Tech Brew Ride Home - Mon. 01/31 – Spotify “Clarifies” The Joe Rogan Situation

Episode Date: January 31, 2022

Summing up the whole Joe Rogan brouhaha from over the weekend. Meta joins a crypto legal alliance and takes a page out of Alphabets book by planning to break out reporting of its metaverse business. And the dotcom bubble called and wants its headlines back: wash trading might be rampant on NFT marketplaces, and a look at the six startups trying to succeed, where Kozmo.com failed. Sponsors: Devry.edu/future Links: Spotify finally responds to Joe Rogan controversy with a plan to label podcasts that discuss COVID-19 (The Verge) Joe Rogan defends podcast and apologizes to Spotify for backlash (The Verge) Spotify’s big Rogan mistake (Protocol) Facebook parent Meta joins crypto group promoting open patents (The Block) Facebook's metaverse efforts are already generating close to $3 billion a year in revenue, analysts estimate. (Insider) LooksRare Has Reportedly Generated $8B in Ethereum NFT Wash Trading (Decrypt) Losses Mount for Startups Racing to Deliver Groceries Fast and Cheap (WSJ) 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 the tech meme right home for Monday, January 31st, 2022. I'm Brian McCullough today. Summing up the whole Joe Rogan Bruhaha from over the weekend, Meta joins a crypto legal alliance and takes a page out of Alphabet's book by planning to break out reporting of its Metaverse business and the dot-com bubble

called and wants its headlines back. Wash trading might be rampant on NFT marketplaces and a look at the six startups trying to succeed where Cosmo.com failed. Here's what you missed today. in the world of tech. Well, over the weekend, it was all Joe Rogan all the time. In response to growing criticism, Spotify published its longstanding platform rules and says it is working to add a content advisory to podcast episodes that discuss COVID-19, quoting The Verge. Spotify says anyone who breaks the rules may have the content in question removed,

with repeat offenders potentially having their accounts suspended or banned. The Verge obtained this policy ahead of the platform's public release, and an internal memo revealed that Joe Rogan's podcast didn't, quote, meet the threshold for removal, end quote. According to the policy, Spotify prohibits content that asserts, quote, AIDS, COVID-19, cancer, or other serious life-threatening diseases are a hoax or not real, end quote. The platform also bans content that encourages people, quote, to purposely get infected with COVID-19 in order to build immunity, end quote, and doesn't allow content that suggests, vaccines, quote, are designed to cause death, end quote. However, compared to the document posted internally and viewed by the verge, the wording on examples has changed and one line is missing entirely. It specifically called out, quote, suggesting that wearing a mask will cause the wearer imminent, life-threatening physical harm, end quote. Neil Young, Joni Mitchell, and Nils Lofgren have all had their music removed from the platform in protest of Rogan's podcast where he has, Among other things suggested that healthy young people don't need the COVID-19 vaccine. Popular podcaster Brené Brown also said she will take a break from adding new episodes to her Spotify exclusive shows, although it's unclear whether the controversy surrounding Rogan was the cause, end quote.

Yes, like I said last week, whether or not folks are taking a principled stand here or not, this controversy gives cover to anyone who wants leverage against Spotify, which could morph into a big problem. for Spotify? For example, Prince Harry and Megan Markle released a statement expressing their concerns about COVID-19 misinformation on the platform. You might remember that the Sussexes signed a big multi-million dollar deal with Spotify to do their own podcast on the platform back in December of 2020, of which I believe there has been one single episode produced in all of that time. But look, I'm not impugning anyone's motivations here. I'm sure there are principled stances all around. Someone on Twitter pointed out that both Joni Mitchell and Neil Young had polio as children, so maybe they have some personal views on the vaccine debate that are stronger than others.

In an Instagram video, Joe Rogan defended his decision to book contentious guests, apologizing to Spotify for the backlash, and detailed how the podcast may change, quoting the verge. These podcasts are very strange because they're just conversations, Rogan says. And oftentimes I have no idea what I'm going to talk about until I sit down and talk to people, people, and that's why some of my ideas are not that prepared or fleshed out because I'm literally having them in real time. But I do my best, and they're just conversations, and I think that's also the appeal of the show. It's one of the things that makes it interesting. So I want to thank Spotify for being so supportive during this time, and I'm very sorry that this is happening to them

and that they're taking so much from it, end quote. Despite the widespread debunking of many of his guests' statements, Rogan takes issue with those episodes being labeled misinformation. He argues that the guest positions on certain subjects like the effectiveness of cloth masks, the origin of the virus, or whether vaccinated people could catch and spread COVID, would have once got you, quote, removed from social media, end quote, but have subsequently become accepted mainstream discourse. He doesn't address their other claims. While unrepentant about booking guests with disputed opinions, Rogan does say he's open to ways in which the podcast could improve. He says he agrees with Spotify's plan to label episodes that include COVID-19 discussion with

content advisories and disclaimers. He also says he wants to, quote, have more experts with differing opinions right after the controversial ones, end quote. Now, as ever, I'm not taking a side on this topic, but let me give you both sides of the debate, if I could, like I always try to do on the one side. You have principled free speech positions, quoting Bobby Goodlady on Twitter. If you're about anti-vax speech, I support you. I also think you're a dumb ass. I support dumbass speech because I support all speech, end quote. From the other side, here is Kara Swisher on Twitter, quote, Spotify can't pretend it's a platform when it is a media company which has legal and ethical obligations like the rest of us.

The problem for Spotify is that there are quite a few alternatives, all of whom are better funded and willing to make a grab here, end quote. Indeed, there has been some stirring both in ads and on social media that other platforms, platforms are stepping up to try to claim audience from this controversy, and that's the crux of the problem to me. Spotify can't have it both ways here. Facebook can claim Section 230 protection or whatever, because whatever objectionable content is on their platform, they didn't commission it. Meanwhile, Joe Rogan is literally on Spotify's payroll, quoting protocol. Moderating audio on demand on Spotify or live on Green Room is hard, especially at scale. And it's

even harder when the offending party is your flagship product, the show you spent a fortune to bring to your platform. Was Spotify ever really going to take Neil Young's side instead of the most popular podcast on its platform? Whether Spotify has a responsibility to moderate every podcast on its platform is a genuinely interesting question and one the company should think deeply about, especially as it continues to invest in technology that helps it understand what's happening on these shows. But there's less question as to whether Spotify has a responsibility for the show it pays to produce and promotes aggressively to its hundreds of millions of users. It wants to be seen like Facebook or YouTube, a more or less neutral platform on which people might sometimes post horrible

things. But Facebook and YouTube aren't directly funding their most problematic contributors, and they're definitely not writing $100 million checks, end quote. One quick bit of inside baseball about that, since this is my industry, after all, I get why Spotify jumped into the podcasting market by buying up the most popular shows. That's what you do in Hollywood. It's a hits business. You go to where the audience is. But Spotify doesn't have an audience problem. Its superpower is its distribution. Discovery is so broken in podcasting that I kind of never understood why Spotify didn't just buy up the exclusive rights to say, I don't know, 20 or 30 smaller podcasts for the same money as they gave Rogan, because if you took a podcast with, say, a hundred thousand in terms of

listenership and promoted the hell out of it on Spotify, on the platform that already has all of this reach, you could turn a show like that into a show with, I don't know, half a million, a million listeners. You would have gotten those shows on the cheap. And since selling ads against them is the whole point, you could have monetized them more powerfully because you'd essentially have created the demand. Yes, Brian, but advertisers want known quantities. Yes, but straw man retorting in my head, do advertisers want controversial content? Anyway, that could be self-serving to point that all out, so take that with all the caveats. Finally, an interesting suggestion I thought came from Elizabeth Spires on Twitter,

quote, how about instead of balancing things, you know, to be disinformation, you just remove the disinformation. What's extraordinarily stupid is that they don't even have to remove Rogan to do that. They just have to edit him. Pretty much every other serious form of media does that. I write political commentary for the Washington Post, the New York Times, and a variety of other publications, and there's no way they'd let me publish COVID disinformation. Why can't Rogan be edited, end quote. I also thought this was interesting. Meta has joined the Crypto Open Patent Alliance, a trade body that promotes the free use of innovative crypto tech. Block established the group in 2020. Block again is square. which I, of course, have to clarify because I'm about to quote from the crypto news website, The Block, which is different. Quote, by joining the Crypto Open Patent Alliance or Copa, Meta has agreed not to enforce its core cryptocurrency patents except in defense of litigation.

The alliance has dozens of members, including Coinbase and Cracken. In April this year, the body sued Enchains chief scientist Craig Wright over his efforts to prevent crypto groups from hosting the Bitcoin White Paper on their websites. Meta's head of licensing and open source, Shane O'Reilly, will join Copa's board alongside representatives from Coinbase and Block. Meta's commitment comes a few weeks after Block's Jack Dorsey, who recently stepped down as CEO of Twitter, launched a new fund to help defend Bitcoin developers against litigation, end quote. And also, also interesting, Meta has announced plans to break out the results of its

AR and VR hardware unit Reality Labs for the first time ever when it reports Q4, for earnings results on February 2nd, quoting Insider. When the social media company reports earnings February 2, it will disclose the performance of a new business for the first time, Reality Labs. This division, led by new CTO Andrew Bosworth, includes sales of Oculus headsets and other ARVR hardware and related software and content. It will sit alongside the company's family of apps segment, which houses Facebook, Instagram, WhatsApp, and Messenger, and generates the ad revenue that accounts for nearly

all of Facebook's business. company, now called Meta, is taking a page from Google's playbook. The internet giant created a new Alphabet parent company in 2015 and soon began reporting revenue and other numbers on its search business and other faster-growing divisions such as YouTube. That extra clarity sparked a surge in alphabet shares. Facebook is now in a similar position. With waning adoption of its core apps and a new focus on the Metaverse, a 3D version of its platforms, access through AR and VR hardware and other tech, the company is eager to focus on its growth prospects. It comes down to isolating different segments within the business to show the street something it can get excited about,

said Dan Morgan, a vice president of Cinovus Trust. Even if it's not a big number in terms of percentage of the business, they've learned from other companies that you can start to trade on a growth number, end quote. Reality Labs revenue should come in around $2.7 billion for all of 2021, Morgan estimates. Mark Mahaney, a top internet analyst at Evercore ISI, expects Reality Labs revenue to be around $2.8 billion for that year, up from $1.8 billion in 2020 for a growth rate of more than 50 percent, end quote. Yes, it is interesting to note that some of the stocks that are the most associated with the idea of the Metaverse have been not down as much as some of the SaaS stocks and other companies we've been talking about having taken a hit lately. Sometimes what

Wall Street wants most is simply a narrative to buy into. Stinging with this side of the tech world for a second, NFT Marketplace Looks Rare has amassed more than $9.5 billion in trading volume since its January 10th launch. That's pretty, pretty impressive, not even a month old. Although, crypto slams suggests that around $8.3 billion of that or so, is users, quote, wash trading between their own wallets, quoting decrypt. NFT analytics from CryptoSlam reported today that it has identified more than $8.3 billion worth of wash trading from looks rare, making up the vast majority of trading volume on the marketplace to date. Most of the wash trading comes from royalty-free collections, which

means that sellers don't have to pay the creators a secondary sale fee. Larva Labs mebits has seen the most wash trading at $4.4 billion, with Terraforms at $2.9 billion, loot at $705 million, and Cryptofunx, a Cryptopunks derivative project, at $251 million, plus $62 million from other projects. According to public blockchain data collected by Dune Analytics, looks rare has amassed more than $9.5 billion in total Ethereum trading volume since its launch. If the figures from both sources, which pull data from the public Ethereum blockchain, are accurate, then about 87% of Lux Rare trading volume to date matches CryptoSlam's criteria of wash trading. Why are some LuxRare users selling NFTs at vastly inflated prices?

It all comes down to the platform's trading rewards model. LuxRare offers token rewards for users who buy and sell NFTs on the site, offering them a percentage of the day's total sales via the site's own Lux token. Users can game the system by selling NFTs back and forth between their own Ethereum wallets via artificially inflated prices with the aim of earning more in looks rewards than they'd spend on LuxRare's 2% marketplace fee and the Ethereum network's own gas fees. LuxRare also provides rapt Ethereum rewards for users who stake their Lux token in the platform, providing further incentive to amass and then hold a large number of them.

The community reward model set LuxRare apart from OpenC, but with trading rewards at their highest level during the platform's first 30 days, some users are abusing the system. Soon after the January 10th launch, data from CryptoSlam showed that LooksRare users were selling MiBits, Lute, and other royalty-free NFTs back and forth between the same wallets for upwards of $50 million worth of ETH each way. At the time, the average sale price for a me-bits NFT over the previous week at OpenC was $4.1 Eth, or $13,800 at the time. looks rare's staggering initial trading numbers looked suspect and the platform did not institute measures to disincentivize users from buying and selling their own NFTs at exaggerated prices. In fact,

Lux Rare retweeted a thread from an investor that called such tactics genius. Looks Rare did not respond to DeCripps' earlier requests for comment, end quote. And finally today, a bit of a long read from the Wall Street Journal, a look at the fight between six rapid grocery delivery startup here in New York City, which have raised more than $5.5 billion since 2021 to hopefully come out on top in this market, I guess. According to sources, some of these companies are averaging a loss of greater than $20 per order. Quote, since High Young Park moved to Manhattan last year, he estimates he has taken in more than $400 of free cookies and cream, ice cream, laundry detergent, and other groceries delivered to his door all courtesy of a way

of rapid delivery grocery startups offering generous referral and discount codes. I have not paid for toilet paper, paper towels, dish soap, or hand soap, said the 23-year-old founder of a small online auction startup. He said for most orders, his only costs are generally tip and tax. As a consumer, he said, I think it's fantastic. A venture capital-backed battle is raging in New York City in the burgeoning field of instant delivery. At least six startups, including Gorilla's Technologies, Joker, Getter, and Bike are vying to win the chance to ferry groceries to customers within 10 to 20 minutes of their order placement on an app. Prices are similar to grocery stores, discounts are plentiful, and many services don't have a fee or minimum order,

allowing consumers to request a single pint of Ben and Jerry's delivered to their doorstep. Food delivery app DoorDash, based in San Francisco, also recently entered the fray in New York City. While these consumer-friendly offerings have brought surging sales, losses are heavy, given the high costs of prolific advertising and paying courtiers to hand-deliver potato chips, soap and eggs in a short time frame, industry investors and executives said. Some of the companies are averaging a loss of over $20 per order when factoring in costs like advertising, those people said, the economics are brutal, said Damir Bekrovich, a principal at venture capital firm index ventures, which hasn't invested in any of the startups.

He added that if any of the companies can build a giant business with efficiencies from scale, that picture could change, but the short-term challenges seem daunting. Take, for example, Fridge No More, a New York-based company that launched in 2020. As of September, its average order value was $33, according to a 2021 investor presentation viewed by the Wall Street Journal. After paying for the products, the people packaging them, delivery writers, waste, and other expenses related to storage, it lost $3.30 on every order. That, however, doesn't include marketing costs. FriG No More spent $70 on advertising to win the average customer, an investment that resulted in a $78 loss for every customer that stayed in the 10 months through September, according to the presentation. Co-founder Pavel

Danilov said that the company's margins have improved since then and that it now spends much less marketing to consumers. Executives and backers of the companies say losses today are investments in a promising prize. Groceries are already an enormous business, and if one or two of the startups grow to dominate the market for quick groceries, the numbers could eventually turn profitable, they say. In the early minutes of a plane just taking off, it consumes a lot of gas, said Nazim Salur, founder of Istanbul-based Gettier, which raised money last summer at a $7.5 billion valuation. Once Gettier grows large enough, the business will become profitable, he said,

something he has seen firsthand with early Gettier locations in Turkey, end quote. Yes, if you're a New Yorker of a certain age, then you remember things like this. You remember when you just cycled through the various dot. com companies offering you essentially free money to try out their services. You might remember the flame out of original delivery companies from the dot com days, companies like cosmo.com and urban fetch. They never could get the economics to work out for them. And yet, so much money has been poured into these new generation delivery companies with the exact same idea. I've been assuming that somehow it is different now. Somehow the economics now work out. People are trying this all around the

world, so there has to be a there there, right? Quoting again from the piece. Joseph Park, Cosmo's founder and chief executive, said there are many tech improvements that could benefit the current crop of companies such as GPS that guides drivers. He said the basic rapid delivery business model could work today, though 15-minute delivery is far more difficult than an hour. It's not easy, he said, but it's absolutely possible. His co-founder, Yang Kang, is less optimistic. Quote, it's the same story, he said, to make this profitable is hard, end quote. And quoting Anand Sanwal on Twitter, quote, I was an early employee at Cosmo back in the day. We lost money on every order, but our secret was we were going to

make it up in volume. A lot is different now, mobile, internet ubiquity, infrastructure costs, but this makes me remember my days as a paper millionaire, end quote. So my mother's side of the family all came from the Cincinnati area, my cousin Kevin. still lives there and is a daily listener to this show. Shout out to you, Kevin. My most formative sports experience, aside from Euro-1996, was when the Cincinnati Reds swept the Oakland A's in the 1990 World Series. So, this is a long way of me telling you that despite not having watched a single minute of NFL football all season, until this weekend, I am claiming my birthright to jump on the Cincinnati Bengals bandwagon. I'm sure you'll understand.

I've never had an NFL team. What am I going to do, be a Jets fan? I guess if I was going to pick a team, it would be the Jets, but, well, if you know about the Jets, you understand. Talk to you tomorrow.