Tech Brew Ride Home - (Bonus) Peter Kafka on Media, Hollywood, Substack and TikTok

Episode Date: December 5, 2020

As promised, here’s Recode’s Peter Kafka, the dean of the media reporters, someone we should have had on the podcast a long time before this. Do checkout his podcast, Recode Media with Peter Kafka. Sponsors: ProtonMail.com/techmeme VistaPrint.com/techmeme DoubleUp.agency Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to another weekend bonus episode of the Tech Meme Right Home. I'm Brian McCullough. As promised, here's Recode's Peter Kafka, the dean of the media reporters, someone we should have had on this podcast a long time before this. Do check out his podcast. It's excellent. He's the best in the business. It's called Recode Media with Peter Kafka.

But we have a ton to talk about, so let's not waste any more time. Peter, we were saying offline that this is perfect timing. We do. delayed talking yesterday because the news actually broke. But man, just when I was ready to be like, you idiots, you destroyed that Tiffany brand of HBO to be what? You know, and also ran in streaming. They go and do a thing like this and basically guarantee I'm going to be a subscriber. So did you see this coming?

I mean, someone was going to do this at some point, right? But them and now? I don't know that someone was going to do this at some point. I know that all the studios have been spending since March a lot of time. figuring out what the heck, can we swear on this? Sure. What they're going to do? And all of them basically punted at the beginning,

but they're all trying to model out, what does this mean? Well, but I mean, this is inside baseball stuff, but for the last couple months, there's been all sorts of reorgs, people being fired essentially, and that sort of pointed towards everyone getting the streaming religion as their main business model, right? I don't know. Some of this was announcing, you know, like Disney announced,

to reorg that I think there's less there than meets the eye. It's certainly important for all the big media companies to tell Wall Street that streaming is very important to them. And they all want to be sort of rewarded for sort of adopting a Netflix strategy. Wall Street hasn't really rewarded most of them for it. You know, you could say that this move has been inevitable for the last decade. You know, every time I've got a movie studio person in a room or on a stage, we ask them about that. And with the exception of Disney, they've all said, look, we'd like to change.

the model a little bit. But they haven't been able to do it until a pandemic. Well, let me ask it this way. Are you surprised that they went with the full slate? Right? Because they sort of teased this a little bit with the Wonder Woman movie,

but like that's pretty radical that they would do all of 2021's releases. It is radical. That said, if you're going to do it, do it, right? It makes the marketing and the idea sound much better. You'd say all the movies, every movie we're putting out. You don't have to work about caveats.

You don't have to say yes, but it's also going to cost 30 bucks extra. It makes much more sense for the consumer. It gives you a brand, which they didn't have before. We were just referencing HBO of Max prior. This was HBO plus Friends and other stuff that wasn't good enough to be on HBO. It didn't make sense. Right. That's why this is so balzy is like they've automatically made themselves a major player.

The flip side is, if you're going to get, uh, granular about it. There's not a lot of movies that are guaranteed blockbusters here. I mean, among the people who are listening to this podcast, they're all going to go see Dune and that'll be a big deal. But the last big remake that Denny Billion you did was Blade Runner, and that was underwhelming. It's not guaranteed. You know, there's a couple Superhero. Yeah, again, like Suicide Squad. One is a famously shitty movie, which again, maybe people want to see. And then the rest of it's like, There's like a Sopranos prequel, you know, for stuff that I might watch, but it's not stuff that I would necessarily be lining up to see.

Well, let me ask you this. Do others have to match this now? Does Disney have to match this? That is a big question. Disney has an investor meeting next week, which they're going to focus on streaming. There was a video circulating last month that is supposedly a leak of that presentation, which sort of, sort of suggested that Disney was going to do some collapsing of its window as well. No one knows if that's real or not.

Disney has always been the studio that was said most strongly. We love theaters. And it's not a coincidence. They have the movies that everyone goes to see in theaters. Everyone else is kind of in the middle. But most of the other big studios are not part of a vertically integrated media company that has its own subscription video thing. We're getting in the weeds here.

but sort of if you stop and think about it for a second, it actually makes sense that Warner would be the one to do this and the other ones haven't or maybe won't. Let me ask you two dumb questions from me not understanding the space as well as you. I'm assuming everyone's done the math on this, right? Like they're going to make more money in the end if they have a successful streaming product.

Let me ask it in this way. No, no. Okay, go ahead. People are doing the math, and they can't figure it out. Okay. Analyst notes this morning and saying, wait a minute,

you're giving up a ton of money, both from the theaters and plus there's all these knock-on effects. And how are you going to justify it? And if the answer is we get a lot more HBO max subscribers, and the answer is, well, how many do you need to make up for this? And again, AT&T has its own particularity. So the math here is a big, big question.

Right, because we've heard forever, it's a hit space business. This is the definition of a hit space business where if you can get a film to do a billion and a half dollars at the box office, that makes up for your, you know, 20 other movies that didn't make back their money. I suppose if they're successful and they have 75 million subscribers two years from now, you know, that's several billion dollars every year guaranteed in revenue, right? So there's that. There's also, you know, if Wall Street decides to credit you. for owning your own Netflix and it pushes your stock up accordingly, you know, that's worth a ton of money. Right. So there's a couple of different ways to skin it. And, you know, I find it, I think most people find it impossible to believe they are able to sort of go back to normal in 2022. You know, the approved line is where this is a one-time only thing. We're not planning for the future.

But it seems like they are setting a precedent. And so it's not just this year's slate of movies, not just this year's money. It's a lot of money in the future they're foregoing. My other dumb question is, can they do this in the sense that doesn't this blow up a ton of existing contracts? Like, you know, the back-end participation contracts, labor contracts, residuals. Like, they're just sort of taking the leap off the cliff, but they're grabbing other people's hands as they're doing that. Can they do that? They think they can do it.

I asked Jason Kyler specifically about sort of how the back end stuff works here. He's like, look, I mean, you know, if you're, if you were going to get paid based on box office receipts in 2021, you didn't get anything because we had to put your movie out. And if we put your movie out next year conventionally, it'll be a lot less anyway because people aren't going to be going to the theaters until maybe, you know, late spring, middle of the summer. And what we are going to do is HBO Max is going to play pay Warner Brothers. studio, they're both owned by the same company, they're going to pay them a bunch of money, and that's going to sort of represent some of the theatrical money you would have made. You can get a slice out of that. Again, if this becomes the model that everyone's using in the future, then, yeah, a lot of those deals get redone.

Switching gears to what we were originally going to talk about. You mentioned, by the way, I'm going to talk about that interview you did with Killart on today's show. But I also am a huge fan of your excellent podcast. I want to recommend that right now, and then we'll talk about it again at the end. But I was listening this morning to your interview with Jonah Peretti recently, and the big news has been, you know, BuzzFeed buying Huffpo, everyone going to the New York Times or to substacks and things like that. But you asked him what he had learned from this year of COVID.

And I'm going to ask you kind of what you asked him, which is it has been by a lot of measures like a blood, bath for media big M writ large. Are you surprised that digital media has sort of bounced back as quickly as it has to the degree that, and you can disagree with me that it's about back, but I was expecting an absolute bloodbath of a lot of digital media startups being killed by COVID. Yeah, I guess you should, I don't think digital media startups were affected much more by COVID than any other media company. The biggest media companies were affected by COVID. I am surprised that in general, the economy in general and the media economy has bounced

back as well as it has. If you look in March and April and, you know, first of all, everyone was just basically in March and April, all the ad money went away. And there was a period where it looked like that might be the new normal for a long time. And it turns out it wasn't. And so everyone's sort of worst case scenarios did not, did not, were not realized. You know, I'm also still worried that, that we're way too optimistic about the economy next year. But I'm, that's, I'm just an amateur bullshitter when it comes to that stuff. You and me both. You're on the right podcast for that. This is the right podcast for that. The, the specific problems of digital media startups, weren't really about the pandemic.

They're about sort of the underlying structure and that most of them were based. were built to be based on Google and Facebook, and we all know the problems there. And then there's a handful of bright spots, usually much smaller companies, that are able to figure out how to grow quickly, more than a very small base. Stuff like that, yeah.

Yeah, and then you also have, you know, some of it is also particular, like Morning Brew got bought by Business Insider, which is owned by Axel Springer, which surprisingly seems like they're very much in the mode of wanting to spend money on growth. which as a journalist I applaud.

A lot of other companies are trying to retrench and figure out how to sort of kick the can down the road. Specifically, BuzzFeed and Huff Po, I have such a hard time. I hate the branding of it being Huff Post, you know. Jonah has been talking about this. We all got a band together, band of brother's style, and that's the only way we can compete

and get scale for advertising and things like that. So do you expect more roll-ups, into BuzzFeed like this? I mean, everyone is still talking about that. Jonah is the one who goes out there and says it the most loudly and says, I want to get all these companies together. And he was trying to buy Group 9 for a long time. You know, the other thing you hear a lot of is if it's not going to be BuzzFeed,

there's going to be a SPAC. I don't know if you guys are into special. Oh, we love SPACs, yes. The great SPAC media roll up. That's the other recurring story you always hear about every media company, mine included, that we're going to get bought by a SPAC or put together our own SPAC or be involved in a SPAC. All these don't really seem like fundamental answers to the problems. Like even if you get all the digital media startups together, they still have a very, you know,

they're not competing with Google and Facebook. I understand that there's some economy of scale. But it doesn't, if the problem that BuzzFeed or Vox Media or Vice has is that it's hard to compete with Google or Facebook, then even if you like triple or quadruple or size, it's still hard to compete with Google or Facebook. That doesn't change. It's hard to compete with infinite scale. Right. And what if we were all part of a public company? Well, it doesn't change our underlying business. What it does is allow investors and some employees to cash out, which isn't necessarily bad, but it doesn't change the business dynamics. So it's hard for me to see how any

of these are solutions to the underlying problem. Another thing that you talked to him about in that interview was the New York Times specifically. I mean, speaking of media companies, that seemingly are doing well. You sort of asked him, what did the New York Times learn to finally get on the right path here? What do you think that was? Because you keep hearing, oh, they were, Trump was so great for them. But I don't think that's it. Like, not on a business side. They wanted to go to subscription forever and suddenly it works. Why does it suddenly work for them? Well, Trump was really good for them, right? There were a lot of people who did sign up. for the Times and some other publications as a way of sort of resisting Trump. That's a real thing. And the worry was always what happens, you know, after that first year of the Trump bump. And what's happened is people still want to subscribe to New York Times and Washington Post. You know, I did ask Mark Thompson about this, the who was the CEO of the New York Times until mid-fall on this podcast.

So you can go back and listen to that. But he said, look, there's some of his nuts and bolts figuring out how to run the subscription business better and figuring out, and figuring out marketing strategies and it's kind of boring stuff unless you're trying to run a business. So it is specific. And the other answer, I think, is that there really isn't competition for the Times. They are the one national newspaper. You know, in theory, the Washington Post is a national newspaper and the journal, etc. But those really aren't.

And among a significant swath of the country and the world, they're the most trusted resource for news. it's a great virtuous cycle, right? Subscribers give them more money. They go out and spend money on good reporters and product people and all of that. They make a better product. Well, that was going to be my next question. What do you think of this idea of, you know, if Spotify is the brand for music now, right? Could we see a reality where there's only, you know, we're used to hundreds of years of there being a galaxy of brands for news?

Could there be a, I think it was, who was it? the ex-BuzzFeed guy that had that article that the New York Times is now competing with Facebook. Could there be a future where the New York Times is the primary news brand and they're the best position to be that? Well, I think that's not the future. That's now. I mean, I think the problem is, and you know, again, like there's a good outcome for the Washington Post and the journal is fine. I think the real problem is, and no one has an answer for it, and it's decades now, is that local news is dying. And that's bad for our country and our planet if you don't have plausible local news outlets. And no one has solved that problem. And I, you know, periodically I bring on someone to talk about their plan for that.

And there really isn't one other than hope. And then a couple sort of, you know, the Texas Tribune is the one that everyone always points to. But there's a stunning lack of other Texas Tribunes out in the world. and, you know, the ups and downs of the times are fascinating to write about, and we're in a very close to little media world, so we pay a lot of attention to it. But, you know, what's happening to the Minneapolis Star Tribune or the Luth News Gazette, I think that's still the name of the paper? I'm from Minnesota, I should know.

And then the much smaller papers where there's just no paper or there's one person there, that's the thing that should worry all of us. But to be the inside baseball conversation for a moment, But why is everybody taking the checks all the sudden from the New York Times? Are they just writing big enough checks? Or are they seeing that that might be the big news brand going forward? I think a couple of things. The Times is the Times.

For a lot of people, that was always the place they wanted to get to. So, of course, you'd go there. The Times kind of used to sort of punish you financially for working there. and I think their salaries are getting closer to a sort of regular market. It's also less timesian in a lot of ways. So you've got people who maybe wouldn't have worked at the Times or would have tried to work at the Times, but it wouldn't have worked out. And the Times didn't sort of understand how to handle a new crop,

a new generation of employees who didn't sort of come from traditional newspapers. So it's remade itself in that way. It's a confluence of factors. Well, and I, especially the people that have, come from Vox, I've noticed that they also come with large podcast audiences. And I'm wondering how much you think that the Times is thinking of this like sort of multi-headed hydra strategy of we can be in all these channels because all we've got to do is bring the Times brand. And like the Daily has proven that that can work for them. Well, the daily, I mean, yeah.

And look, I mean, there's a lot of people, the Times is, is omnivorous. It wants to do lots of different things. It wants to hire best of class people. It wants it's specifically interested in some specific subject areas. It has its own sort of feuds and fiefdoms. So, you know, the opinion section sort of has its own set of priorities. The Times has not replicated the success that daily. And it wants to figure out how to do that. So it's constantly trying to figure out how it can get more out of podcasting. So yes, they're hiring Karras Swisher, but they're also buying, you know, Ira Glass's company. They're trying to figure out how, we can't just be the daily.

We've got to figure out other stuff. And so far, they have yet to prove that out. All right. So if you're big enough, you can take a check from the times and bring your podcast over and get a column. But also, if you're big enough, seemingly the thing to do is take money from Substack and go over to Substack. I'm sorry that I haven't heard or read you your thoughts on substack, but just what do you think of...

Well, if you can wait a couple days, I have a substack story coming out. It's not going to blow your mind, but I am supposed to have written a substack story yesterday and then news happened. All right. Do you want to play a game with me because I've got four... This is not playing devil's advocate, but I got four being skeptical of substack. So let me throw these out at you and comment or give me your thoughts, because this is, is just me. Sometimes on this show, this is literally me thinking through stuff with people that are smarter than me, right? Let's do it. All right, skepticism number one, is it, does it only work for big names? Like, like everything else, like these people that are making the

headlines, well, of course they can get an audience on Substack because they already have an audience, right? Mm-hmm. That's the, that's one of the big unknowns. And what Substack would say is, hey, Jud Leggham, who's making more than half a million dollars a year right now based on just what's publicly available. He was not a household name before he got to Substack. He built a cool product and Substack to help him deliver it. And it works really well. There are other writers you haven't heard about who are now making nice livings on Substack

because it allowed them to find their audience. That is the pitch. Is it much easier for my former colleague Matt Iglesias to announce that he's going to Substack and then immediately have thousands of subscribers? Yes, it is much easier for Matt. And the big fundamental question for Substack is, you know, can they create an ecosystem where there are many, many, many, many, many people earning an actual living doing this, even if you've never heard of them,

or is it only going to be sort of weighted towards the Maddoxas of the world? So see, that's skepticism number two, because, you know, my frame of reference is blogging. You know, I was there when blogging exploded. But again, it was, there were a crop of big names that were successful. Even in blogging, to get an audience big enough that you could throw AdWords on it or, you know, federated media ads on there. That was a small ecosystem. So, and that's, that's an ecosystem where there's no cost for people to find you, right? Yeah. So if that's-

Well, you've got it right there. So this is what Chris Bester CEO says. It's like, yeah, you should think about these the way you thought about blogs, except, Even the most successful blogs back in the day didn't really make money. Yes, if you got big enough, you could throw in some ad words there. And if you got big enough, maybe Federated Media would throw you a check at the beginning. But there was no real business. You know, web advertising was pretty nascent then.

It's only gotten worse. What's happened here is because they've given ad of the subscription element, it makes it possible for you to have 2,000 subscribers and make a nice living as a journalist. And so you don't have, you know, it is, in a lot of ways, the promise of the Web 1O Internet that a lot of us bought into that these niches that the Internet would allow you to find a niche around the world and make that, and come into contact with the people who are delivering that niche information or be able to distribute that niche information to that audience and make it sustainable. That's my skepticism, though. We've already tried that once. It kind of didn't let a thousand flowers bloom. We tried it with advertising and advertising. And isn't it harder to get people to pay, though? Well, it is certainly harder for it.

There's zero friction for me looking at your blog. Right. Right. If I don't have to pay for it. And yeah, it's a lot for me to fish out $6 or $10 a month. But if you make something I like and I value it, and those are big ifs, it's a much better system. To that end, another skepticism, everyone, including,

the substack guys, always name check Ben Thompson. Number one, not everyone can be Ben Thompson, right? But I get the argument, okay, there can be a Ben Thompson for every niche, right? But number two, and I say this to everybody all the time, you're forgetting a really key factor to newsletters that have always existed, which is expense accounts. If you can justify it for your work, if you can get your boss to pay for it, that's why you have things like the information and skift and things like that because it is justifiable for your job. I don't know that you can achieve that same level of success for something that is just interest-based. That's not going to make me more money. That's why I pay $100 a year.

It is obviously much harder to sell a subscription to someone who has to pay for their own pocket, and especially if you're not saying we're not going to make you money this way. On the other hand, everyone likes different shit. Now I'm just swearing for swearing sake. And especially if you can't, and I thought the athletic was not going to work because sports content is widely available. But if you are really into a thing and that thing is available to you and you can't get it anywhere else and it's actually something that you can afford, again, you don't need millions of people doing this. You need a couple thousand for this model to work for my go-to thing. It was always like if you're into long-haired Persian cats, which I think are a thing. you know is it worth six bucks a month for you to like join the long-haired persian cat information club

sure and are there a couple of thousand people like you in the world interested in that maybe see you're you're perfect at this because that that was exactly hitting the ball back at my skepticism um it's fun because i'm always the skeptical guy one last one though um everyone's always like oh newsletters it's so freeing we're outside the reach of the platforms and the algorithms And I'm sure, again, substack has thought about this, but tomorrow Gmail could create a tab for newsletters and what does that do to open rates and things like that? And then there's the question of how many newsletters, I've got 40 that I'm subscribed to and things like that. Again, it seems to be, you know, Steve Jobs' old thing about going through an orifice. the web is a wide open.

I feel like an email inbox is an orifice that can get crowded really quickly. Yes. And it already is crowded, right? And Gmail often takes stuff from my kid's school and puts it in the promotions tab. I'm like, how come I didn't get information about the conference I was supposed to go to yesterday? Oh, it's in my spam. It doesn't solve any of those problems. I mean, again, the idea of substack and of any niche media is this is a thing that you care about.

And so you're doing, there's friction involved and you are doing work to overcome obstacles because you care about this stuff. What all of this does, or one of the big things the Internet does is make a lot of sort of easy to access fluff, right, that you can just spend time flicking through the TikToks of the world and YouTube's of the world. And those businesses have to be scale because you don't have any intent there. You're just kind of killing time. And then there's a handful of things and sometimes it's Spotify and sometimes. it's substack and sometimes it's a $60 video game and you care a lot about it and you will take out your wallet

or your mom's wallet and figure out how to get it to you. Real quick, TikTok. If you can, what the hell is this all just Kabuki Theater? Was there any substance to this at all?

Do we expect this to never be brought up again? What do you think? Well, recording this. on December 4th, which I think was a new deadline for the TikTok deal to go through. It's pretty fascinating because obviously, you know, the Trump administration did not really care about TikTok. It was clearly, it was always evident that it was a thing they thought was beneficial to them to talk about politically. And now they've moved on to imaginary ballot fraud.

So there's no one there to push this through. But there are thoughtful people who say, yeah, there really is a problem with TikTok being essentially. a Chinese company. Ben Thompson is one of them. And so something should be done here. There's a whole wider sort of U.S. China thing that gets worked out. So this is me just vaping and because I'm bamping, not vaping. Not in the morning. You know, I do think that assuming this gets sort of left on the Biden administration's desk, that it doesn't go away and that there'll be some kind of change to TikTok. I don't know if Oracle and Walmart being sort of investor, sort of operators, is the solution in the end. Clearly, TikTok is doing just fine, even though no one has any idea.

To wrap up, Recode Media is your podcast. And I'm going to cop to trying to copy your style in the sense of trying to be... Butchering my name. Cash. casual, I butcher everyone's name, casual in conversation, but having all of the facts so that it's, you know,

you're lined up and smart. Do you think of doing a podcast interview differently than if you're doing a, this is an interview where I'm trying to grill someone to get news? Yeah, it's, it's for public consumption, right? So,

I am trying to both get information out and also help an audience understand what is being said or not said. So I'm just, so I interviewed Jason Kyler yesterday, and I recorded that, but it wasn't going to be a podcast, and I was able to sort of, it's just, it's a different form of presentation.

And I don't think that one is necessarily better than the other. It is, I'd say, in my top 10 of podcasts that I listen to all the time, and that might sound like top 10, but I listen to 50 podcasts. Listen, I'll take it. And if it's in your top 10 in the pandemic, it's even better because I know that podcast listening is supposedly rebounded to where it was pre-pandemic. I find that impossible to believe. Really?

My podcast listening is so, and I'm a huge podcast fan, my podcast listening has got to be 10% of where it was last spring. I can tell you straight up from our numbers, we were down 20% let's say April and May and then that was back to 100% by July, and then we're 120% at this point. Yeah, and maybe, I don't know, maybe it's a New York specific thing, but, you know, podcasts for me were commute

and then occasional waddles to the gym, and those are both out, and so I really have to sort of make time to listen to a podcast of doing something instead of doing something else. So thank you, is what I'm saying. Well, thank you, Peter, because we love you, and thanks for talking to us.

Be well, thanks.