous. Kevin, what is most interesting to you about this story? Well, there's a lot to go over there. We could spend another entire hour talking about the Board Ape Yacht Club and the pseudonymous founders who are, I guess, no longer pseudonymous. But basically there was this report in BuzzFeed, Katie Nautopoulos reported on the real names of some of the founders of the Board of Apeach Club, which is a very sort of well-known, well-established, and extremely wealthy sort of collective of NFT collectors who all own these little monkey pictures. And Jimmy Fallon's got one and Paris Hilton's got one.

and it's become sort of a status symbol in the crypto world. And I think the interesting piece here, there are a couple. One is that I think the crypto world is just struggling to adjust to the reality that its sort of emphasis on anonymity and the ability to kind of do transactions in a way that's anonymous has a limit. If you get wealthy enough, if you get influential enough, if you're trying to, to raise money from traditional investors, if celebrities are buying your projects. It no longer is really tenable to stay anonymous, to just be some person with a username on the internet. And that's what happened in this case. I mean, this company was incorporated, this Yugo Labs, which is the

sort of company that makes the board API club, was trying to raise money from venture capital investors at a deal that would have valued it at $5 billion. And to do that, to raise money from institutional investors, you need to have a corporation. And that corporation needs to have filings and needs to have officers and needs to have people whose names are attached to the project. It has to kind of exist in the real world in a way that a lot of crypto projects don't want to. So I think we'll see this really interesting tension. There's a lot of really interesting stuff happening in the crypto world right now about anonymity and the sort of value and some of the drawbacks of being able to build, in some cases, five billion dollar businesses without

revealing who you are, which was never really something that we had pre-crypto. So, yeah, it's just a, it's a fascinating sort of inflection point for the crypto world as a whole. Yeah, I think what's so interesting is that some of the smarter people that I follow in the crypto community, they really, they don't just want to build a whole new internet. They want to build a whole new country, a whole new reality, a whole new set of rules to govern human relations. I mean, if it sounds grandiose, to put it like that, I am framing it less grandiosely than it's typically framed online. Like they are, they are open advocates for using this technology to reform human relations. And one of the ways they want to reform humanity is, you know, they're going to reform humanity

is to empower this kind of pseudonymous layer of reality, this the pseudonymous internet, where people's identities are not as public as they are. But that's just not how journalism works. Jeff Bercovesy, Deputy Business Editor at Los Angeles Times, made a really good point on Twitter where he said, look, the Board Apes Yacht Club founders haven't done anything wrong, but, quote,

journalists publish information about public figures who've done nothing wrong all the time if it's newsworthy. Think of a star athlete. getting off-season surgery they'd like to keep quiet or a celebrity buying a big house. End quote. The point is, I think lots of people listen to this podcast who are familiar with the ringers of their offerings.

They're very familiar with the idea of an athlete trying to cover up a leg injury who ends up getting reported that they did in fact spray in their ACL and they're having surgery in the off-season. This happens all the time because their prominence, their importance, elevates them above the threshold of expected anonymity. We don't publish their names of people,

who aren't publicly important, who aren't publicly newsworthy, but we often do publish names of those who are. And clearly crypto has passed above that threshold to a point where I think there's going to continue to be, this is why the BuzzFeed articles have interested in me, it will continue to be showdowns between the media that holds up the principle of wanting to publish that which is newsworthy and members of this community

who are trying to build a world where their identities, or their pseudonymity is written into code, is a critical part of this new reality they're working on. I don't know if you agree with that general framing. Yeah, I think this is going to be the first of many blowups between the media and the crypto elite over this exact issue, whether it's okay for people to remain anonymous when they're involved in projects that are raising billions of dollars,

that are, you know, I mean, the sort of, Just really quickly, actually, Kevin, like, what is the most interesting stuff that they're trying to do anonymously? Like, what is the, what's the strongest argument for those who truly believe in building an anonymous internet? What's the best case they have for why the future of the internet should be anonymous? Well, I think some people have, you know, very ideological reasons for wanting sort of this crypto-sudonymous internet to remain pseudonymous. You know, they don't want to open themselves up to cancellation or sort of being fired from their day jobs when their bosses, you know, find out that they're running some crazy NFT collective. But I think they more see this sort of heading in a direction where everything that we do online, all of our sort of digital activities will be united, not under our real names, Derek and Kevin, but under our screen names. It's more like what happens in, say, the gaming world where you have your gamer.

tag and you, you know, own assets in your gamer tag's name, and you, you know, people know you by that. And so it's more like that. And I think the argument for that is that, you know, we are, you know, privacy is important. You know, we have seen, you know, sort of what happens, you know, in a sort of internet culture where people are constantly sort of being canceled or, you know, held to account for things that they say and do, and that basically crypto should adhere to a different set of rules and exist in this sort of parallel name space where no one knows what anyone's real name is

because they're all just going by their sort of crypto names and avatars. Right. And I'm sure some people listening are like, well, yeah, one person's privacy is another person's right to commit crimes without being called out. So there is, you know, not that the people working on crypto are working on it for the purpose of committing crimes, but we've already seen that crypto is a place where there are scams, a place where crimes are committed,

and clearly pseudonymity and anonymity are things that allow certain crimes to be committed under dark. Kevin, thank you very much for joining the podcast again. I hope that you'll be the first quadruple repeat guests in a few weeks. Let's keep it going. It's great to talk to you. Planning this with Derek Thompson is produced by Devin Manzi. Thank you so much for listening to this show. If you like us, follow us on Spotify, rate and review on Apple Podcasts.

We will be back with our second episode this week on Friday. We will see you then.