The Pomp Podcast - Rich Greenfield, Partner at LightShed Partners: The War for Time and Attention

Episode Date: February 12, 2020

Rich Greenfield is a Partner at LightShed Partners. In this conversation, Rich and Anthony discuss new media models like Barstool Sports, The Athletic, & Substack, what’s going on in the streaming wars between ESPN, Disney+, Netflix, Apple, & Amazon Prime, the podcast world with Bill Simmons, Gimlet Media, Anchor, & Luminary, and what he thinks is going on with Twitter, TikTok, & Quibi. CRYPTO.COM-----The only all-in-one platform that allows you to BUY / SELL / STORE / EARN / LOAN / INVEST crypto all from one place. Join over 1 million users and download the Crypto.com app today to earn $50 USD using the code ‘pomp2020’ when you sign up for one of their MCO Visa Cards.  TAXBIT-----Refund-maximizing, cryptocurrency tax software you can depend on. Visit taxbit.com/invite/pomp and receive 10% off your tax plan today by signing up for a free trial. TRAVALA.COM-----Travala.com is the world’s leading blockchain-based travel booking platform trusted by thousands of customers worldwide as their preferred online travel agency. Book over 2 Million hotels and accommodations and pay with 25 cryptocurrencies or credit and debit cards.

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off The Chain, simply the best podcast in crypto. Let's kick this thing off. Rich Greenfield is the co-founder and partner at LightShed Partners. He's widely considered one of the best TMT analysts on Wall Street. In this conversation, we talked about new media models like Barstool Sports, The Athletic, and Substack, what's going on in the streaming wars between ESPN, Disney+, Netflix, Apple, Amazon Prime, what's happening in music with Spotify, Apple Music, and Prime Music, the podcast world with Bill Simmons, Gimlet, Anchor, Luminary, and others, and what he thinks is going on with Twitter, TikTok, and Quibi. We also touched on the Warner Music going public story and how political ad dollars are going to shift as less and less people subscribe to cable bundles. I really enjoyed this conversation and I learned a ton from Rich, so I highly recommend you take a listen. But before we get into the episode, I want to cover the three sponsors that made it possible. The first is Crypto.com. They're a pioneering payment and cryptocurrency platform that seeks to accelerate the world's transition to cryptocurrency.

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and build open source technology controlled by software and governed by users go check out Travelala.com. That's T-R-A-V-A-L-A.com and book something today. Now let's get into the episode with Rich. I hope you guys enjoyed this one. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy but only as an expression of his opinion this podcast is for informational purposes only all right guys bang bang i've got rich here uh he doesn't know

i'm gonna say this but uh i think that you're probably recognized as the best tmt analyst on wall street is that uh it's flattering it's flattering but is it true some people will say that some of them some would say most hated but you know it just depends on your perspective in life. All right. I just wanted to get that out of the way, right out of the gate. I got a whole bunch of stuff I want to talk to you about. First of all, let's just talk about your background and how did we get to LightShed? Because you spent the last, what, nine years or so BTIG, but what'd you do before that? I mean, I've really spent 20, I guess this is 24 years plus analyzing media stocks. I started at Goldman Sachs right out of college. I love the media space. I mean,

Mike is in front of my mouth as I'm talking to you. I mean, I was running the college radio station up in Boston at Brandeis. I was calling basketball games. I almost went to Newhouse to do sports broadcasting and ended up in finance because that was my other passion was finance and sort of have combined the two of media, sports and finance all into one, which is covering the broad media tech space and started at Goldman, spent eight years there, have been in a couple of other firms in between. But the idea has always been about covering media and tech companies. And so I've been covering names like Disney going back to 1995. And so it's been a long history of looking at the space and seeing the evolution. I like to say that my first two months on the job

at Goldman Sachs, Disney bought ABC. So just to kind of frame like just how far back in history you go and you look at the consolidation that's playing out now with Disney buying Fox and AT&T buying Time Warner. I remember when Time Warner bought Turner. So I used to carry Ted Turner's bags to conferences. And so it's been a long evolution, but the reality is I think it gives us really unique perspective on the space to look back over a 24 year plus period and see how this industry has evolved because there's been a lot of change. We're sitting here on a podcast and you think like my first year at Goldman in 95, the only thing technologically going on in the media space was the creation of the DVD and the predecessor to DirecTV was pushing satellite

television at the time. And that was technology in 1995. And now we could spend hours talking about technology's impact on the media space and really how technology sort of infused and really colliding with media. Yeah. And part of what I think people really enjoy about your analysis, both kind of what you guys do professionally, but also just on Twitter is your understanding and kind of how you pay attention to both the public stocks and things you guys cover, but also your understanding of the private markets and a lot of what's going on there and those trends, et cetera. And you blend them together pretty nicely. Yeah. I mean, look, we met Evan Spiegel at Snapchat when it was 20 people and

we really try to understand where the world is going. And I think you can't do that in the media space broadly without really getting into the early stage startups that are playing out. And we've seen that time and time again of how all of this disruption has impacted. I mean, look at what Netflix, I mean, you think about Netflix, which was a DVD company when I first started looking at it. And now, you know, you look at how every media company is evolving. You have to really spend a lot of time on the startup community to understand what's going to impact these big public companies, not just from what they're going to make acquisitions in, but just how it's going to impact their business. And I put everything from everything we do focuses around

the consumer. What is the consumer doing? How is consumer behavior changing? And how do you make money off of that. And I've become an active angel investor. I think if things go well, we'll launch LightShed Ventures over the course of 2020. But we have a lot of ambitions to be a lot bigger than we are now. But it all comes back to it's driving this kind of ultimate flywheel of you learn more from the private community. I think it makes you a better analyst in the public markets in terms of how do you analyze these companies and get smart on these companies. And that also creates more windows into what are the things that are missing or what are the missing pieces or problems that the public companies are facing that the private sphere can address or try to fix. And I think you're seeing that flywheel really play out.

And I think it's been – from our research standpoint, I think it's been what really differentiates us because I don't think a lot of people focus on the private sphere sitting in my job. Absolutely. Couldn't agree more. Just so people know, LightShed, just kind of what do you guys do as we get into some of the more nuanced topics? They've got that perspective. Yeah. So my whole career has been about covering stocks. So buy, sell, hold ratings on public media and tech companies. And I started LightShed with two partners, Walt Pysyk and Brandon Ross, who worked together with BTIG for a decade. The three of us and two other colleagues left in July and in September started up LightShed. And LightShed is essentially in its initial

creation is a research platform. So we're writing research at LightShedTMT.com. We are building out our research subscription business. We will add – we were talking before the show, talking about we want to get our own podcast started in 2020. We want to build out LightShed Ventures. But what you see today is essentially a content business focused on helping our clients, our subscribers, make money in the media and tech space. Got it. And most of those are all focused on public markets. I wouldn't say that, actually. There's plenty of people who are – I think the value add of our content applies across a wide spectrum. And so the reality is there's fewer and fewer investors today, even if their focus is public market investing. More and more of those firms are making private investment because, look, companies are going public later. You're seeing a lot of companies stay private for a long time, and you're seeing a lot of what you would think of as very traditional public market investment funds allocating a portion of their portfolio to private investing. And I think our access to private companies is a real value add for a lot of investors, no matter whether they're in the public sphere, private sphere, or across the two.

For sure. Before we get into what I think is more of the mainstream topics, I want to talk about some of the new media models that we're seeing. The first and probably the one that I think about the most is Barstool Sports. So for those that don't know, Barstool is a – we'll call it a sports blog. That's kind of how it started out. It originally was a newspaper. I would call it comedy more than sports. Characters for sure. But I think comedy really infuses and what differentiates it is the comedic take on sports content. I don't think you could look – I don't think you can say sports without comedy.

If you wanted to say a sports comedy, fine. But I think it would be unfair to call it sports because it's not about – it's not where you go to get the scores. It's not where you go to get the analysis of last night's game the way an ESPN would break it down or a Bleacher Report would break it down. This is where you really go for kind of the comedic take on everything that's happening in the world, the wide world of sports globally, especially in the U.S. The more entertainment, which is definitely driven by the comedy. But what they've now morphed into, they took an investment from Chernin. Then they brought in kind of professional leadership. They've really built a big business, about $100 million in annualized revenue now.

And they just did the deal with Penn to kind of push more into kind of the gambling component of that sports world. What's your general take on, one, that deal with Penn, and then also, two, why no one's really kind of copied what they've been able to do? Is it driven by the people behind this or kind of what's that magic sauce that they have that others haven't been able to copy? Look, I think one of the real challenges facing digital media publishers is trying to build a brand that really means something. And I think this is not just go to college campuses. This would be walk into a Wall Street trading floor, walk almost anywhere on the East Coast, Midwest, and even parts of the West Coast, and you'll walk into a dorm room, girls and guys, and you'll see Barstool merchandise, Barstool posters. You'll see chicks in the office. You'll see so much Barstool branding.

You know, I don't – there is such a passion for the brand, and I think that's what's really important is that Dave Portnoy and Erica Nardini, the CEO, they've really understood that they have this passionate connection with the listener, with the watcher, which is the reader. And that can translate into many things, and whether it's selling merch, whether it's tuning into a serious radio show, whether it's using the app, whether it's showing up. I mean if Dave Portnoy told everyone to show up in Union Square, New York City at 5 p.m. tonight just because, there'd be a crowd of people not knowing why they were lined up, but they would go do it. That's something that's really powerful in the media world, and you think about what you can do with that passionate, loyal fan base, and there's lots of things. And I think one of the things obviously that Penn saw in this transaction was the ability to drive them instead of going to DraftKings or to FanDuel, drive them to Penn's apps to gamble, especially as mobile gambling and mobile sports betting takes off over the next – take a lot of time for legalization to play out across the entire country. But state by state, you're certainly seeing it in New Jersey. Obviously, FanDuel and DraftKings have dominated this space. If you want to break in, branding and being able to use a media business, a broad media business, to drive people from one to another.

I mean I think Portnoy is on record basically saying in many ways he helped build the Fan Duels and Draft Kings, directing people to go there. Now he can direct people elsewhere, and I think he's got a loyal enough following where they're going to follow whatever he wants them to do, obviously within reason. But I think that that passion for the brand – and I also think what's really interesting about Barstool is they've rethought the model. Most media businesses that you and I have grown up with tend to rely on advertising. And this is one, especially digital media businesses. And I'm thinking if you think about historically the Vices, the Refinery29s. I mean you go through the list. They traditionally rely on advertising.

And I think more and more of them are now converting into studio businesses. But if you see Barstool, they really – from a very early on, it was commerce and transactional from a merch standpoint was a huge part of their business. And so really rethinking media models I think is why the Barstool case study is so important for every media company. Whether or not they like the content of Barstool is a whole other thing. Seeing how Barstool owns the customer, how they're able to use that or push that customer across their properties, leverage one podcast into another, leverage one event into another. But people that actually mean how many digital media brands do you actually want to wear the T-shirt? I mean, I think of wearing the T-shirt is a huge determination of success. Like if you want to wear a T-shirt of a digital media brand, that really means something.

And I think there's very few where you'd actually want to wear that brand and people would go, oh, my God, you're so – I'm a stoolie too. Yeah, yeah. So I looked at the deck that Penn Gaming put out on the acquisition, and 31% and 32%, so about 63% of the total revenue of the business is in podcast advertising and merchandise. And to me, it was that it was so backwards compared to every other media company in the world, right? They were quick to get on podcasts. They've got a number of the top 50 podcasts in the world. And then the merchandise component, and I don't think that a lot of the mainstream media, right, can do merchandise because their brand promise is very different, right? It goes back to this kind of fanaticism that people have with the Barstool brand.

The New York Times can't be pushing merchandise onto subscribers because it's just – it would violate that brand promise. I mean, look, I think ESPN had an incredible sports brand that people probably would have worn when I was growing up. I mean I don't think it's – I think it's very different now. I think ESPN to most people now means a live sports event that they go to to watch a live game on a Saturday evening, a college football game or a college basketball game. I don't think they think of the brand in the same way that they used to. But I think a lot of media brands are like that. I mean MTV doesn't mean what – I think about what MTV meant to me growing up and tuning in for the top 100 video countdown into New Year's. TRL and –

TRL, right. I mean, TRL was, you know, or, you know, think about the grind and South, you know, spring break with MTV that my friend Andy Schoen helped build. And that's a brand that really meant something to an entire generation. Now, I think Spotify is that type of brand, you know, for if you're thinking about a media brand or music brand in 2020, Spotify has far more kind of that cool factor that you'd want to wear the Spotify t-shirt far more than the MTV t-shirt. And I just think it's like a lot of these digital or a lot of these legacy media brands have not kind of stayed up with what is, quote unquote, hip and cool for the consumer. Yeah, we'll get to music in a second. But yesterday I tweeted a photo. I was in a Starbucks and it had a we're hiring kind of chalkboard that had all of their benefits outlaid. And one of them was you get a free online education from Arizona State University. You get, you know, 50 percent off the food. you get all these different things and then one of it was a free spotify premium uh account and it and i literally tweeted and i said i don't know if the free education or the free spotify account was more valuable right but depending on the demographic spotify actually may be the winner spotify has an incredible brand and you know i think it's just you know it's hard to differentiate

music services because they all have the same songs effectively i mean some have more than others, but effectively you have access to the world's music catalog. And so the underlying technology and the brand mean a lot. And I think that's what Daniel's been so smart to build is he's built a brand that constantly iterates. And I think it's that constant iteration is something that a lot of the traditional media companies struggle with is that they don't live in that cycle of constant iteration. And I think as they've tried to get into tech, it's been one of the real challenges they face is that they don't live on an every week refreshment cycle for a new feature. They live in months, if not a year cycle for, you know, planning things. And I

think it hurts them as they try to break into tech. Yeah. So this is part of the Barstool magic sauce, right? Is this something can happen. They can turn around t-shirts and merchandise, et cetera, within an hour and literally get it out. People are buying it, et cetera. They also added a, um, a subscription component. So people can actually buy in. One of the questions that I have is, or you talk a lot about the Barstool brand, but one of the things that they've done that ESPN I think did early on, but kind of got away from is Barstool's really kind of put these personalities on a pedestal, right? So whether it's Big Cat or PFT commentator, all these guys, et cetera, can somebody else replicate Barstool's type of success with just the model and not have

the personalities? Or do you think all of this kind of goes together hand in hand? Well, look, I think you're talking to a broader theme of like news as a category, right? You know, think of the innovation of Fox News. Fox News is not really about news. I mean, during its primary money earning period, which is prime time, it's not about news at all. It's all about talk. And it's because so much of the quote unquote news and information has been commoditized by the internet that where you really differentiate yourself is in conversations like we're having, the actual kind of personality driven side of the business. And I think that's what Barstool, obviously in a very different context than Fox News, but I think it's where they've really seen

as a huge opportunity and exploited it, is really defining the category of, look, live sports is really expensive. And so getting in and doing what ESPN does, where you're spending billions of dollars, I mean, ESPN spends $2 billion for 17 Monday Night Football games. That's a very expensive business that requires tens of millions of people paying a lot of money in their cable bill every month. The Barstool model is obviously a very different cost model where you're able to do a tremendous amount with a relatively slim content budget. Well, during those live games, what are they doing? They're literally sitting in front of a phone basically propped up and they're filming themselves reacting to the game, right? Which is an amazing hack as to how you get

around the licensing. Absolutely. I mean, I think Barstool has been very creative in how they you know play in the world of sports without having to absorb the i don't want to say absurd but the ever-increasing costs of live sports broadcasting so staying with sports another uh new model is uh the subscription and so you've got things like the athletic that are popping up which the data that was recently released after their last private round is incredibly impressive in terms of retention rates and monetization etc we've seen the new york times i think is the best example in the mainstream press who's gotten five plus million subscribers now. ESPN Plus has started to actually get people to pay and they've got, I think, seven and a half million or so

subscribers. Is this where all of media goes or is there still room for the non-subscription based business model? Yeah. Look, for a second, let's just push ESPN Plus to the side because I think it's a little bit of a unique case. I think if you look at the New York Times and The Athletic, they've both been great examples of when you put up a paywall and you basically tell people they've got to pay for something and you have content people want, people pay. Now, I mean, clearly the New York Times is benefiting from adjusting how easy, I mean, it used to be very easy to get content for free. Now they've made it harder and harder and they keep restricting how much content is free before they force you to pay. So they've gotten technically smarter,

understanding how to market which people to go after. I mean, New York Times has really invested in the technology side of the publishing business and so that they really understand how to social market on, you know, digital marketing campaigns, how they figure out how the conversion looks like, what churn looks like. They've had to learn essentially this new business, but it really is underlaid by the idea that there is content that people will pay for. Maybe it's not as many people as we're reading for free online, but that there's a business of people that will absolutely pay for these things. And look, you've seen lots of examples of audiences that will pay for something. You know, look at a Crunchyroll that has several million

subscribers for, you know, for, you know, for Japanese anime, the athletic, you know, when you take the best writers on sports out of the publications they're reading and say, this is the only place you can get those writers. And we're going to give you those writers access to all, and not just those writers, you're going to get access to the best sports writers from the key publications all across the country that have left their jobs to come here. There's a group of consumers that are tribal. I mean, you know, sports is really tribal. And if you want to read The person you've grown up with reading for the last 10 years, 15 or 20, 30 years, you're going to subscribe to The Athletic. And the price point of – call it $40 a year I think is what –

I think $60. Yeah, but I think there's lots of people on promotions and discounts. So probably the blend is probably in that $35, $40 plus range. It's a Costco membership, right? Costco, I think $60 a year and then with all the promotions. This is not expensive. And I think there – look, it may not be the – I mean you have to separate. When you think about subscription businesses, not everything is going to be Netflix with 160 million subscribers.

Not everything is going to be Amazon Prime with their global subscriber base. You have to put kind of the lens of like is this a good business? Can you create a successful business with a group of passionate, loyal subscribers? And I think the answer is absolutely yes. And I think that – I've been really impressed with The New York Times. I've been really impressed with The Athletic to date. I think what Alex has done, I mean, trying to prove people wrong day by day who never said this could be done. And, you know, he's going into new businesses, you know, putting podcasts behind the wall for subscribers and looking for ways of adding incremental value, expanding overseas.

And now they have EPL content and going after the, you know, the English Premier League diehard fans who are probably even more passionate than a lot of U.S. sport fans are about their sport. So I think he's been very smart in targeting the sports that have real tribal audiences and going after kind of the talent and locking up that key talent in an industry called traditional publishing, newspaper publishing, that's in secular decline. I mean leave the times aside. The rest of the entire industry is in deep trouble, and it's not getting better. ESPN+, I just wanted to come back to you for a second. It's sort of in a different universe. you know, ESPN Plus is sort of the long-term subscription life raft for ESPN. I don't think, you know, most people, when you said the seven and a half million subscribers that ESPN Plus has,

remember, most of those people were subscribing to a triple play bundle of Disney Plus and Hulu over the last quarter. So before the triple play was announced, they only had three and a half million subscribers. And then Conor McGregor, I think brought another million or so during the So the point is, is that, you know, and that we don't know what the longevity of that last million is who came in for the McGregor fight. You can come on and off these, you know, part of the problem with a lot of the subscription businesses that it's really easy. You know, it's the exact opposite of taking a day off from work and waiting for the the charter service person to come to your house and disconnect your cable and then having to, you know, install it again. And then sort of a painful and just waiting on hold to make that happen, to get someone to come to your house or to go to your house is nearly impossible. So now you live in a world where in the time it takes me to say cancel, you could go on your phone and cancel one of these services.

And so the churn dynamics are tremendously different in the direct-to-consumer world. And I think it's a real issue as all of these companies – everyone wants to be in the Netflix business. Everyone sees it and goes, oh, my God, we should be doing that. It's hard to be in the direct-to-consumer business, and there's a reason why Netflix is creating as much content is that they need to keep you from leaving because it's that easy to leave. And I think, you know, publishing businesses in many ways are naturally built because there's constant content that's coming out. You know, look, Disney's got a great brand and there can be a lot of people who just subscribe to Disney Plus because it ties to kids and people want to have that around as kind of a constant babysitter. But, you know, in terms of high profile content for an adult, there hasn't been anything new on Disney Plus since Mandalorian ended in December. There's a new show on Netflix every single day.

Yeah, and it's very topical, right? I mean everything from the Aaron Hernandez-type documentary to the latest movie or their originals, et cetera, it kind of spans the gamut. Yeah, well, I think it's an important reminder of if you're trying to build a mass audience product and when I think about mass audience meaning something that can have upwards of 80, 90 million subscribers in the US and hundreds of millions of subscribers globally, you can't just reach one part of a household. I mean take John Stanky who runs AT&T, WarnerMedia within AT&T, and he's public on record talking about the fact that HBO didn't have enough breadth to it. HBO was really great for someone like me. I love the shows on HBO, but the reality is in order to expand HBO, their problem was something like Game of Thrones ends and you turn off. You leave, yeah. Not me, but lots – millions of people churn off when a big show ends because there isn't a show every single day.

There isn't a show for your kids. There isn't a rom-com. There have to be titles for everyone in the household. And so you may not care about To All the Boys I Love No. 2 or whatever the show is, but it's not for you. It's for someone else in your household. It's for your kids or whatever. And it's recognizing that in order to mitigate churn in the new world, you need to become important to everyone in the household all the time. Yeah, and this is actually what's so impressive about The Athletic.

The numbers at the last private fundraising, Bedrock Capital led the round, published a bunch of these numbers, and the churn after year one. So if you get through year one into year two is actually staying above 90% – or I'm sorry, the retention rate is staying above 90%. And so it's just because it's so easy when you see people staying for multiple years in a row at these low price points, it goes back to this idea of like who's winning? The people who are actually making things that people want. Look, subscription businesses are incredible. You look at – the cable bundle was incredible for a long time, right? I mean think about how easy it was. You showed up to work and whether you were ESPN or Discovery or AMC or A&E or Lifetime or MTV or Nickelodeon, it didn't matter.

Honestly, if nobody watched your channel the night before, money just rained down every single day. I mean think about it. At the peak, 100 million people were paying over $8 a month for ESPN and the viewership on a nightly basis was a fraction of that. And there was a – more than probably half the base never even touched ESPN over the course of a year. And yet you were paying a lot of money for it. And so the challenge that the traditional media, the legacy media world faces is that they'll never be a model as good as TV's legacy business model. I mean you're never – nobody – I always think about from a standpoint of Netflix. How many Netflix subscribers are there that don't want it?

Like that literally pay for Netflix and don't want it? The number has got to be very small. where there's lots of people who pay for a cable bundle, and there's lots of channels that they have no interest in, including the really expensive ones. I mean, when you realize it's something like MSG Networks that my colleague, partner Brandon Ross covers, you're paying $8 a month for that. Yes, network, you're probably paying $6 to $6.50 a month for. Most regional sports networks, you're paying $4 to $4.50 a month for, whether you watch them or not. And so there's a lot of very expensive content that you're being forced to pay for

because of the way the bundle was built and because these big media companies own so many channels and they don't want to let you choose FX without Disney. They don't want you to choose MTV without Nickelodeon. And so they kind of force the bundling together. And I think the reality is what's happening now is the consumer is saying enough is enough. All the best content or all the most ambitious content is going direct to consumer. And consumers are just finding new outlets for entertainment. And I think it's not just things like netflix and video it's also the athletic like you're reallocating your entertainment budget to a wider array of options than you've ever had and not all of it is traditional video the way we

think of video it may be something like headspace you know or it may be calm i mean i think there's a whole array of of where you spend your time apps they're going to go well beyond the the traditional video watching experiences for sure one other new model um that i've seen and have become a fan of is like the sub stacks, the morning brews, kind of all of the email direct to consumer type content delivery businesses. What are you seeing there? How do you guys think about that? Yeah, look, I'm an early angel investor in the skim. And I think if you were to look at things like the morning brew that have sort of, you know, taken a different spin on that model, I think it's in many ways, it's a lot like what Barstool has proven out is that you have

passionate audiences about a topic, lifestyle topic that you can build real fandom around, the real kind of habitual behavior and use that audience, use the passion of that audience for your content and do other things with. And so I think, you know, we're still really early in that evolution. But, you know, I think if you look at some of these brands that are trying to replicate that level of passion and use it to monetize across a number of different ways, whether it's affiliate marketing, whether it's sponsorship, there's, you know, look, the challenge that brands face, I mean, this is a really serious problem, you know, not just in the U.S., but globally is as linear TV viewership disappears, I mean, disappears is a harsh word, shrinks,

but shrinks dramatically, right? I mean, there's already, there's 120 million households with televisions in the US, 40 of them don't have cable television. So there's 40 million homes that you can't reach on ESPN or MTV or A&E anymore. You literally cannot reach those homes. They don't subscribe. And so the challenge as this number keeps shrinking and even the people that still have it, they're watching less and less. So the challenge for a marketer is how do you reach consumers in 2020 and beyond? I mean, forget about where we are today, but what about in five years? When that 80 becomes 60 or that 80 becomes 50, how do you reach consumers? And so I think all of these brands are trying to figure out, yes, you can spend on Facebook, you can spend on Google,

you can spend on Twitter, you can spend on Snapchat, but everyone's trying to figure out how do you create a real meaningful relationship with a consumer? And I think some of these passionate audiences, you mentioned The Athletic, you mentioned Barstool, you mentioned, you know, I mentioned The Skim, Morning Broom, and all of these are trying to go after passionate audiences and trying to figure out a way to connect brands, advertisers, in many ways with consumers and take advantage of that. Some of them are ad-free like The Athletic. We'll see whether ultimately there's opportunities for brands to play a role. But I think, you know, some of them are going to shift into, I mean, obviously, Barstool's done a great job of leveraging advertising on the podcast side

and then turning it into merchandise sales. I think everyone's going to have to figure out new models because the reality is advertisers are dying to figure out how do they reach consumers in 2020 because it's just getting a lot harder to get the same reach. They're paying a lot more. Every year, they pay more for less and less reach. And so the question is, how do you make up that gap? And I don't have any crystal ball. I mean, you bring a CMO onto this podcast. This is a real fundamental challenge that all of these brands are facing. No one has the crystal ball right now of how to execute on that. Yeah, and one of the things to me, you know, when we were at Facebook and thinking about ad placements and kind of targeting and all these things is most people actually are okay with ads if they're good ads.

They're things that they want to see. They discover things, all this kind of stuff. But one of the hard parts about television, for example, is it's really hard to do kind of the micro-targeting that a Facebook allows you to do, right? And so one of the things I've seen on the email side – have you seen this new one called Girls' Night In? Have you seen this yet? I have not. So my fiancé started telling me about it, and basically it's a woman who created an email. She sends it, and it's kind of around the self-care, right?

So if you're a woman, you want to stay in, you want to do your facials, paint your nails, all this kind of stuff. But it's perfectly built to suggest products and brands to people who are specifically interested in this. And so you see the media like what Michelle Phan built up on YouTube with her passionate fan base and then built Ipsy around it. And, you know, look, the reality is everyone is trying. I go back to what is where do we center our research all around the consumer? It's a war for time and attention, right? I mean, there's a fixed number of hours and minutes. And, yes, you can multitask and you can be listening to this podcast while you're sending a message or snapping a friend or whatever.

But the reality is it's a war for time and attention. And everyone is trying to capture in their ecosystem, whether it's Google, whether it's Facebook, the challenge that the media world uses is that the vast majority of the traditional media world, what I call the legacy media companies, and we're talking in this case, whether we're talking Viacom, whether we're talking Fox, whether we're talking, you know, go through the list of, you know, even HBO and for the vast majority of its subscribers and even Disney for most of its relationships, they don't know who you are. They don't know who I am. Right. I mean, they don't have a direct relationship with us. They live in a world where they get Nielsen ratings and the data, you know, ABC puts a show up and they get a Nielsen report the next day and it's extrapolated from 40,000 homes of what we think people did the night before. Whereas Facebook knows exactly what I do. They know exactly what I'm interested in. And when Instagram serves me an ad like they did last week for Core Power Yoga opening up on the Upper East Side two blocks from where I live with a free first week, it's an incredibly – not only am I interested in fitness and not only do I – I am a Peloton user and I go to SoulCycle and I go to Rumble. And like it's an incredibly well-targeted ad, whether or not I end up actually going, the fact of just how good that targeting is versus compare going home tonight, turning on ABC, and you're going to see the same ads that I see. Not to mention every single other person in New York State and other than the few local ads that are inserted, everyone in the entire country is seeing the same ads.

It doesn't matter whether you have interest in those products or not. And so TV in many ways is the exact opposite of the Facebooks. And I think the beauty of what Facebook's shown, especially with Instagram, is Cheryl and the team have really built essentially the holy grail of advertising, right, where they've actually tied together advertising and commerce. Like, you actually want to buy the products on Instagram. It reminds me in many ways of the ads in InStyle that my wife would flip through and go, oh, I want to buy that. Like, you know, the ads are content. I think the ads on Facebook are content. And what the beauty of that is you can have an infinite ad load because you don't mind the ads.

You actually like the ads. You actually want ads on Facebook. Yeah, you engage with them. Right. Whereas what was the last time you saw an ad on TV that goes, oh, that was so awesome. I wish I could share that with a friend. I mean, yes, it happens. If I think about like the Beats ad that ran before the World Cup, you know, like there are certain ads that you go, that was awesome.

But it's very few and far between. Absolutely. When we leave the ad world and we get into the kind of streaming wars that are going on, I had to make a list. I hate that term, by the way. Okay, why? Well, I just hate the idea that it's a streaming war between each other. When I think the reality is, is that what's actually happening is consumers are leaving traditional linear TV and they're embracing a wide array of streaming services. Like I don't think Netflix's gains are Disney's losses and vice versa.

It's not a winner-take-all type market. It's because you have – essentially consumers were spending five hours a day. Go back a few years. People were spending five hours a day watching linear TV. When you shift that – and they were spending – a household was spending upwards of $100 a month. And not to mention they were buying DVDs. They were, you know, I mean, there were lots of other incremental spending on top of that. The blockbuster.

For sure. They were buying downloads on iTunes and on Amazon and all of that. And they were going to red boxes and Walmarts and renting movies. And now entertainment dollars are shifting to an array of streaming services, whether it's Netflix or Disney Plus or Hulu or Prime Video. And some of them don't even have incremental costs, right? I mean you are a T-Mobile subscriber and the team over there gives you Netflix for free. You sign up for Verizon Unlimited plan and you're getting Disney Plus at least for year one for free. And so this idea that one's gain is another's loss is just a fallacy.

I mean consumers are going to have lots of these services. There may be three or four that are essentially core services, but consumers are going to have lots of these and it's so easy to go in and out of them. I think it's much less of a war against each other and much more of a war of, wait, why are you subscribing to television bundle? Like why are you spending $80 on a video service that you really don't use except for live sports? And an antenna for most of your listeners does a pretty good job of getting them football, live football. For the ones that are diehard NBA fans or diehard MLB fans, yeah, they're probably going to have to subscribe to YouTube TV or Hulu. Hulu has live sports. Now when you watch that Super Bowl spot and it's like, okay, the reality is those are great services, right?

Think about it from the consumer standpoint. If you're just a fan of the NFL, you can sign up for Hulu Live or YouTube TV. You can sign up from August until February and then cancel. You don't need to be a subscriber for the full year, whereas no one ever called up Comcast and canceled halfway through the year. So you have a whole new behavior of you can manage – not only do you pay less than you would pay for a video subscription on one of the big cable companies or satellite companies, but it's also easy to turn on and off. And I think – I mean if you use the experience of YouTube TV, it is night and day versus spectrum. Like I – it's actually hard for me to understand how anyone who's actually used or seen the YouTube TV product, why you wouldn't be using YouTube TV versus spectrum because it's just a night and day experience. I'm in a cloud DVR and access across – I mean the fact that I could watch YouTube TV right here, any of my channels, and the same thing if I'm in Los Angeles versus my spectrum, which is essentially tied to my house and is clunky even in my house.

It's amazing these things are still relatively small. You know, roughly call it 9 million of the 80 million homes with multi-channel television are taking one of these kind of over-the-top streaming bundlers of channels, which is still – I mean, look, it's big from zero, but it still seems small when you look at just how much better the experience is. For sure. How do you think about – when I think streaming coming from someone who doesn't spend all day thinking about it, I go right to like Amazon – or I'm sorry, Netflix, Hulu, et cetera. It's like Kleenex. There are certain brands that matter most. That's streaming to me. But then when you really dig into it, there's Apple, there's Amazon, there's others that are there playing.

What's your kind of view of the landscape when it comes to streaming, specifically around video, outside of live sports? Forget about the live sports for a second. Just when you look at who's creating content, what are the platforms, what's each one's angle, and how does that landscape kind of play out over time? Netflix, obviously, it's all they have. I mean, their entire business is they need you to subscribe to Netflix for the video content, the bundle of video content that they're aggregating for you, increasingly their own content. But it's probably 50-50 theirs versus third party, and it's moving more and more towards their own content over time. Which is a great model because they have the data. They know what you want to see.

If you click on a rom-com, you're going to get a lot more rom-coms. if you click on an international, you know, if you click on Roma, you're going to get a lot of international content. The, you know, the beauty of Netflix is data begets more data, you know, because you can create a better experience. You can learn from it. You can try lots of things. I think the culture of testing and learning and experimenting is something that is so, is so powerful at Netflix. And it's just not built into the DNA of, of traditional media companies. And as they convert from linear TV into the streaming world, their greatest challenge is understanding that it's not just about putting a streaming application up. It's about learning

and leveraging the data and evolving the model and seeing what people do and being willing to cancel shows because the price value doesn't make sense relative to the number of... You actually know how many people are watching. Theoretically, they know exactly how many people watched each episode, where they tuned out, where the problems were, that data is really powerful. And it's something that, you know, no company has ever, no one's ever had access to 160 million subscribers, households, not just people, but 160 million households, figure three people per household, maybe even more with password sharing. There's a tremendous amount of data that's being aggregated. But again, it's not just having the data, you have to use it, right? Like capturing data is

one thing, understanding how to use it. And I think that's the beauty of what Netflix has been successful at is using the data to inform decision-making. It doesn't make any show better. Like it's not like they can say they can't take a bad show and make it better simply by having data, but I think they can learn what types of shows people really like, what types of content, what genres to go into, where to go deep, how well is international content working in one market versus another, what's missing from the offering, where could they add more content? And I think that is really powerful. But to your question on like the landscape overall, you know, you've got Netflix by far the default kind of clear leader in the category. And you've got everyone else

kind of realizing, you know, you've got obviously Amazon was there early as well. Hulu was there sort of as last night's television originally. And I think increasingly as last night's TV sort of goes away, it's increasingly going to morph into more of an original programming story, much like Netflix. So you're seeing FX now. If you watch the Oscars last night, a bunch of ads for FX on Hulu, you're going to see more and more FX content flow into Hulu over the course of the next couple of years as it makes that transition. But I want to come back to the philosophy here of like, why is an Amazon or Apple in this world? It's all about keeping you in the ecosystem for a long time. Time and attention. Yes. They want more of your time and

attention. The more time you spend with Amazon, the more you're going to purchase. Like the only reason they do Amazon Prime Video, I believe, is not because they think it's for the good of their heart. They want to give you, you know, free movies and TV shows like Mrs. Maisel to watch. They actually believe that if you watch Mrs. Maisel, that you'll end up, end up spending more time with Amazon and purchasing more. That's the reason. I mean, that's why they do this content. And so it's about keeping you in the Amazon ecosystem. Apple's doing it because they want the more time you spend with Apple and Apple devices. And if you come into the Apple TV plus app to watch the morning show or to watch, you know, pick, you know, any of the new shows that

they've created The Servant, which was, you know, very good. And you look at this content, you go, okay, I'm spending more time with Apple TV Plux. All of a sudden you realize, oh, I can subscribe to HBO through Apple. I didn't realize I could do that. Let me subscribe to HBO through Apple. So now I'm spending even more time on my Apple devices. And then I'm like, well, I'm even more wedded. And, you know, not that churn is a problem for Apple, which my colleague Walt Pisces covers, but it just keeps you in the ecosystem and it creates a services layer on top of the equipment that Apple hasn't had before. And so it plays into this, how do you build this robust services layer. It's through great content and people, let's go back to where we started

with the cable bundle. People spend a lot of time and a lot of money on video. And so I think it's the opportunity is to capture some of that time attention and then turn wallet share for these companies in their ecosystems. And I think each of them is, you know, they have different goals, you know, ones to sell devices, ones is to kind of drive retail sales, but each of them is trying to keep you in that ecosystem longer and longer. Even Disney plus, I mean, And look, the reality of Disney Plus is probably to take – for the first time ever to mine data for Disney so that they can hopefully in success – we haven't seen it yet. But hopefully in success, they're sending out to their members, their subscribers, and they're saying, would you like to come to the parks? We can offer members a discount or we can get in early to the parks or what are the membership has its privileges, benefits of being part of the Disney Plus Club?

We haven't really seen that yet. right now it's just about content on the service, but I imagine over time that this will go far beyond just simply a subscription fee of $6.99 a month. Yeah. So two things. One is the membership model obviously drives revenue. And in the short term, you can easily see, hey, I'm going to look at data. I'm going to use that to create new content and give people what they want, et cetera. But what you just hit on is kind of this connection between the subscription to receive digital content and everything else in an ecosystem whether it's apple giving discounts for products whether it's disney getting you in early or discounted pricing whatever to their parks to

showings in person whatever it is i don't think that a lot of people have done that yet not just disney but just across the entire landscape it doesn't seem like that's something that they're pushing is it because you need to build up critical mass first and then you kind of pull that trigger or is it something else that's kind of holding them back from kind of jumping into that that connection of subscriber to other types of services and experiences? It's a really good question. I mean, if I think kind of holistically about the question you're asking, I mean, certainly a company like Disney has been the best at making use of it, right? I mean, you create movies and then you build theme park rides around them. So-

And then sell stuffed animals and clothes and all sorts of- Princess dresses for Halloween, right? And so there's no doubt that they're, you know, when you build brands or you build IP, that there's lots of ways to monetize them. When Stranger Things came out, there were lots of people buying Christmas, you know, Stranger Things, you know, sweaters and Christmas lights. And there is no doubt that there are ways to extend successful brands, just as we were talking about when you were in the Barstool conversation. Everybody's trying to create IP that can be leveraged above and beyond the core business.

You know, this is not just about the video subscription business. it's about understanding the customer. Look for a company like Amazon, it may be enough to just know that this is one more reason you don't leave the prime ecosystem, which has a lot of value to Amazon in terms of purchase behavior. But they're also probably learning a lot. I mean, we haven't gotten to music yet, but when you think about what you listen to in music, what you watch on video probably says a lot about who you are and what types of products you're interested in. I think you can learn a lot about people from their media life. And so that information, that data can be very powerful when harnessed properly.

A friend of mine recently brought up, he said to me, you want to know how valuable Netflix is? And I said, how? And he goes, what's it cost per month? And I said, $9.99. That's what I signed up at, right? No, they've had like two price increases. I don't even remember that they moved it, right? $12.99. Yeah. So $12.99 now, right? And he basically was like, that's how you know a product has really served its purpose for somebody is they remember the price that they probably paid initially. But if that price is moved up, you don't see kind of a higher degree of churn. You don't see the elasticity, et cetera. Yeah. Look, Netflix grew slower this year

and they cited the price increase actually as the key driver of why they grew slower. Grew slower, but not increase in churn. Definitely an increase in churn. Okay. There was an increase. There was an increase in churn, but they didn't lose subs. How many businesses can raise price by 20% and still gross subscribers. Yes, churn picked up. And so they had to have more gross ads to mitigate the churn.

But they actually, with a 20% price increase, Disney Plus and Apple TV Plus launching. And remember, Disney added 26 million, probably 22 or 23 million of them in the US alone in the fourth quarter. And Netflix still added 400,000 subscribers at that 20% higher price than it was a year before. And so this is all about becoming so important

in your daily life that you can't imagine disconnecting. Again, the beauty of Netflix, right, is it's easy to cancel. There's no contracts. You're not locked in. If you want to cancel Netflix while we're talking on the laptop that's sitting in front of you, it's really easy to do. So you have to believe that the beauty of Netflix is the price value is so good. There are no, I mean, $12.99 is nowhere near the right price. I mean, just think about what they're doing now if you whether or not you watched the oscars last night multiple netflix movies were nominated some of them won but remember what does a movie cost you i mean you go to the movie theaters in manhattan a movie costs what at a minimum 13 or 14 dollars oh it's more than that

yeah most movies you're paying 16 17 dollars 3d you're spending over 20 netflix is getting out again the movie ticket average just to level set the whole country listening to your podcast movie ticket price on average is 10 per person okay across the whole country matinee is included and all of that, kids, etc. But still, $10 per person for a movie before popcorn, before babysitting, before gas to get there, whatever. Pick your whatever it is. $10 a person. Here we're talking about $12.99 for the entire month for your whole household for- Unlimited. Unlimited. I mean, there's a movie a week on Netflix, let alone a big movie probably every month lots more to come they're just getting started in their movie you know let alone all

of the tv series so yeah they're losing friends but there's like so much stuff that like you know i mean try to go somewhere right now without someone talking to you especially someone in a little bit younger than the two of us try to go somewhere with people not talking about cheer everyone's talking about cheer like every single person's talking about cheer a show that wasn't even on my radar screen a few months ago and now it's like part of memes and everywhere you go People are talking about cheer and they're talking about you, a show that failed on A&E, literally was – it was a joint venture of Warner Brothers and A&E and now is literally blowing it out on Netflix where all of the content moved. And I think it just shows you consumers want to watch in this new model, and enabling people to binge has been transformative to how people watch television. And I think a lot of the legacy in these shows is trying to force you to watch week to week even as they do streaming.

People want to binge, and people want to be – it's not even as much as they want to binge. People want to be in control of their viewing experience, and I think that's really the opportunity. But I think you go back to this. When you love something so much and the price value seems so compelling, even when the price goes up, you don't leave. How does that look through that perspective for Disney+, right? So they came out with a much lower price point. They got a ton of subs right out of the gate. I think some people were surprised by how low the price point was.

How do you think about that? $6.99 is an absurd price point for the product. $6.99 literally is comical for what they're providing. When you think about one new Disney, if you wanted to buy Blu-ray version of Frozen 2 when it comes out in a few weeks, that's probably a $20 product. You know, the – when that movie hit streaming, it would go on to Netflix, which again costs far more than $6.99. And so to put all of their kind of streaming movies and all of the catalog, Disney Channel and all of that content for only $6.99 was an amazing price value. the price point was certainly lower than than we and and you know a little bit lower than we thought i think definitely lower than wall street thought overall the flip side is is they

didn't have a lot of content right in terms of fresh content and so it's a very library heavy service the good news is kids like watching lots of library they don't mind watching the same mickey mouse clubhouse show over and over again they don't mind watching you know frozen one you probably could show to some you know five and six seven year old girls like boys and girls like they could watch that over and over and over and over again they know the three daughters so i just think of like you know i think of my youngest and how much how much she watched frozen the original back in the day at that point you know a digital version or probably a blu-ray version but like the the the amount of re-watching enabled disney to have a lot more value add to the

consumer on day one now the question i think really becomes how long does that you know how long before because not everybody obviously is a family when you have 26 million subscribers that quickly and now i think 28.6 if you include um what they did in january the question is is it is really easy to churn and you know mandalorian ended in december do all 28.6 million stick around until mandalorian comes back or until there's a marvel series in august it's gonna be really interesting to see the price point may be low enough where churn And so I think that speaks to why is the price point so low? It was to mitigate churn as much as possible until they could build up enough original programming and they'll never be Netflix. So I'm not sure the price point will ever be, you know, 15 or $16, but I think it was recognition that there wasn't a lot of kind of adult skewing fresh content and that they were really relying on kind of the library, at least for the first 12 to 18 months to carry them. Yeah. I don't have kids, but is this a no brainer have to have for parents?

Disney Plus? I think if you have kids under the age of 10, this is a very high price value. If you were in the mode of having to buy one of these things, I don't even mean to buy it on DVD or Blu-ray. But if you had to buy one of these titles, Disney generates roughly $2 billion backward looking on home entertainment. So that's the purchase either digitally or physically of movies and television shows. If you were spending to buy even just one of these titles, getting Disney Plus, the annual plan is – call it $69.99. The price value is pretty compelling. Instead of what you were doing before, if your kids aren't into Disney princesses or Lucasfilms or Marvel, no.

I mean there's not enough original programming above and beyond. Maybe you're a Nat Geo fan. Look, I'm sure there are some people who bought it just because it has the entire Simpsons catalog available at the click of a button. Look, the number two show on Disney Plus right now is – and has been – has been Simpsons. That's crazy. Now, there's a lot of episodes. Yeah, yeah. That's true. But it's sort of ironic that the number one thing on Disney Plus isn't even a Disney title.

I mean they bought Fox to get the Simpsons. But I think it just shows you of – this is a very library-heavy offering at least initially. I think they've got – we always thought that they had 20 to 30 million homes in the US was their addressable market. They got there just – Four months. Shocking how fast they got there. I think the question now is if you want to move the price point up or you want to have a far bigger addressable market, do you have to diversify the content? I don't think they're going to go there.

Or the other big lever that Disney has ultimately at its disposal is there's no reason why a movie comes out in the movie theaters today and it doesn't show up on Disney Plus for six to seven months. That legacy windowing of the movie business doesn't make sense to a consumer in 2020. And so I think the ultimate tool – and I don't think Disney is going to talk about it anytime soon. I don't think they're going to do it. But the ultimate weapon in their arsenal is to shrink windows. and I think it's ultimately very consumer friendly because remember, you go to the movie theaters, they don't know who you are either.

They don't know that you went to see Avengers. They don't know that you went to see Rise of Skywalker. They don't know that you tuned out or I would assume most people don't walk out halfway through the movie. You might've really been disappointed in it, but imagine you were a subscriber to Disney Plus and that movie was available two weeks after it came out

and after the first half of the movie, you actually just stopped watching. That would be incredibly data informative to Disney, but they don't get that data because they live in a world of movie theaters where they don't have any relationship with you, the end customer. And so I think ultimately the quest for data is going to drive everyone to move more and more in this direction. Netflix is starting it, obviously, just as they did with binging. They started movies direct to consumer without kind of skipping the theatrical window, and sometimes they're forced to do short theatrical windows. But ultimately, the goal is to get you movie content far sooner than they ever wise could. Let's switch gears, go to streaming music.

I think we've seen a huge push by Spotify in recent months, but obviously Apple Music, Prime, etc. How do you guys think about kind of music in the lens of that like war on time and attention? You know, it plays into this overarching audio thesis. actually it goes beyond music is music or audio has become so accessible right i mean we're all walking around with kind of you know almost like computers in our ears with airpods i mean everywhere you go you see people with you know airpods in you see smart speakers in people's homes you see them you know i mean the price point for these things is like almost free i mean like there's so many things you sign up for now and they send you a smart speaker as part of signing

up for something like it's hard not to have a google home device or an amazon alexa or you know pick your service then you add in siri on our phones etc siri on our phones and then then take the where is two hours a day of audio listen to the car and between android auto carplay you know alex is getting into the car you know it's getting easier and easier to voice control in the car and these interfaces are getting better and better that the the time spent with music it's it's just easier you've taken all the friction away from listening to to audio content and if you think about audio, it's not just music, right? I mean, what do you listen to? You listen to music, you listen to news, you listen to talk, you listen to weather. I mean, sometimes you even

listen to sports. I think it's fairly natural that all of these activities are moving from kind of a linear terrestrial radio world into a digital world. And the beauty, I think of podcasts much the way I think of talk radio, right? I mean, if you wanted to listen, I think But back in the day, you'd listen to Howard in the morning and the reality is now you can listen to this podcast whenever you feel like it. You don't have to be at certain place at a certain time. Just like – the same innovation as video, right? Like I don't have to tune in at 8 o'clock on Tuesday. I can watch that show whenever I want to watch it because it's available on demand to stream on any device anywhere I go.

You walk into a Starbucks and you see someone streaming The Crown. It's no different than someone walking around with all the music, both music and talk news content that podcasts enable. And so I think if you think about this experience, it's taking what was a lot of friction. You had to go out and buy an individual album, usually only wanted a song or two, and it's moving from an ownership model to an access model. And it's, it's really very similar to the same thread that you saw in video where, you know, you'd buy a DVD and it would sit on your shelf collecting dust. And now, you know, you could, how many people bought friends DVDs, never really watched them. And then you look at Netflix where there was nonstop watching of friends on these platforms because it was just so easy. So you take all the friction out of the business model or out of the consumer experience and people use it more. So music, I think, has never been listened to more than we have right now. The economics of the business are just beginning to get better. It took a long time. If you look at consumer spending on music in 2019, essentially we're back – it was up a lot, up mid to high teens in terms of overall consumer spending. But you're back to levels of like 2004, 2005.

It's taken a long way to build. It collapsed. I think of in 2000 is where things really started to get ugly. By 2000, 2008, it got really ugly, declines of 20-plus percent of consumer spending on CDs. It's taken a long way to build out of it, but the model of access that Spotify – I think Daniel Ek deserves a lot of credit. It never would have happened without the perseverance of one entrepreneur who just literally wouldn't give up in the face of incredible odds and incredible pushback, and look where we are now. A lot of people don't know how much pushback that they actually went through and kind of the legal threats and all the things that kind of – Bands were pulling songs and albums, and I mean it was brutal.

I mean think about it. Taylor Swift was – I don't want to say an enemy of Spotify, but certainly was pushing back. And, I mean, we've gone through multiple iterations of talent having to get comfortable that this world is far better than the old world. And I look at it now and I go we're just – Spotify has got 100 million subscriptions. Apple has got over 60 million. There's a bunch of other services out there from Google and Amazon. And you've even got things like even TikTok trying to do subscriptions in certain developing markets. It's – I mean music is going to have hundreds and hundreds of millions of paying subscribers all over the world and obviously price points are still really low. But there's a tremendous opportunity because you're spending – people are spending so much time on these streaming services.

I think going back to your point you made before about Netflix, as you spend more with these services, as it's not just about music, as it's podcasting, as it takes on more of your day, your pushback on pricing disappears. And we haven't seen. Spotify has raised price in one market so far. They tried it in Scandinavia. It went very well. They haven't done it yet. But at some point, Spotify is going to raise price in major markets and especially family plan subscribers, people who are spending $15 a month. I mean I have five people on my family plan in my household, and I mean there's no chance whether they were charging $15 or $17 would matter. That's a very sticky customer because they love it, and I think the brand really matters. I think Spotify has done a great job of building out what it means to be a subscriber to that brand, and everyone else is playing catch-up. Everyone wants to be in that pole position. What's interesting is there's been a couple of attempts. You mentioned Taylor Swift, Jay-Z with Tidal.

I think Drake at one point was very kind of, hey, my content is going to be available one place and not another. I think Kanye has done that, et cetera. Every single one of them is caved at some point, right? Because ultimately what ends up happening is the artist seems to realize having my content in as many places as possible is actually better for me than me trying to play favorites. But that's a function of the music model, right? So in video, you don't go touring, right? Like the ultimate goal of a Brad Pitt is not to go on a tour, right? Like I mean he may write a book and go on tour.

but like it's not about touring right like the ultimate usually trying to get out of get away from people right right so but my point is like i don't mean to make funny but like you know the goal of the movie business or the tv business is to make money in that business to get the next product right so the exclusivity i mean you're used to things being game of thrones was exclusive to hbo and we're kind of used to that in the music world you essentially wanted to be on every radio station you wanted to be on you know you wanted to be at every retail store for some people to buy your cassette then cd now the idea of like you want to be everywhere and as visible as possible because ultimately you want to go on tour and that's where you make the real money right like

where you keep 95 plus of the ticket sales if you're you know a teller might make 99 percent of ticket sales when she goes on tour that's the incredible you want to be in that live nation ecosystem, touring all of those venues all over the world, that's where the real artist money is. And so from that standpoint, limiting yourself to one service or another doesn't make a lot of sense. If your goal is reach, it doesn't make sense to be on one service. I think it's in many ways, it's why the NFL, if you think of go back, the NFL has sort of shied away from making any of its content exclusive to the streaming world and has really pushed, not even for the cable, they've wanted to really basically be on broadcast TV because they want reach, right? It's all about

reach. And I think if you're an artist, you really live in the world of reach and you want to be available. I mean, the beauty of what Spotify does even versus an Apple, right, is that you don't even need to pay a subscription to be on Spotify. There's a free version that's ad supported and you can literally hit, you know, essentially anyone on planet earth with a phone can listen to Spotify. You similarly, you know, you look at Amazon prime, you know, most people are not paying for the premium prime subscription for music. They're just literally, they have an Alexa device or they have some form of smart speaker, and there's all the catalog, meaning stuff that's six months or older is just available to stream on demand as part of an Amazon Prime Music

subscription. And so that reach element, I think, is really important in the music space, and I think is a large reason why you haven't seen these exclusives, by and large, haven't worked. What's the ad models look like in terms of dollars compared to the subscriptions? So for Spotify and Amazon, et cetera, is the ad component of their revenue material or not really? Starting to be. I think Spotify – Oh, it's actually increasing.

Meaningfully. I mean I think Spotify a few years ago didn't – I think advertising – first of all, the labels wanted to kill it. Yeah, of course. Right? So they wanted to go, hey, look at the Apple model. Can't you be more like Apple? Why are we having a free product that you don't have to subscribe to? I think Spotify has done a really good job of proving to people mathematically that if you get people in the free funnel, they love the product.

You get them addicted. They upconvert at a very healthy rate from free to paid over time. It doesn't happen instantly, but it happens over time. Spotify has proved that out, and you don't hear labels or I don't hear labels the way I did a few years ago trying to kill Spotify free. If anything, I hear the reverse of wouldn't it be great if Apple had a free funnel to drive even more people into the Apple Music paid product? Now, Apple doesn't do ads. You know, they're not really big on data usage, and so I don't think it's ever going to happen. But I think it's interesting that the music industry has sort of gone full circle of we hate the ad-based product.

Now that's a great driver of the paid conversion. And so I think Spotify is really taking the advertised – the ad-driven product far more seriously now than they did a few years ago. A lot of – you know, they iterated it a lot in 2018, started to bear some fruit in 2019. And you're starting to really see them talk about how much momentum you're seeing, you know, for a company of Spotify's age, for monthly users to literally be re-accelerating shows you something's working, right? That that free funnel is really starting to take off and they're adding more paid users than they did the year before. So sort of that kind of flywheel is really kicking in. And I think the labels get it. And I think the labels, obviously, they're seeing their valuations go up.

I mean Universal sold a 10% stake at an incredible valuation to Tencent, which was – Vendee sold a 10% stake in Universal Music. Now Warner Music is trying to go public. I mean music is hot again, and it's been a long time since music was hot, and I think that's really interesting in terms of the idea of shifting proof of – as you shift from an ownership to an access model, you can actually make a lot more money. All right. We got to talk about Warner Music because I didn't realize this, but when they announced recently that they were going to try to go public, it was brought private for about $3.3 billion within the last decade. And now the latest private valuation was $33 billion, so 10x in terms of multiple appreciation. Who knows what they'll end up going public at, but is this a – I'm not going to speculate. Okay. Is this a Warner is hot and Warner has a great business and therefore this is a good time for Warner to go public? Or is this more of a function of frothy public markets? This is a great time if you're a private company to go public if you've got a good enough business that the public markets want.

You have north of 200 million people subscribing at some price point to music. If we one posit believe that people are going to spend more, which I think both of us do, that we're spending enough time on these things, maybe not all of them, but the good ones you're going to spend more money on per month. And then the question is just how big is the TAM, the total addressable market? How many people worldwide could be spenders of music? I think that number is still – if we're somewhere between 200 and 250 million households paying now, could that number be double or triple the universe that's currently paying apps? When you look globally, how early Spotify and Apple and Amazon are and so many – and Google Music, YouTube Music, I think there's a long way to go. And so I see why people are excited. There is a real opportunity to, first of all, leverage the data in a very different way.

So you actually know. And the other thing to remember is when these companies, to your point on going private, these companies were quote unquote fat, right? Like they were cost fat. So now because of the change in the business, they've been forced to get skinnier. They've fired a lot of people just to put it in plain English. They've fired a lot of people. They've become much leaner organizations than they were a decade ago. And the revenue is starting to explode. and subscriptions are much, you know, as we, you know, subscriptions are very good, predictable business. And I think it's one that investors, you know, if I look at the long history of the cable industry, people, and even how people think about Netflix, people love investing in subscription economics and music's essentially being driven by subscription economics. And so I think it makes that content increasingly valuable. And, you know, in a media space where a lot of the media ecosystem is sort of collapsing, you know, so much of the ecosystem is built around the cable bundle and cable networks and publishing. And you look so many problems.

Here's a bright spot because music's already gotten killed. They're on the comeback trail. Video, we were talking about videos going from a hundred million people who were subscribing to cable television in the US. We're down to 80. Remember the last time we were at 80 was 2000. So we're retrenching back. Now we're going to go towards what? 60 million, 50 million. And I'll ask you like how many households in this country have at least one diehard sports fan? Like where you need – I don't just mean you need NFL, but you need everything. Like you need ESPN. You need Fox Sports.

You need the regional sports networks. Like how many homes is that? Well, I'm going to flip the question just a little bit in the sense of not only do you have to have a diehard, but also your diehardness is not served by seeing the highlights on Instagram or something else. It's great. I totally agree, and that's the problem, right? Like there's a whole generation growing up with YouTube highlights and Twitter highlights is more than enough. I haven't watched SportsCenter literally every single morning. I would wake up early and watch, and I would try to walk out of the door right after top 10 at the end of the hour, right?

And that was kind of our, okay, let's go to school, my brothers and I. I have not watched SportsCenter in at least seven years, right? I've seen every single highlight on Instagram. Lots of highlights, all these things. So the question is, is that number – I know it's not 80 million. Oh, yeah. It is probably closer to 50 than it is to 70. Is it 50? Is it 40? Is it 30?

I mean I think a lot of the – a lot of companies that I talk to believe it's somewhere in the 40 to 50 million range. But that means the current universe of households paying for multi-channel television is going to have. Yeah, cut in half. So cut in half with a lot of the costs that we're talking about, meaning sports costs fixed. So you think about what that means and you go video is on the way down. That's why everyone is shifting and trying to jump into the direct-to-consumer streaming market, these so-called streaming wars that we talked about before. Music is coming out of it, right? They've gotten destroyed.

They took their pain. That's why those sales to Len Bovotnik happened for Warner Music. This industry got destroyed, got leaner, and now is benefiting from not so willingly but finally embracing the access model of what Spotify pioneered. And now they're starting to realize how much bigger this business can be. And, you know, you look at something like, you know, take TikTok, right? I mean, look at the amazing use case for music. And so, you know, TikTok and Facebook and Snapchat, all of these companies are starting to pay for music, right? Because all of their products, they're not music streaming services, but they all need music to function.

And so as music becomes more embedded in, you know, in other applications, it creates new revenue opportunities that didn't exist before for the music industry. So there's just more and more ways to make money than ever before. I mean, who would have thought that, you know, artists like Lizzo, you know, blow up on TikTok and, you know, it's sort of just amazing what's happening in the ecosystem and, you know, in terms of, you know, where there is so much creativity. And I think that's what makes music exciting right now. Yeah. Tangentially related to that is a podcast, which still plays into this whole. Like what we're doing right now. Yeah.

But well, here's part of it, right? So it's a mix between kind of the trends in music, but also kind of that talk radio being replaced by more of on-demand, put the listener in control. All those elements are there. But we've seen two big things happen. So one is the Anchor and Gimlet-type acquisitions that Spotify is doing, and they're really kind of making a big play and consolidating. But then also we've seen the Bill Simmons of the world, et cetera, where these are legacy media folks who are realizing there is a new medium, and they're trying to go figure it out. Barstool was the same way, right? I mean, Portnoy was publishing a pamphlet in Boston, but he goes into podcasting.

Like I think everyone's realizing – And 30-plus percent of his revenue comes through the advertising. What's amazing about podcasting is it's so intimate, right? Like you have us in your ear right now. I mean most people are literally – they have a little device in their ear, and they're listening to us in their ear. I mean it's so personal, and you get to know the host. You get to know the conversation. there is you know i don't care whether it's a you know host like you or whether it's storytelling

like you see on something like cereal you know full disclosure i'm a wondering investor but like you know listen to the shrink next door i mean there's just incredible audio storytelling this is like you know we're still at the early stages i mean this is a one billion dollar revenue business in advertising and that one billion dollars the numbers i recently just saw uh rogan $30 million just on the advertising of the podcast. There's a true crime or something like that that did about $15 million. And then Dave Ramsey, $10 million a year just on the advertising. But what was shocking to me, that second one, I forget the name of the podcast, they did $15 million in advertising via their podcast. And the report I saw was they did 40

live shows last year where people paid to come show up, a couple hundred people at each one. And then they also have a $40 a year annual membership where 55,000 people are subscribed to get special episodes, behind the scenes, AMA, et cetera. When you start to look at that, that starts to look a lot like a Disney with the IP and monetizing it through different channels, et cetera. But it's all audio based and creating characters or stars or personalities. Yeah, I mean, look, I think, you know, podcasting is going to be a natural place where people look for IP creation. And so, you know, I went to the Peacock, which is NBC's, you know, their version of their streaming service that they're launching. It'll be out in, you know, soft launch in May and bigger launch around the Olympics later this year. But one of their big launch programs that they profiled was Dr. Death, which is a Wondry show, you know, Wondry murder show that they're turning into a TV series.

And, you know, I think, you know, you're seeing podcasts permeate culture. I think – I don't – whether podcasting becomes super successful simply because of the ad dollars that are behind it or the subscription, higher-end subscription premium services. You look at a company like Glow.fm is trying to make it a lot easier to sign up for these premium subscriptions that podcasters launch, like you mentioned. Or does it become just IP monetization through books and TVs? Who knows? I don't think we know yet. all we know is that there's a lot of great brands being created. People love listening to podcasts. They love that they can do it on their own schedule. Any free moment of their day, they can

plop one on and start and stop whenever they want. And the ad load is reasonably light. And you can skip the ads if you don't like the ads. And ultimately, the ads are going to get more and more. I think one of the things you'll really see innovation-wise starting with Spotify is starting to make much more dynamic ad insertion. So you're hearing ads that you care about. Right now, podcasts, basically the ads have been baked in and oftener times are not relevant to me or you. That's going to change over the course of the next 12 months. And I think Spotify is kind of planting a beachhead. Like this is a category that they know they need to win.

People listen to a lot more than just music. Why would you want to just – when you think about the radio in your car, when you get in the morning drive, like you're not just listening – even if you were listening to Z100 back in the day and the Z Morning Zoo, right? It wasn't just for the music. You were listening to the hosts and the banter. And like there, it's far more than just music. I think that's what Spotify realizes that it's, you know, you want to provide a complete audio experience. You know, they dabbled in video for a while.

I think they realized that that's not where they're, that's not where the expertise is where Spotify really can excel. Especially as you think about taking the advertising side of the business more seriously, it's a natural place to play in and go after podcasting. And I look, I think these podcasts, it reminds me of the early days of, of radio because you have the ability to have this relationship you know we it's funny how we were talking about barstool as we started this off when you think about podcasting it's that relationship with the host i mean think about howard when i think of howard stern i think of snapple to this day like

i just think of snapple i don't know if you do yeah but i always think of snapple it's joe rogan and cash app sure yeah and so brands become so attached to the to these hosts and it's such a personal relationship and they have such kind of passionate audiences, just like Portnoy and what he's able to do. I think that's the power of this podcast, Mina, is that you have this passion and it's going to get easier and easier. I mean, I think it'll get easier and easier to monetize that fandom over time in terms of the ad experience where you'll be able to save the ad or learn more about it just using your voice. I mean, all of that's going to get solved over the next several years it'll take time but podcast as a medium is still in the very early days with a lot of

growth potential and it's a category that right now i think the hardest thing about podcasting i don't know about you but it's finding the ones to listen to yeah the discovery yeah it's really hard well and here's another thing right if you look at like joe rogan who's the highest earning podcaster on on earth as as far as been reported uh but i wonder if he makes more money doing the UFC commentating and his comedy shows etc or through the podcasting I don't know I mean look I just invested in a company called Podchaser that's trying to solve this issue of discovery I mean I think everyone's trying to analytics well it basically they want to basically be the IMDB of podcasting basically help you find lists and and what you should be listening to me I think

it's a real challenge of like how do you find podcasts that you're interested in most of its word of mouth it reminds me a lot absolutely you know it reminds me a lot of like the video space Like there's, Hey, go watch this show or go watch this show. Now it's like my wife gets told, go listen to Oprah's podcast or go listen to Katie Couric's podcast. Like it's, it, this is all word of mouth. And I think there's going to, you know, there's a real opportunity to help the consumer find all, cause there's lots of content you don't even know exists. I mean, we all know Joe Rogan. There's all, you know, there's a few that we all know, but there's such a huge tail of great content, finding it and surfacing it is still really hard. And I think Spotify is trying to,

I mean, all of these companies are trying to tackle this challenge. So one of the things that I've thought a lot about just having a podcast is the ad model has been pretty much 100% of the market. Like we've seen in video, Netflix, et cetera. We've seen consumers start to pay in a subscription model. There's a couple of people who are trying it with podcasts, Luminary, et cetera. Their whole model has been raise a bunch of money, go get a bunch of talent, put them behind a hard paywall, and then upsell people into it. Right, and the challenge is just, again, go back to your musician issue. people most podcasters are not doing it purely for the fee they get for the podcast they're

trying to build their media brand and so you know i think the the the in some ways does it make sense there should be a subscription service for podcasts that's ad free sure yeah theoretically that makes sense the challenge is behavior has been different theoretically the challenge right now is is that most podcasters i know want to be as famous and visible as possible and paywalls don't help them like even the you know the reality is yes spotify has a paywall but there's a free version that you can get access to every podcast that they offer for free i mean there may be a couple of exclusives that have like a staggered release but essentially everyone can get access luminary i think look luminary is gonna have to prove that they can get an aggregate enough

audience to make it worth it so that podcasters put their best stuff behind the paywall and look They just brought in new management. Simon comes from HBO. He certainly understands premium content. He just lowered the price. First thing he did in the door was lower the price. My guess is to get the number of subscribers up because you – in order to entice talent, you need a much bigger net to entice talent. Yeah, because it's almost like – and I think some of the numbers they were paying people were pretty – like seven-figure type deals to go behind that paywall.

But you can not only do that for so long and two, even the money doesn't speak as much as if you're Spotify, right? And you've got a hundred plus million people, whatever, listening. Yeah, I think it's less about the content behind the paywall than it's what catches zeitgeist, right? Like you want, you know, if the content that's behind the paywall is the zeitgeisty content, that's amazing. And people will come in and I think people would absolutely pay the, you know, right now. I mean, what Spotify is trying to do, right, is they're trying to create content that's only available on Spotify as a way to get you off of. the main platform where everyone listens to podcasts, I'd say, I assume 60 plus percent of your audience is right now listening on an Apple podcast application. It's 55 to 60%,

I think. Yeah. Fine. So the vast majority of people are using the Apple podcast app that hasn't evolved much over the course of time, doesn't allow for sort of any fancy form of monetization. And so I think the real opportunity that Spotify sees is how do we get you off of Apple podcasts and into Spotify. And we're going to use, you know, exclusive content to the Spotify platform. But again, exclusive still means everyone can access it across the world. But we're going to try to use that those exclusives to get you off of Apple. Yeah, it's still early days. Their market share is clearly building. They also have a younger audience. So I think a lot of the younger skewing podcasts are doing better on Spotify than some of the older skewing podcasts where people

are more embedded in the Apple podcast ecosystem. And that's the same thing that Luminary is trying to do and you know again i think it's really early days let's see what simon can do what um what's your thoughts on the bill simmons deal so he sold to spotify i think we don't know the number yet so i you know it's hard the report was he wanted 200 million i doubt he got it but that's that's what they were saying he wanted uh you know i think until we know the number it's little you know i don't say it's silly but it's hard to speculate on kind of you know how big a deal this was i think thematically though for spotify they are trying to aggregate enough podcasts to be a major player in owned and operated inventory

where they control the ad inventory, they control the experience and they can show the market what you can do when you move from, whether it's host read ads or embedded ads and move to, imagine you the host of this show recording seven different ads in Spotify,

picking the one that targets me the best and only serving me the ads that I care about. Making, A, going back to what we were talking about with Instagram, making the experience better, making it where you actually want to buy the products, where you could actually sell the products. I mean, there's so much opportunities from improving the ad experience, making it feel more like content. They're not there yet, but I think that's the rationale behind doing this.

Not to mention, while I don't think any of Bill's podcasts that matter today will go exclusive or behind a paywall, I think there'll be new podcasts where they try to create some unique content that tries to draw people from the Apple podcast platform over to the Spotify platform. And it's all about trying to move market share and give you reasons. Most people I would assume don't realize that they can listen to almost every major podcast on Spotify. I just think it's not where they, historically, they just, they listened to podcasts on most of them on Apple, some of them on Overcast or, you know, some of them on, you know, pick your application, but it wasn't Spotify. And so I think a big part of this is education and having some really big deal, high performing

podcasts, helps people become aware of Spotify as a major player and major destination for podcasts. I thought it was interesting too, at least the reports I read, they're going to leave the ringers written sites. They're going to keep those and keep running them. I'm assuming that that has nothing to signal for Spotify's kind of grander ambitions and they'll just let the ringer team do it, but it was still interesting. Look, I think you certainly could imagine there being a lot of cross promotion, right?

So, I mean, there's no reason why on the ringer website, it can't, you know, if you want to listen to a podcast, I assume it'll be a Spotify embed versus I don't even know which player the ringer uses today, but I would assume it'll be a Spotify player embed just to, again, to hammer home to people that when they go to the ringer and they're reading an article about whoever that, you know, they see that the podcast is available on the Spotify platform. So I think, again, just as a barker for what helping introduce people to Spotify as a podcast player, I think it makes sense. You know, again, I don't know the cost of running the non podcast part of the business, but I assume those are not very expensive, you know, operations

relative to, you know, the scale of Spotify. I want to talk about, uh, three, uh, social content platforms, Twitter, Tik TOK, and, uh, Quibi. Let's start, uh, in reverse order Quibi. Uh, well, Quibi, I wouldn't really put a social yet. I mean, there will be a social layer to it. To me, Quibi sort of fits in the middle of the video subscription platforms that we talked about before, a little bit of the advertising component that we talked about before, and this reality that every single person you and I know is living more and more of their daily waking life on mobile devices. And Quibi is basically going, look, we spend lots of time with gaps, whether it's waiting in the lobby before you came and got me, whether it's waiting for the subway or even on

the subway. There's lots of kind of limited moments of time where right now, you know, you can consume content on Snapchat, discover, you can consume content, you can flip through your Instagram feed or your Facebook groups or whatever it may be, chat with someone on iMessage or WhatsApp all over the world. And I think it's just recognizing that we have lots of white spaces in our day. And if we can create some compelling content, just like you watch YouTube, right? I mean, you think about, you know, the earliest start of YouTube was very short form. I mean, now you get content that's 20, 30, 40, 50. I mean, you can get really long content on YouTube, but originally YouTube was really short content. I think it's recognizing we have lots of these

gaps in our day. And would we pay a modest fee that may even be included if you're things like a T-Mobile subscriber, you know, would you pay a modest fee for really good content on your mobile device? Look, no one's ever tried it. You know, some people think Jeffrey's crazy. The reality is I don't think people know what they don't want yet or what they want. I think Like if the content is really good and the service is really easy to use, I think people will come. We'll see. My whole thing has been other than Jet.com. I tweeted this the other day.

I don't know very many companies that have raised a ton of money pre-launch and been successful. And the part that just kind of made me cringe a little bit when it came to Quibi was they ran a Super Bowl ad, right? Pre-launch running a Super Bowl ad. I don't know if they've ever – if we've ever seen a company be successful doing that. But it doesn't mean that they can't be the first, but still just the hype and kind of all of the ad spend, et cetera, we're just going to see when they launch if it actually translates to revenue. Yeah, I remember walking through CES six or seven years ago. I mean probably even five years ago. It wasn't even that long ago.

And I remember running into someone who goes, the content on Netflix is horrible. There's nothing to watch. And look, I still get people that say that. There's nothing on Netflix. And then you go like, what are you talking about? Like people are spending – households are spending two hours a day, and that's the median. I mean like there's probably households spending three or four hours a day. I mean there's more to watch than you can physically consume ever.

So, look, the reality is it's all about the content. I mean that's where I'm going with this. If the content is something that people find compelling, if people get addicted to short-form storytelling – and again, there's no – there's really not a lot of historical context to prove Katzenberg right or wrong. We know that, you know, people went from watching movies to watching TV. We know that, you know, there's lots of examples of short form content. And, you know, look, look at the whole gaming space. I mean, Candy Crush is sort of a time killer between meetings or you're bored at work and it's a way to kill time.

How many people have you walked by their desks in a big office building are watching YouTube videos that they find funny? It's all about kind of filling those gaps in your day and your daily life. I think if the content's good, it'll work. if the content's no good this will be a failure it's fair enough tick tock just you know it's the creativity is amazing like it's literally amazing i'm i'm amazed it reminds me of you know i remember talking to jeff dorsey sorry jack dorsey uh early on jeff is jack's lost brother i remember talking to jack dorsey and i remember him saying that the the why vine was so creative

is that with YouTube, you know, you, you essentially hit record just like we're recording this conversation and not that we're not creative, but when you're forced to hold the screen and you're actually forced to compose something in that case, six seconds, TikTok, 15 seconds, it forces you to be super creative. Like, and I'll see my daughter and I'll see one of my daughters who will spend sometimes two hours to compose a 15 second TikTok. Really? Absolutely. Where they'll just practice and, you know, two or three of them will practice for hours trying to get something just right the i think the the like like dance type craft stuff yeah yeah but you see the same thing with comedy and other categories and i think it's also aging up

which is really interesting but it's the create i think it's the the short form and this may even go back to quibi as well shorter form does force a level of creativity you have to you know it can't get good after 20 minutes it has to get good really fast like if that if it doesn't get good quick you're not gonna watch you're not you know you're gonna tune out and i think the tiktok you In 15 seconds, you're forcing incredible virality, but it's also the participatory nature, right? You watch something, then you can take the music and create your own and try to copy it with all of your friends, and then it sort of just virally takes over. And the speed at which people are becoming, quote-unquote, TikTok famous reminds me of when people were – when being a YouTube influencer was like the be-all, end-all, and now it's like being a TikTok influencer. I mean like YouTube should be a little worried that like TikTok has gotten this big this fast because I think a lot of the elements of what are working on TikTok, music and comedy, were kind of early kind of drivers of the YouTube story.

And not that YouTube is going anywhere and it's a huge business doing, as we know now, $15 billion a year. It's a huge business. But I just think from a creativity standpoint, I think they should be a bit concerned that you're seeing such momentum out of TikTok. Yeah, the part to me that is really crazy is when Vine first came out, all of the Vine influencers all moved into the apartment in Vine Street, right? And this is where you get the Logan and his brother and all stuff. But recently I saw on TikTok, there's a family based here in New York, the D'Amelio family, which is… Norwalk, Connecticut, I think. Yeah.

Somewhere in Connecticut. Two daughters, teenage daughters, and then the mother and the father, and they put the same playbook where, hey, the girls started to get famous on TikTok. Then they started bringing their parents in, tagging their parents' accounts. Next thing you know, I think the father's got like a million followers on TikTok. UTA just signed the whole family, not just them. They signed the whole family, my friends at UTA, the talent agency. And you look at the – I'm a big fan of Famous Birthdays, the website, in terms of just what's happening in teen youth culture. And Charlie is number one on the list.

Really? So when you look at kind of who's popular and who's – I mean – 15-year-old is top of the list. Top of the list. Wow. Literally. Number one. Wow.

In a Super Bowl commercial, right? In a Super Bowl commercial. What was it? Tostitos? No, Sabra. Sabra. Sabra hummus for OK Boomer. Yep.

So look, I think it is an incredibly powerful platform that's, again, very early in its monetization. They're just starting to get really serious about advertising. They just hired – and Blake came over from Facebook to run revenue in the U.S. Vanessa has been building a team who came over from YouTube. I mean there is – it's really exciting just as a platform of creativity. And I think that, again, this is just one more thing that takes away time spent from watching linear television. You know, this go back to where we started this whole conversation. It's the war for time, right?

War for time and attention. And, you know, if you're a brand marketer, you're looking at TikTok and going, you better have a TikTok strategy, right? Like you better be figuring out like how you participate. Like the NFL was early. I mean, you know, the NFL got early into, you know, pretty early into TikTok realizing we need to be there. So you started the season, they launched, you know, they launched on TikTok and they've

been, you know, pushing content all throughout the season, building up their brand presence. And you're seeing more and more of the Washington Post was even earlier. I mean you're seeing publishers realize they have to be there, and I think same thing with advertisers. Where eyeballs go, brands follow. What about Twitter? We all spend way too much time on Twitter talking about time and attention, and they've actually done pretty well, still growing, et cetera, but there's plenty of – They're faster than they've ever grown actually, and I think it's largely due to product changes, right? I mean I think the product side of Twitter has just gotten way better.

I mean you go back four years ago, and you actually – it was reverse chronological, right? Reverse chronological and 180 character – or 140 characters. But I mean like if you weren't actually watching the site at that moment in time, you missed the tweet and you never saw it. Now the tweets that I should see, if I open up my Twitter account right now, it's showing me things I should see. And the next level of this is it's sort of silly that you should have to know Rich Greenfield to care and follow media investing, which is what you have to do. Like you'd have to find Rich Lightshed right now and follow me to get my tweets. As Twitter really breaks into 2020, the big initiative is topics. And so you should be able to follow media investing.

I don't think that topic exists yet. But conceptually, more and more topics like you can follow Fortnite. You can follow certain – pardon my take is now a topic you can follow. And so it doesn't have to be a tweet from that account. It can be I follow the New York Giants topic. And so now I see tweets not just from the New York Giants accounts but from beat writers and even interesting people who are writing something that goes viral about the New York Giants I'm now seeing in my feed. And so in many ways, Twitter was sort of awkward, right? Like it was an interest-based network that forced you to follow people.

And the hard part was – Finding them. Discovery. No different than our podcast discussion, right, in terms of how difficult. Discovery was the biggest – figuring out who to follow was one of the biggest challenges Twitter had. When you signed on, you were like, oh my god, what do I do? Like what do I follow? Do I choose this and how do I decide?

And if you didn't follow the right people, you actually had a bad experience and you were less likely to come back every day. Like the easier they make it be to find the content you care most about and they can populate your feed successfully. I don't care whether we're talking Spotify and making sure that you see the music you should see, all of that. Same thing with Netflix, right? Like tailoring the experience so that you have a good experience is ultimately what causes you to come back time and time again and creates that addictive behavior. And I think that's what, in many ways, what Twitter has been successful, a lot of investment in machine learning and AI, obviously shifting away from reverse chronology. I mean if you look at what was the demarcation line – and it's funny because Facebook was the first, right? I mean Facebook –

Coming from Facebook, it was like a no-brainer for them to do, right, at Twitter to go to the ranked feed. But Instagram, when you first started using – remember the uproar? Remember what happened with Instagram when they shifted away from – Twitter was the same thing. There's always the user backlash, and then they realize, oh, wait, this might be better. 140 to 280 characters, same thing. Right. And actually, most people don't even use the 280.

Yep. Most people are not tweeting 280 characters, but it does create sometimes much better content having that flexibility. Absolutely. So I think the key takeaway from that whole theme or thread is letting machine learning and AI take over is what creates trusting the computers to give you the right answer or the right content is what becomes critical. And that's what Twitter has done a much better job. And I think that's why people are enjoying the experience. And that's why they, you know, I mean, it's, you know, it's sort of amazing that, you know, Twitter, which was growing in the low single digits just a few years ago, when, you know, when Jack kind of came back into the company, they just grew 21% in terms of, you know, daily active users. So, I mean, actually daily active users on the platform up over 20%, sort of an incredible story. Absolutely. One of the last things I want to talk about. So Jack has made a very kind of big stand on no political advertising on the platform. Facebook has taken a different toll. But I saw you recently tweeting about political ad spending being something that is going to have to change because of the drawdown in viewership on television, the popularity of social, etc.

I mean, it's a great question. You're basically putting me in a box, right? Like TV's dying. Where does that ad spend go? What happens? Facebook will still take it. Well, let me let you out of the box in the sense of politicians will always spend, right? They'll find somewhere to spend money because they think that's what's going to end up getting them elected, et cetera. How do you view revenue for these various platforms, especially from the political side in the political seasons, if all of a sudden their main source for that marketing goes

away or at least gets cut in half or drastically draws down? I feel like I asked you like a really hard question. No, it's a, you know, I mean, it's sort of the same question of like, you know, even if you're a brand, like, you know. Yeah, yeah. Where do you go? Yeah, I mean, like think about the car commercials that run on TV or the – forget about car commercials because maybe, you know, like think about a Dove soap commercial. Like what does a Dove soap commercial look like when no one's really watching linear TV? Like it's just – all of these things are really hard intellectual questions of, you know, kind of how do you reach consumers?

and I think politicians are no different than a brand, linear TV is dying. It's still a great way to reach lots of people. So even today, especially older people, right? I mean, the people that are cutting the cord and moving the fastest away from the linear TV bundle are younger. They're not young, but there's only younger, you know, and so you can still reach lots of people through linear TV, which is why you're seeing this incredible ad spend on, you know, in terms of the current presidential race. But it is an interesting conundrum because brand marketers can certainly spend on Facebook as they love doing and Instagram and TikTok and all of these platforms. But to the extent that you can't advertise on these sites, it really creates the

ultimate conundrum of like, what are you supposed to do if you can't reach people on TV? Where are you supposed to reach people? And it really becomes an interesting problem. Look, I think in many ways you know i mean facebook's still taking political ads um for now yeah but i mean i think but like in some ways it part of the answer to your question like well if this is the platform that reaches two billion people on the planet earth and they'll take our money then of course we're gonna go spend well no but also shouldn't we let them reach i mean if this is today's medium it used to be tv it used to be radio but if today's medium is this thing called the internet Shouldn't we allow them to – and the number – the largest aggregator of eyeballs on the internet globally is Facebook, Facebook and Google.

Should we not let them be there? And I think it's a really tough challenge that I think – look, obviously politicians in each country are going to need to put rules around it. I think that's what Mark certainly wants is rather than stop it, force governments to put rules around it. But I think it's a really hard question. I think it's easy to just say, no, we don't want any political ad spend. And I'm not sure that solves the societal problem that you're sort of raising, which is how do you stay informed about – people used to pick up the paper, right? Well, and this goes – so I'm going to bring it full circle here, two things. One is I saw recently there was a politician, doesn't matter which one, that was starting to pay influencers to talk about them.

And the first reaction I had was like, what exactly is an influencer going to say that makes somebody change their vote? And then we saw the Joe Rogan comment about Bernie Sanders, and it was like half the country hates him all of a sudden, half the country supports him, and you get all of the kind of political controversy that follows something like that. But if you kind of take that even a step further, if media starts going behind paywalls, right? So take the New York Times, et cetera. I saw a study that showed kind of the left-leaning language has exploded with the New York Times once they went behind the paywall. and a lot of it is just unconsciously you begin to write for the subscriber right and you change the way that you present information because they can leave easily right and it's almost you create these echo chambers to some degree which ends up being bad for society because the business models

are forcing that or is that something where it theoretically the the fear mongers you know talk about it but actually that's in reality not what ends up happening you know i've never done the analysis to actually know whether yeah of course you could quantifiably actually prove what you just said yep it may or may not be true and i'm not going to debate the point i think look the good news is is there's still you know um even if you can't run political ads on on twitter there's certainly lots of places to reach consumers and you know look there's certainly the ability to build your following. I think, look, what has Trump done really well? He's learned how to build a following. Follow his Twitter account and Instagram followers from the time six months

before he became president until now. FDR, if you think about what he did, he pioneered the use of radio to reach consumers. It was a way to use mass reach mediums to reach consumers. AOC does it. So it's not on either side of the aisle, right? AOC and Trump have both done very well. Maybe it's not, maybe unfortunately it's not going to be through paid media. It's going to be through organic media and you're going to have to build your own following. Maybe that's better. I don't think we, I don't think we know the, the ultimate answer. Obviously, you know, there, it is not easy to build mass followings. And obviously sometimes those, you end up sort of moving towards the edges to build that, you know, aggressive, you know, you know, to get heard

through the noise on these platforms. But I'd say that the ability to reach people through the internet, what's been enabled through all of these different social media platforms is unparalleled to anything before. I mean, you can reach a lot. I mean, the reach of some of these politicians' social media accounts pales the number of people that ever, literally ever paid for a newspaper or paid for television. And so the ability to reach people all over the world is unprecedented. And that's really the opportunity. Obviously, there's fact checking and lots of other issues that we could get into that become problematic and what is okay, what is not okay. I mean, just in the last couple of days, we've gone into the problem of

before it was you can't, you shouldn't disseminate things that are knowingly false or that change the meaning of somebody. Now the question is, is if you change the order that something happened in, Is it OK? You know, even if all of the events actually happen, can you if you change the order of those things to distort the ultimate implication, is that bad? Or, you know, who sets the rules? And you're seeing Twitter and everyone is trying to look. The Internet's moving. As we know, the Internet moves at incredible speed. Regulation, not just in this country, but all over the world, moves at a much slower pace. And it's just it's very hard to understand how who sets the rules for these these applications. And I have no good answers. Yeah, well, I think it's a good enough answer by itself.

Before we wrap up, I always talk about two things. One is Bitcoin and one is aliens. Any thoughts on Bitcoin? I think the payments overall, I just think about payments overall for any form of media, making it easier to transact, especially on a cross-border, especially think about developing countries, countries that may not have stable currencies. I think there are certainly interesting potentials, and you look at why Facebook's doing Libra and why companies like Spotify have been interested in it. And I think there's – the world's a big place, and as you look to grow from what we think of as a very kind of U.S.-centric view of the world of media and realize that – just look at last night, right? I mean look at what won the Academy Award in Parasite. There's a massive world of incredible content, music, audio, and everything and beyond and gaming. The ability to shift to some form of universal currency is really interesting across all of these forms of media. And I don't think – I think we're still a ways away from this being common.

But it has the potential to solve real challenges. If I think about even the early days of Netflix, one of their greatest challenges when they expanded outside the US, Their first market they went to was Latin America, South America, and dealing with credit cards and payment processors and all of that was really complicated and challenging. And I think, again, in the ultimate success story of crypto in general, hopefully you solve a lot of those issues. And I'm definitely not the expert, but I'm certainly thinking about it from that lens of like how do you solve real-world business problems to make it easier for the world's population to transact? Yeah, that's one of the most rational answers from somebody who's not in the crypto world I've heard, so that was good. And then aliens, I mean, look, I love the movie Aliens. Sigourney Weaver was on stage at the Oscars, and I absolutely love the movie Aliens.

Will I comment on the presence of aliens? I have no idea, but I really hope there's life outside of our solar system. Why do you hope that there's life out? I just think it's hard to believe that we're the only ones in the entire solar system that have evolved into humans. I think that's fair. I end each one letting you ask me one question. What do you got for me? It's been fun.

What's your favorite? What are you watching right now? What am I watching? So I don't watch anything religiously. What's the last series you binged? So two of them. One that I chose to watch and one that I was forced to watch. So this is your fiancée forced you.

Cheer. She was obsessed. She forced you. right so everyone so here's the point everyone is watching cheer like everyone listening to this podcast knows somebody if they're not and it speaks to this whole thing when people say there's nothing to watch on netflix or nobody's watching the content bullshit complete bullshit exactly yeah exactly and when here's what here's what's crazy if she was here here's what she would tell you yeah when she first started watching i was like i don't want to watch this is stupid you

know i'm like playing on my phone all that stuff by the end i'm like yo ladarius stop screwing around right so you get you get sucked in um and then uh what is um the only show that i watch uh that you wanted to watch well just religiously every season um what is it uh axe capital um billions billions yeah so and and you want to know how i watch it i do i don't tell me you steal it have amazon prime okay no i sign up for showtime i watch it and then i cancel showtime right and then i wait and then the other thing i do is you watch it week to week live or do you wait for it to end. I was just going to say, I wait for it to end and I binge it. Usually I try to do it in a weekend, usually takes kind of four days. Right. So you're the definition of why media as a broad

business is in so much trouble is that you move, you know, even Showtime, which tries to space out a show like Billions over, you know, whatever, 10 weeks. I just wait. The reality is most content doesn't need to be watched live. Like you don't really need, you know, maybe, you know, Game of Thrones probably was pop culture enough where you wanted to be part of that conversation the morning after. I would say there's probably on one hand that many shows that exist that are so important to pop culture now that you need to watch week to week live. And the reality is everything else. I mean, I know lots of people who are just starting you and it came out two years ago. Like, so this whole idea that, you know, um, that whole change of behavior is a huge problem

because you're a horrible Showtime customer because you sign up for a month, whether you pay the whatever you know ten dollars doesn't matter there used to be you being a full year subscriber oh yeah they make more money off of me than hbo and all the other subscriptions because i don't subscribe to any of those but they definitely relative to what they are used to in a subscriber you're a bad customer absolutely in there and a problem that the only way to solve it is to add a lot more content and diversify and if that's why hbo is going from hbo to hbo max Because they need a lot more content to prevent you from doing that. The other thing too that I don't know enough about how TV series used to get produced, but like something like Friends or whatever, to me it seems like it was much more persistent, like every single week, week in, week out.

And there were seasons, but they weren't – Well, seasons were 22 episodes because they had to get you from September through May. Yeah, yeah, yeah. Right? They had to get you there and – And that only leaves like June, July, August, only 90 days off of the year. Right, yeah. But now the idea is let's create shows that are sometimes as few as six or seven episodes, and the beauty of that is it allows for movie stars who wouldn't normally take breaks from shooting, didn't have time for 22 weeks, but might have room for eight weeks to film a six or seven-episode series.

So it actually is – the creative loves it. I think the consumers like it because you're not kind of forcing overly long seasons where – I mean look, I think seasons are going to be shorter. Like you don't – I mean how many shows need five or six seasons? Most things get pretty bad after – I mean the first few seasons of shows are generally the best, and then it gets really hard to keep it creative. Well, you can't kill off so many characters, right? Look, I think there's probably a lot of people even on Game of Thrones fans who would go, I wish it had ended a year sooner. Like, you know, they could have condensed it a little bit and ended it sooner. Like, I think that's one of the other things you're seeing now is episode orders are going to be shorter.

Content's going to be more condensed. You're hopefully going to try to make better, shorter series, both in episodes and seasons, to keep people interested. Where can people find Lightshed? We are, I mean, on Lightshed, I'm rich at LightshedTMT.com. The website's LightshedTMT.com. We're a subscription site, but on Twitter, we're just Rich Lightshed. Anyone can follow us. My colleagues, Brandon Lightshed and Walt Lightshed.

We're all on Twitter. We're pretty active. We'd love to engage with your audience in this dialogue and hope to come back. I can say this. He can't, but I probably – there's two people I learned the most about media, business, investing, et cetera, you and Matthew Ball. So you guys are killing it. So I appreciate all the things you put out on Twitter. And we debate actively.

well but that's part of the the value of it right is uh as you guys go at it so it's it's awesome but uh thanks so much for coming to do this and we'll have to do it again thank you hey everyone pop here if you like this episode of off the chain and want to help us take crypto to the top of the apple spotify and other podcast charts please do us a favor and rate review and subscribe to review simply go to the off the chain home page scroll down until you see the five blank stars taking 15 seconds to fill those stars in and leave a quick review goes a long way in helping us take the entire crypto ecosystem to the top of the charts. I appreciate you listening and see you next time on Off The Chain.