The Vergecast - Figuring out Apple's TV plans with Recode’s Peter Kafka

Episode Date: April 2, 2019

Will Apple's new foray into streaming be able to swim in the same waters as Netflix and Disney, or will it go the way of Verizon's Go90? Recode executive editor Peter Kafka and Verge editor-in-chief Nilay Patel discuss Apple's plan for streaming, news, and more. Subscribe to Recode Media with Peter Kafka. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Build Me a Revenue Dashboard on our Salesforce data. And Retool actually builds it on your company's data, in your cloud with enterprise security built in. Go to retool.com slash Verchcast. We all need to retool how we build software. What's up, y'all. I'm Skylar Diggins, seven-time WMBA All-Star, Olympic gold medalist, and mom. And I'm Cassidy Hubbard, host and reporter for nearly 20 years,

covering the biggest names and stories in sports and mom. And this is Am Mom, a community for athletes, game changers, and moms of all kinds. dropping May 14th. Tap in with us. Hey everybody, it's Neil Life from the Vergecast. On this week's interview episode, we went in-house, in the building. We brought in Peter Kafka from Recode Media.

Peter is one of the smartest people I know reporting on the media industry. So we talked about what else, what Apple announced with Apple News Plus, Apple TV Plus, their streaming bundles or services push, how they're going to compete against Netflix, Disney Plus, Warner Plus, all the things that are happening in the world. Broke it down. We decided who's going to go. 90 and who's not. Super interesting conversation.

Really fun to talk to Peter. I wanted him on the show forever. Check it out. All right. We're here at Peter Kafka. Hello. It's a real honor to be here. It's an honor to be invited.

It's funny because you're on the Vergecast, but then we're going to run this on your show. So technically, I'm on... It's a crossover. I'm on Recode Media right now. This is like Happy Days meets Joni Chachi. What's a more current version of that? You're Captain America.

And you're Spider-Man. Yeah. What's up, bro? The kid who doesn't know he's doing. Yeah, that's right. Big Apple event. It was a week ago. It was so long ago now.

But you went. I didn't go. You went. You were at the Steve Jobs Theater. Yeah, you big foot of the Apple event by not going to the Apple event. I... A flex, as they call it. It was a little bit of flex.

I had a strong inkling that it would be a lot of sitting through TV show trailers. Yeah. And I was wrong. You're wrong. You got that wrong. There were, in fact, no TV show trailers. Yeah. But they announced two things that you, I just think of you as the smartest person I

about this. Yeah, yeah, more. Peter, you're so amazing. You're wonderful. Then that's two things that I think you have a lot of insight on and I want to pick your brain about. And then I have just like a lot of emotions that I think would be entertained for your audience on media. But you told me right before you went, I've been covering Apple's attempts to make TV for a decade. Yes. So I want to talk about that and where they are. Well, I want to start with the other one, which is Apple News Plus, which is just for my use of it over the past week, a deeply weird product that has scared a lot of media people, and I kind of don't get it.

Can you explain it to me? Do you want to talk about what it is or what it used to be? It's actually the same thing, really. It's the same thing. This again goes back a decade or so. This is around the time of the iPad. All the magazine publishers are worried about getting iTunes. They saw what happened to the music business

where Steve Jobs came in and said, these $15 bundles of CDs you sell, we're going to sell them for a dollar a song, and we're going to blow up your industry. And they said, we're not going to let that happen. We're going to control the means of production and distribution. We're going to get together, all the big magazine publishers, Meredith at the Time, Time, Inc.

Hearst, Condé Nast, News Corp, weirdly, all got together, made a JV and said, we're going to put all our magazines into this thing, and you can subscribe for, I don't know, 15 bucks a month and get all our magazines. And they made that thing, and no one used it. Yeah. And that sat there forever. It was called, it was rebranded multiple times. Eventually it was called texture, and then Apple bought it a year ago.

Yeah. And again, it's crucial to remember that they paid the magazine publishers for this thing. I think KKR was an investor at some point as well. Cut to last week. It's now rebranded as Apple News Plus. So it's that same product. The Apple guys will tell you they redid the actual mechanics of the product, but it's the same thing. It's all the magazines you can ever read for now $10 a month.

And there is also now the Wall Street Journal and the LA Times and a few other publishers including Vox.com available there. Important disclosure. Oh, but Rehead's part of Vox? I get it. I don't know. I'm always like sister's site. I just say owned by Vox. Vox Media, which owns this website, which generally covers it.

Yeah. So that's the product. So 10 bucks a month, you can read anything that's in New York Magazine, the New Yorker, in the print editions, not the websites generally. You can read basically everything that's in the Wall Street Journal with some caveats. It works okay. So here, that's my disagreement. Yeah. I think it depends on what you want out of it.

I think it works okay is a low bar for a new Apple service. That's where we're at. That's where we're at. Here's I would say, if you are a casual, if you are someone who likes to read a lot, but casually, like you like to open up an app and be presented with stuff, it's good. It's good for browsing. And if you are someone who, for instance, subscribes to the New Yorker, that works okay, too. If you like reading the New Yorker deeply and you want to read all the web stuff, that's not going to work for you.

If you want to deeply dive into the Wall Street Journal, that's not going to work for it. There's very limited search there. It's hard. You have to sort of know what you want to get or be presented. with it. But if you were someone who periodically reads a GQ story a month and a New York magazine a month, New York Magazine Story Month, et cetera, you can see how that that proposition might work for you, the casual magazine reader. You know, what's interesting is I think most of those people, their discovery happens on Twitter. This is why I think it's a very low bar. It

works okay in the sense that you can pay Apple the money. Yeah. And then this app will be signed in, and then some things will happen on it. But most people who are hitting those paywalls were like, I just wish I could pay some money and see all these paywall articles that I can't read. There is no connection to their primary discovery. Yes, you would have to go, oh, I wanted to read that New Yorker dinosaur article that I've heard is great. So if you get a Twitter link to it, that won't work. You'll have to remember that it's available in the app and then go dig it up. So there's extra steps to get there.

If you could just say, like, I have this link, Apple News, do you have it? If your phone, for example, which is wholly controlled by Apple. Now, maybe they'll get to it or maybe they want it to be kind of a crippled, product, that's a good question to ask. Yeah. And then the other piece of it that just kills me is we work for very digital media company. Yeah.

I think most of our audience doesn't realize that most of our print competitors, print colleagues actually still have newsrooms divided between print and online, or they have publishing methodologies divided between print. Right. And periodical, let's say, we're getting rid of the silos. Yeah. And he's like, we still are silos? It's 2019.

Yeah. But you do. But employees at Condé and asked all over the place are tweeting, if you want all of the New Yorker, you got to, you still got to pay us because nothing that we published online is going to hit this app. That's right. And that, to me, it's just like mind-blowing legacy magazine stuff. Yeah.

I just like don't understand it. Yeah, but this cuts to the core thing, right? Do the, does the New Yorker, does Condé Nast, does Hearst, does Meredith, would they prefer that you get a subscription directly through them? They keep all the money instead of cutting that money in half and then cutting it up multiple times. That's what happens right now. obviously they'd prefer that you sell directly, that you buy something from them directly.

What they are saying is we don't think we're selling a whole lot more subscriptions. Yeah. And we think Apple can sell millions and millions of millions of subscriptions, and we would have a small piece of a very big pie than that big, small, then have that pie to ourselves and it's a tiny pie. Yeah. This is kind of the economics debate about it. I just got an email from a publishing executive. I don't understand why people haven't done the math on this.

It's great for a magazine. And it may be. I mean, you can do some very rough back of the envelope stuff. of. Apple Music has sold 50 million subscriptions. It's an okay product. It's mostly because Apple has pushed it out. Let's say they say 25 million of these subscriptions over, I don't know how many years. They get to that. It's worldwide. It's English language. I don't know. Maybe it's less than that. But if you get to 25 million, if I have done my math correctly, that's $1.5 billion to be divided by the participating publishers. Yeah. Sounds like a lot, but then you've got to divide

that by hundreds of publishers. Would they be better off selling individual subscriptions? Absolutely. And the bigger question is, are they going to prevent, are they going to entice me to not subscribe to New Yorker directly and get the Apple News product directly? You can get the Apple News product instead. And I think they might. That seems very dangerous. So I think this cuts to kind of the big debate around the newspaper sides.

And I think this is also for most mainstream consumers, the idea that newspapers and magazines are different beasts. Right. They're not. They're just a thing you click on. It's crazy. But yet they consider themselves different. So all the magazine publishers are in there.

They're doing the math you're doing. They think they're going to win. And again, they've already been paid once by Apple. Yeah. That's important to remember this. They've already gotten a big check. We don't know how big, but they got money from Apple already. They're already in.

Yeah. That's great. So they're enticed. But Apple famously cannot get the New York Times, the Washington Post. Eddie Q is, he's doing his thing. He's trying to get the deal. He can't get the deal from the two big newspapers that you think of. It's a hard no from that.

And the Wall Street Journal, they're taking the prime spot. They're the lead paper of this thing in the L. Times, which we'll see what the new guy does. Yeah. It seems another billionaire is about another paper. We'll see what happens. But the Wall Street Journal is taking the prime spot. And everyone's like, why would the journal take this deal that the Times and the Post won't? Right. My sense of it is that they have not been competing on the national level. There's an election season about to start. And they're just going to take the exclusivity and get some traffic and exposure and maybe some dollars. And all the hedge funders

who are going to subscribe to the journal anyway are going to keep subscribing the journal. Yes, if you read between the lines what Apple and the journal are saying is, we don't think this product is competitive with the $30, $40 a month thing we sell to our business executives who are subscribing, which is another way of saying, this isn't really a great product if you really want to read the Wall Street Journal. And I wouldn't come out and say that, but that's kind of what they're saying. What they say publicly is we're going to surface general interest stories that would appeal to the Apple News subscriber as opposed to the Wall Street Journal subscriber. but we're going to focus on those. You'll be able to get everything that's in the journal. But again, you have to really go hunt for it and find it. Search is very difficult.

And after three days, these stories go away. So if you're using the Wall Street Journal for utility, less good. If you're just, oh, here's a random article from this thing called the Wall Street Journal that I haven't heard of or don't normally read. It works for you. And then weirdly, or interestingly, the journal is going to hire 50 more journalists to create content for Apple News Plus. So again, they'll be in this weird little sector of the journal. So I assume other journal journalists will look down their noses at them. And they'll all aspire to get into the real Wall Street Journal.

But we'll see how that plays out. But they're going to write stuff that is meant for the Apple News audience, i.e. a general news audience. That seems weird. Yeah. It seems like maybe you could take those 50 slots and do other things with them if you were the journal. But especially as election coverage. But you would have to know what Ripper Murdoch and Eddie Q are thinking.

I feel like we've all learned a really important lesson about depending on other people's platforms for monetization with Facebook. Maybe the Wallster Journal has not. Look, I mean, or you say, look, we're going in eyes wide open. We all know what can happen. We will take some money up front and we will not build a business around it. But if we can hire 50 more journalists, great. Hopefully that we'll build a business under them that will sustain it.

And if not, we move on. Yeah. I mean, that was the eyes wide open arguing about Facebook as well. And I feel like that. Yeah, I think with Facebook, everyone who said their eyes were wide open, and we're still kidding themselves because there was a lot of like, well, obviously if Facebook is going to value

name the publication, we're very important to them. Obviously, Facebook needs this stuff. And you could easily argue, no, they don't. They need cat pictures or anything. I don't think anyone is saying Apple needs this stuff. They're saying, look, Apple wants this stuff

and they're willing to pay us for it. Let's hit the bid, as the Wall Street guys say. That's amazing. Well, speaking of Facebook, you actually broke the story yesterday. Facebook's going to start paying for news in a new tab. Facebook. This is the new, new news strategy from Facebook. And they've been saying they don't want to do news forever.

Campbell Brown, their head of news is out there saying you're on your own. Like, don't depend on us. We want to work with you, but don't count on us. But now there's an Apple news. We're going to pay you 50%. Facebook is saying maybe we'll just pay you directly to put stuff in Facebook if we like you enough. Is that a reset? Is that a repivit? Is that Mark Zuckerberg trying to get people like him again? So this is something Campbell Brown, who is there a news partnership person, has been pushing for Chris Cox, who's the outgoing product, He liked it too. He's kind of a news junkie. Mark Zuckerberg's, I think, confused about news. He'll say he likes it. Sometimes I think he doesn't like it. I think people in Facebook were a little surprised, frankly, that he came out and said, this is something we're doing. So that's interesting. I think there's still a debate within Facebook between the product side and other folks because the product guys look at this and go, how does this help us? Yeah. The why is Facebook doing it? I'm not quite sure. The, the what it's supposed to be is seems kind of clear. This will be a tab. It'll be dedicated to news. It'll have either full stories or at least extroval. some stories and the people who put that stuff in there are going to get money from Facebook,

either a direct fee or maybe some sort of ad share with a minimum guarantee. Yeah. This sounds like a Facebook watch. Yes. This is the analogy Mark Zuckerberg used when describing it. Facebook Watch, in my estimation, another deeply failed product, but you're saying they think it's a good idea. I'm going to quote from Mark Zuckerberg directly. I happen to have it on my phone.

Quote, one of the things that's really worked, and remember Mark doesn't really speak extemporaneously, so they've thought this through. This comes out of like a half-hour-long conversation with the CEO of Axlisberger, but Mark's not like, you know, he's not freelancing here. Quote, one of the things that's really worked over the last year or two as we launched this watch product for videos, people weren't getting all the video that they wanted in a news feed and could go to a place, comma, a dedicated space, comma, to get video. And because that has started to grow really quickly, and that's a lot of video that now people use through our services, We've decided that there is really an opportunity to do something like that with news as well.

That's straight from the horse's mouth. Facebook Watch is successful, thus this will be as well. I do not know a single person who uses Facebook Watch. It's a weird product. I mean, Facebook is constantly telling you to watch something on Facebook Watch. I'm still confused about if I watch a video in the feed, if that counts as a Facebook watch, and periodically Facebook will come out with the stats saying, every single person in the Neone universe is watching a Facebook watch video, but yes, anecdotally,

it doesn't seem like this stuff as well. Facebook watch and IGTV seem like two big bets where I think this is true of Apple too. Facebook, Apple, Google, these companies are also big. They accidentally succeed a lot with bad products. Yes, through sheer size and weight, right? You can force this stuff to work at least to limited degrees. Like if Apple converts 1% of the known iPhone users to Apple News, they will be the biggest news service in the world. This is the Apple argument, by the way.

We have 1.2 billion, 1.4 billion users. We're going to convert some small percentage of them to subscribers. This will be a giant service. And to me, you know, like, I'm using this app. I'm like, if an independent developer showed this to me, this is actually true before Apple News was Apple News. It was some indie product, like authoring product. And they showed it to me.

I was like, this is pretty bad. And they like, we know. We're going to make it better. And they sold it to Apple. And Apple's like, this is basically the same thing. But it's huge. It's the biggest news reader on the planet. And that to me, not to get totally sidetracked, the argument to force these companies to unbundle in some way.

They would, they get away with making bad product just through sheer weight. Yeah. Facebook Watch is like a sort of non-entity. And then if there's something that was better, it doesn't get to work because it's crushed by the giants. Yep. There's probably a good argument for that. Yeah, it's like the fact that, do you read the Joe Pompeo's story in Banyfair? Like, everyone's like terrified of.

And I'm like, this app is a PDF reader. Right. It's fundamental form. Apple argument, which holds a lot of weight is it's in your hand. This is the Oprah line. Billion pockets, y'all, right? And again, Apple Music is not a great service. It's a fine service, but it's not better than Spotify.

It doesn't have more subscribers than Spotify, but it started late, and Apple got the 50 million subscribers because they put it in everyone's hands and said, here's a free three-month subscription. If you start using it, by the way, you're going to end up clicking buttons, which says you're now a subscriber. They're not tricking you, but they're making it very, very easy to subscribe. And for a lot of people, that's good enough. And the Spotify guys will happily tell you that they also make it harder for you to subscribe the spot. True that. The publishers won't complain if Apple News Plus is half as successful as Spotify as Apple Music has been.

Yeah. That will be a big pile of subscribers they weren't going to reach already. They basically conceded, look, this thing we were afraid of happening of us getting screwed by Apple. It's already happened. We just didn't get screwed by Apple. We just got screwed by the Internet. Yeah. So we'll take it now.

Let's take that argument because it's working for the publishers who no one's making money, right? So, fine. This seems good. That same argument for television. Let's switch gears and talk about that. It hasn't worked for Apple at all because the TV guys have been making money. If they're not making enough money, they can just sell themselves to a telco. Fire everybody and make even more money.

I mean, I have literally sat with Apple and they have told me. Eventually, Netflix is going to have to come into this TV app because we'll just have everybody. Yeah. And that is just abundantly not true. Should we back up and talk about what the app is? Yeah. Let's start. What is the TV?

You were there. I wasn't there. I was drunk in Miami. What happened? Well, there's two things, which is extra confusing. And you used to say this is very unappily, and now maybe it sort of is apply to give a confusing keynote. Yeah. So there's one product called, I don't know, TV.

Yeah. There's the box, the Apple TV. Well, there's the Apple TV box. There's the Apple TV app, which also works on your box, but it also sits on your phone. And it's essentially, it's a TV guide. Yeah. which, by the way, seems like a pretty good idea, right? If you look at a world where the bundle has been broken up or there's lots of different places to get video, it'd be great to have one place that has all of them. Who controls that real estate? That's a big, expensive question. But as a user, that makes sense to me. I'd like to know where all my stuff is and what I can watch. That's what Apple has tried to build. There is also a storefront component to it, right? A big part of the Apple video strategy here is to get you to subscribe to HBO or Showtime or Stars or CBS and for Apple to take a cut.

of that subscription. I think that is, by the way, more important to them than whatever subscription service they are eventually going to watch. Then there is this other thing. I don't know. What's it called Apple TV Plus? Question mark.

Yeah. And this is the thing that we still don't know what it is, but it's going to have some TV shows and maybe a few movies and people like J.J. Abrams and Steven Spielberg and Jennifer Aniston and Reese Witherspoon and Oprah Winfrey are all involved in some way. Let's not forget that Oprah is also mysteriously

doing a book club that has new details. That part makes sense, actually. Does it? Yeah. It's like the one thing there wasn't already a press release about. Yeah, well, they were mysterious about it when they announced the Oprah thing. They didn't say she's making a TV show. They said something, something media and sort of left a question mark around it.

So they're going to have stuff that you can watch and you may or may not pay for it. They're describing it as a subscription service. I don't think they're actually going to charge you actual money for it. I think it's going to get bundled in some way. Yeah. I don't think they can charge you for it. If they do, it had to be so small because compared to what you're going to get from Netflix or HBO or Disney Plus, it's, you know, maybe 30 shows, but a couple shows a month.

I don't think you can charge people for that. Yeah. But we'll see. So that's what they announced. Now, the Apple, the TV box obviously existed. The TV Guide has been around for a couple of years. This was sort of there because we can't do the thing we want to do, we're doing this TV guide instead strategy.

What was the thing we wanted to do? They wanted to put together their own bundle of TV channels and sell them to you, which now is something that many people, Google, Hulu, slang, Sony is still in this business, AT&T, are all doing various forms of this. Apple wanted its own form. They wanted a specific set of channels and a specific price point. They could never get it. That's actually one thing I don't understand.

Why wouldn't they just pay the money and get what they wanted? It seems like everyone else can get the same basic deal. Apple will tell you they wanted a specific deal. They wanted it, you know, $25 or $30. They basically wanted to take sports out of the bundle. So this really comes down to Disney primarily. Disney has ESPN. ESPN is sort of the key of Disney and the key of the bundle.

And Disney for years and years and years has resisted separating ESPN out from the rest of its stuff. If it goes, then everything goes. Maybe it will go one day. But it hasn't gone yet. And so that seemed to be the major sticking point. Some of the other networks I've been told had already signed on to Apple to do a skinnier bundle. And Eddie Q just won't. He's not launching without Disney channels.

He's not launching without Disney channels, but he doesn't want to take ESPN a sort of a base part of it. He wanted to make that an ad on. Now, maybe there's more complex stuff, but that seems to be where it broke. If you go look at the other bundles, everyone else is selling, they all pretty much replicate what you would normally get through Comcast or Charter. You pay 40, 50-ish bucks a month. You get this many channels. It kind of looks the same thing. So Apple is, they weren't able to launch this sort of over-the-top channels, linear streaming thing.

there are Sats PSVU, right? It didn't happen for them. So they said, okay, we're going to spend a billion dollars on Oprah and Steven Spielberg and Jennifer Aniston or make 30 shows. That'll just be like a sweetener. And then you're going to now start using this TV app. And the real money is going to come from Showtime. That's what I believe.

Yeah. When and if they eventually announced pricing, I think it'll become clearer. Everyone sort of wants to describe this in shorthand as a Netflix killer. Again, Netflix is 10 to 20 bucks depending on what you're getting. And you're getting triple frontier and friends, you're getting triple frontier plus whatever new shows Netflix is making. Plus, and this is the key, a bunch of old stuff, whether it's friends or old movies or old TV shows.

And that's why even if you don't like Triple Frontier, which is a thoroughly mediocre but also entertaining movie, it doesn't matter because there's a bunch of other stuff there. And so you feel like you're getting $10 worth of value each month. People live their entire life in Netflix. Right. And you don't even have to love everything you're watching. It's just there.

It's kind of like TV, right? it's just like flipping through the cable channel. Right, which is why Netflix won't disaggregate its content from its interface. Right. Like we have the bundle. We've basically made a bundle for you. It's just one channel. It's one little box.

You live in here. So that works really well for Netflix. And it's hard to imagine someone saying, I will pay as much as I'm paying for Netflix or Hulu or any of these other competitive service for a Jennifer Aniston show. Even by the way, if that show is great. Yeah. Then you just buy the one individual show.

It's hard to imagine them coming out with a, competing, compelling service, which is why I think they're going to add, throw this in to iPhone owners, to people who buy a bigger bundle of stuff. You can imagine what else could go in an Apple bundle, right? It seems like the bundle that's coming is just start paying us monthly for an iPhone. We'll give you a new iPhone every 18 months. Which I'm already doing. Right. Right. So we'll just raise that price a little bit and you get this suite of services just sort of bundled in your iPhone price. And there's Jennifer Annison. So they've got news. They've got music. They're going to have something something video.

There's a game service that no one seems to care about, but that's interesting. The version audience cares about the game service. I care about it. It could be cool. I'm paying them monthly for iCloud storage. I didn't want to,

but eventually they made me. So that's, I think, three bucks a month there. The classic Apple, nickel and dime. I'm sure I'm paying for Apple care. You can sort of see how they could mix and match those bundles and maybe it gets interesting. And somewhere in there, there's a video thing that you're ostensibly paying for.

And maybe you could buy it on your own, but I don't think that's worth the intent. Yeah. But keeping 30-ish percent of your showtime monthly subscription, that could be a lot of money for them. I mean, it just really seems like how do you stabilize iPhone sales? How do you keep people locked in this ecosystem? And then how do you add yourself some upsell opportunities along the way? Yeah.

And then this has been covered by you guys and me, but I think them showing up on Samsung TVs and on Roku players and on fire TVs, right? Amazon, which is one of the great frenemies for them, they're now saying, look, we're We are so interested in building up this service business. We're going to go work with people we compete against. Yeah. It's fascinating. The more you look at it, the more they're turning into Amazon in that way. These are Amazon moves inside.

Like, how does Amazon make money in the Fire TV? They sell you cuts of channels. Yeah, or Microsoft, right? I mean, everyone has always distributed their stuff widely, except for Apple. Apple's the one who's contained it. And that's why, like, you know, iTunes coming to Windows or something was a big deal at the time. Now it seems, of course, it would be there. At the time, it was a giant deal.

It was a big deal. I just, I keep thinking about Johnny Ive, holding a Roku remote and looking at the mockup of his app on Roku. The Roku remote, which is fugly. Or by the way, the Roku home screen, which is just full of crap. And there's ads. And it's really hard to move around. But I bought up TCL TV from Costco last summer. And it's got Roku built on.

And I still have the Apple TV box. And I use the Roku TV interface much more just because it's there. And Apple's saying, yeah, all right, fine. We'll fish where the fishes are. Google is a solid. time. I'm actually, come look at our design process.

Like, Apple's not giving anybody. Matt Panzerino is not going to Apple to watch Johnny I have designed the Roku app. Like, they're going to fart that thing out. They're going to pretend it doesn't exist. They're going to do this in the shed and no one can see what happens. Yeah, exactly. Do you think it's going to work? The TV thing in particular.

I don't know. It's interesting that they have gotten so little traction from the TV app to begin with. Because what a lot of this is, is them saying, essentially, this TV app thing that we came out in 2016, that's a non-starter. That is not working. If it was working, we wouldn't have to sort of refurbish it and spend billions of dollars on content to make it look cool and sexy. So we'll adding Jennifer Aniston and Steven Spielberg and open, I don't know, man, making content is hard, making TV shows is hard. People who are really good at it fail most of the time. Amazon. It's right. Amazon has kind of failed at it. There's a couple good shows, but they've had

like executive turnover, right? Yeah, it turns out in retrospect that they weren't really paying attention to the billions of dollars they spent, which is not something I thought I would say about a Jeff Bezos operation, but they were just kind of throwing it in the money hole in the classic way that outsiders come to Hollywood and get rooked and get seduced by hanging out in the red carpet. It actually turns out that's Amazon, which is not a thing I thought I would say, but it turns out to be the case. But yeah, they initially had found some hits. Actually, they initially started off and made a bunch of shows you've never watched and then stumbled their way into a couple small hits and are now trying to do something at bigger scale. But, you know, again, the people

who are best at this, the CBSes and Disney's and NBC's, they get it wrong all the time. So the idea that Apple's going to have 30 shows, maybe a couple of them will be wildly successful. Maybe. Yeah. I also wonder, you know, there's the stories about Tim Cook asking when all the shows are so mean. Yeah. Like sort of Apple executive meddling in the shows. Amazon, just by way of comparison, had like a couple scandals around it shows.

Like Transparent had a pretty solid scandal around it. Yeah, the guy who ran Amazon's video thing got B-toed out. Yeah. Right price. So you could argue that Amazon wasn't paying nearly enough attention to how that process was working, which is quite believable. They could spend billions of dollars and not spend that much attention in retrospect because they were focused on other stuff, whether it's shooting rockets into space

or buying whole foods or whatever it was. Well, I'm just saying, right now, Jason Mamoa, there's a tiny little baby. He said something wrong in an interview scandal. He's going to go do a press tour again for his new show. How on earth, if he says something dumb. again, like, what is Tim Cook going to do? This is a brand that is so pristine. So this is not a theoretical scandal

because I haven't heard of it. It's just a little baby. He said something dumb. He's Aquaman. He's Jason Mamoa. I had the bigger thing. He is his personality. I had the bigger issue with Jason Mamois. He came out and said, and this is not his fault. He was a script. He said, the whole point of the what we were referencing earlier was that Apple didn't show

off any of the TV shows. It had brought these stars on stage and had then describe what the TV show might be like. And then Jason Amoa shows about someone who's blind. So then he said, close your eyes and imagine. And then when I'm to describe what you should imagine, but it was the same thing as watching in real life because there was nothing to see.

Anyway, yes, talent will cause problems for Tim Cook. I won't like everyone just take a second and really ponder well what Peter said. It was good. And everyone kind of wins because it was absolutely, and it was four or five speakers into it where you realized, oh shit, they're not going to show us anything. Yeah. Which, again, to digress, I still don't know why they did this.

But I do know that you probably can't get Stephen Spielberg on stage multiple times a year. So this was your one time to have Steven Spielberg and Jennifer Aniston and Reese Witherspoon and Jason Mamoah who's the next tier down with stars, but still big, big, big stars. You'd think you'd want them to come out once with the show and really not get it.

I think you made this point, I made this point. This was an upfront, right? That's what it felt like for a minute. An upfront is when the networks get all the advertisers together put on a big show at Radio City Music Hall over New York and say, here's our cool new shit. We're going to show you some of it. In some cases, they might even show you all of it just to show you how confident they are.

And then we're going to have stars and singing and dancing, and there's some shrimp out back too when you're done. Please buy the ads. And Apple's responses, we don't have to do that. Because there's not so many ads. But they do want you to pay something for this or at least subscribe to this in some way. The best argument I can think of is when this comes out in the fall, no one who's actually going to consume this stuff will remember that Apple had a weird-ass event. And they're either going to like the show or not, which may well be true.

I just don't know why you would have this event in March. And they can do press relapse for each individual show. Yeah. Still weird. But that's what I'm saying. Like you're going to take your stars. You're going to make them do press relats. They're going to talk.

What happens when one of them does something dumb? Because it always happens. Yep. Have they made that consideration to me is this is a brand that does not have scandals? That is a good question. I did not ask anyone at Apple about that. I've asked other people who've got like I, we had Randall Stevenson on stage at Code a couple years ago. And it was Roseanne Barr had just done a Roseanne Bar thing.

And I said, now you're in the, you've been in the telco business, and now you're going to be in the equivalent of the Roseanne Bar business. What are you going to do when someone does something equivalent? He said, yeah, I got to deal with that, basically. I don't know if Tim Cook has thought that through. Yeah. That said, I mean, I think they're probably, you know, if you sort of look at who they've signed on, I imagine part of the explicit and implicit contract is you're going to behave yourself and not act out. And also, you're all grown-outs. We're not signing.

There's no Viceland show. Yeah. Maybe there will be one day. All right. We've got to take a break. We're going to listen to some ads. We're going to come back. We're going to talk about TV service.

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Upwork.com. All right, we're back with Peter Kafka. So I'm putting forth what I'm referring to is the Go-90. scale of doom streaming services. The scale is Netflix to Go 90. Go 90, if you'll remember is Verizon's obviously doomed streaming service, which

it was just so bad, and they tried so hard. You guys had that video with the Verizon managers explaining that the kids would say go 90? Yeah. He said the word kids, too. The kids are going to go 90. It looked like you guys had made up the video. Ben Popper did that video for us, and he came back, and he was like, he actually said to me, we can't run all this

because it'll be too mean. It was, it was the, you had made the sort of Verge video equivalent of the Steve Bichemy. Yeah. Actually, we should probably just run an ad's dead. It's like, a friend who worked at Verizon, he's like, I got to put my kids in college, man. Like, this thing's going to ruin us. It was a great, you know, everyone gets mad about socialism. Yeah.

But that is corporate socialism. They funded a lot of cool businesses. They gave us money. Yeah. They gave Jeffrey Katzenberg and DreamWorks lots of money. Yeah. It was good. No, I mean, the Doom streaming service.

funding, everyone chasing the money from the Doom Streaming service that's overfunded is just a part of our lives. Quibi, that's Quibi. Every wants that Quibi money? It's the same people who wanted to go 90 money. Nodds. Yeah. So, okay. So you got Netflix. Yeah. Obvious success. Yeah. Go 90 over here. When you failed, you have gone 90. This is my scale.

So I'm putting Quibi at like 85 degrees. You put you putting there at most, giving them a nearly a full Go 90. Yeah, okay. Where does Apple? What degree is Apple? From zero to 90? Yeah. I want to say, no, they're not going to back away from this. They're going to double down for a while.

Again, a billion dollars is a lot of money, but not to Apple. Yeah. So they can keep trying this. I do think you probably have tapped into something where the reputationalally, it's probably more of a risk for Apple than anything else. The money doesn't really matter. They're still in the iPhone business. Yes, if Jason Momoa did something really outrageous,

and then everyone else who worked for Apple did the same thing at the same time, I guess that's a problem. Or maybe they got a social conscience or who knows what. Look, I think one of the 30 shows will be successful in some way. Yeah. By the way, the Apple guys, when you talk to them about their experience in video up to date, they will concede that Planet of the Apps, which was a miserable failure, did not work. They will also insist.

Planet of the Apps, it went 90. Yes, it went 90. They will also insist that the James Corden Carpool Karaoke thing is a big success. Right. You just, great. We should get a gift of your first. face there and they will point to the fact that it won an Emmy. They bring this up repeatedly.

Yeah. Lots of things get Emmys. Sure. The Verge has like two Emmys. Yeah, there's like Emmy in the break room there. Yeah. Next to our Ellie. It's cool.

That's great. Yeah. Okay. So I hedge. It's at 45. I don't, the question is, will it be a successful stand-alone service? No, I don't think it's a successful standalone service. It's going to be bundled in with something else.

And if Apple can get credit for a cool show or something else that wins an Emmy, they'll probably pat themselves on the back. and if they can take that billion dollars and turn it into this much more service subscription bundle, that's probably a win for them too. They are not going to go head-to-head with Netflix. There's just no way that version of reality works. Yeah.

And I don't think they're even going to go head-to-head with Amazon in that sense. So why didn't they just make a goddamn TV? They would have actually been able to, I think, compete. They would have able to do this sort of Ben Thompson aggregation theory. We own the interface. Right. What do we talk about Apple News? They're in your pocket.

So the smart person arguments about not making a TV are TVs are a terrible business, right? There's no margin. Yeah. And then you buy one and it sits on your living room, whatever, stand for five years. But then you're monetizing with this service of yours forever at a reasonably high margin. The argument for not making a TV before they were doing this huge services push made total sense to me. This is a product you buy once. They're never going to make any money.

You're going to buy one show for $9.9.9. sense. Like, this is, this is stupid. You're going to buy some, you're going to buy Apple's hardware to run Netflix's service. Well, now they're, they're trying to, they're a cable company. Yeah. These plays actually do look more like Comcast Verizon. I think the more nuanced argument is they made a TV, it's your phone. Yeah. And that has a high margin on it. And they're trying to figure out other things they can sell you. And one of them is going to be video. Yeah. So rather than chase this thing where you're trying to squeeze out a five cent margin going up against Chinese manufacturers you've never heard of because it didn't exist three years ago,

you've got this locked-in phone. It's great, super profitable. What else can you add to it? Yeah. Are they just chasing the TV dragon because Steve Jobs said it in the book? I don't know. I mean, I think they're just looking for stuff to sell, right? They like magazines, too.

And if they can, you know, the famous, famously right, it needs to be a billion-dollar business for them to care about it. Yeah. You know, I can see them making a billion-dollar-plus magazine business. You can definitely see them making multiple billions of dollars from TV. So the sort of media folks, a little, you know, some tremors, Apple News, this might be a thing, should be in bad, should we not. What's the vibe from the TV side? The TV guys are happy that Apple's in the market, just like they're happy that Amazon's in the market, and they're happy that Netflix is in the market, and they're happy to time warners in the market.

Do they think all those folks are going to be in the market forever? No, but they are happy to sell them stuff in the near term. And then the big, I think, fundamental question for all, for the Time Warner, sorry, AT&Ts, Disney Foxes, NBC Comcast is, do we want to be someone who makes shows and sells them to other people, which is what we've done forever and has been a very good business for us? And especially in the last five years or so, been a great business. Or do we want to be in the Netflix model where we have this direct-to-consumer thing that is now what everyone says they want to do? And my question is, in a couple years after people have spent a lot of money trying to build. their own services, are they going to go, this is stupid? Yeah.

We should just make TV shows and movies. We're awesome at that. We're going to sell them to Netflix. I think some of them are still debating internally, whether they should have done that or should do that. And you might see the conventional wisdom tilt back at some point, say. We were really good at this one thing. Let's keep doing that. The idea of us building up our own streaming service, we don't know how to do that.

And also, we're going up against people who are already way ahead of us. Let's hold off. Let's just make the thing. Yeah. And you've got major players in Disney Plus and Warner, whatever that thing is going to be happening. Right. But is Warner's real value that they are going to,

they think what they're going to do is take all this stuff, connect it to your phones and your phone line and your other services you're getting from them, and that's your direct-to-consumer thing, and they'll win that way. Maybe. Disney is going to argue that the sheer weight of their content is going to make you sign up.

Maybe. There's also obviously just a finite number of things people are going to subscribe to. I think very obviously with sort of the YouTube paranoia in the world, Disney has a strong argument for parents out there. Pay us, it's safe. Yeah. And by the way, they can do their own bundle.

They can, I think, will likely bundle this with Hulu, right? So if you're already getting something from Hulu, you pay a very small amount to add the Disney service, that's going to seem appealing. Yeah, I have to get the Disney service. I don't have any choice. I'm required to get it. Yeah. My kids.

Yeah. Mine's not yet all enough, but I can tell. Just go ahead and buy it. It's just kind of, I subscribe to anything anyway. What choice do I really have? Does this look, just talking about this, honestly feels like Apple's strategy is much more like 18th strategy than anybody else's. We own you. You're paying us some money.

Yeah. Now we're just going to upsell you with other stuff. Yeah. Right. And very Amazon-y, as you pointed out too, right? I mean, the idea of the, hey, subscribe to HBO through us, that's what Amazon's been doing now quite successfully for a couple years. Yeah. I just, I get some strong cell phone carrier vibes off Apple.

Yeah, or a less flattering way of saying it is, we have a product. Growth is slowing, right? The Apple business is much more robust than the AT&T wireless business, but they're still finite, right? They're still slowing. What else can we sell? Let's sell some more stuff. Yeah. I mean, it's not bad.

Yeah. That's what they're paid to do. Yeah. And by the way, they're kind of good at it. Yeah. And, again, they have massive scale. So they can be only kind of good and still be massive. massively successful. It's not inspiring.

The thing I can continue to think about is their size distorts their own perception of how good their products are. The Siri. By the numbers, Siri is a massive success. Right. By the experience, Siri is still serious. Right, which they then sort of after years, I'm assisting, it's awesome. And eventually they go back and move everybody out and bring in new people. I'll let you do the criminology of Apple and who works there. But all big businesses have that issue.

All big organizations have that issue. How's the virtual doing? Verge is doing great. How's Vox Media doing? How do you feel about Facebook? I don't have Facebook on my phone anymore. So you are someone who has spent a lot of time creating content specifically for other platforms for a long time, right? YouTube, Facebook, et cetera.

When did you realize, hey, that's not going to work for us? Or maybe is it still working for you? In retrospect, I would have bet harder on YouTube faster. and there was, I think, when those conversations, every media company were really hard. Do you pay Brightcove and run the thing on your own site or do you just take less money and go for audience? Is it a video player that most,

well, some of you know about, but if you clicked on a Verge video for a long time, it was a Brightcove player. One of the most tiresome arguments in the history of this company was like, do we use Brightcove or are you? Yeah. Like, super dumb, no one cares. I wish we had made the audience about on YouTube faster. And I think, you know, we didn't, and so it goes, it's going fine there. But that's

where the audience is. That's where the ecosystem is. That's where the watching of our kind of videos happening. And that just happened organically. Yeah. Because it's the biggest video service of the world. It's the biggest, yeah, it's like that's where they are. We should go there. We should figure out a business there that works for us. One thing that we're challenged by is that we won't do direct sponsorships. Like, we're a journalistic organization. So, like, all their YouTubers make a lot of money because they will, like, hold up the phone case. Here's a Samsung, whatever. Yeah.

Yeah. Or no, like, this Samsung phone I'm reviewing is in someone else's case. You can buy that case. Like, we just won't do it. So we have some more challenges, but like, I totally respect the fact they do that, make your money. The Facebook bet we made with Circuit Breaker. We made it, do I wish we hadn't put any effort in the Facebook ever in our lives?

Of course I do. We made a tiny bet that people there would want gadgets. We like shaved off part of our brand to put it there. Medium worked, circuit breaker still exists. It's, as a label on our site, it's a permission slip for people. to write silly things about gadgets. I think that's a important piece of what we do. Do I think that we could have all seen Facebook coming

that it would never figure this out? I honestly do. Yeah. Like, I just think Google as a company wants stuff. Like, they want content. They have a lot of problems. They're an information and gestion organization, whereas Facebook is an advertising organization.

Two more questions for you. You guys started off as a gadget blog, right? The roots of this company are in gadget. Really a gadget blog. Is that still the core of what you guys do? So at your core, there's a new whatever, we want to tell you about whatever, or is that now sort of a vestigial part of your content? No, it's the heart of it. I think there are less things that are of massive interest.

Right. That's sort of what I want to get to. Like if we're no longer excited about the new iPhone, right, and we just fundamentally aren't. Yeah. Where does that leave someone like your company? Well, so people are still really excited about the new iPhone. They're still really excited about the new Galaxy S-10. Isn't the audience for like when you guys do a rollout thing, like steadily decreasing?

No, it's very high, but flat. Okay. Right? So it's like, I think we've maxed out on it. So when there's a new iPhone, whatever event, there's still a lot of people tuning in to learn about it, but that number's not growing anymore. Yeah, our joke from this last event was what people care about with Apple's new hardware. And so the credit card was the most popular thing. Yeah, titanium, man.

It's a good piece of hardware. It's titanium. So whenever Apple has new hardware, massive audience. Yeah. Right. Whenever Samsung or Google has new products, massive audience. I think our mission with the gadget coverage in particular is to say, hey, there's still innovation in this world. It's still happening. So like I just wrote 1500 words about a new universal remote control called the comma. Yeah. Huge audience. Debuted on code media stage. debuted on the code media stage. Got me super excited. People really love that. We write a lot about Chris Welch, our great news editor and I love TV stuff. We write a lot about Dolby Vision and new TVs. And we have this running thesis that the best $15 to $1,700 you can spend right now is not a new phone or a tablet.

a laptop. It's a great Dolby Vision TV and a sound bar. That's like it will immediately upgrade your life. Yeah. I think there's a lot of service to do in that world still. And there's still a big hungry audience for that. Big hungry audience. They're not burnt out on the stuff. They don't have the enwee that people like you and I have like, uh, you know, I don't have

battery. I think a lot of people read us for that escape. Uh-huh. So that's the core. It's not going anywhere. And we're, you know, we're always trying to like make it better. We have a lot of great competition. Particularly with YouTube is a great gadget competition. We've got to stay ahead of them. That's good. Makes us makes us move fast.

But then there's just like the second element of what the verge has always been, which is the idea that if you put a camera on everybody's hands, you're going to necessarily change the culture. Right. And so like this week at the verge, Crater's Week, and we're like, like Bloomberg in the Times and the post,

they all do really great Facebook policy coverage. We were the only people that cared about that for a while. Right? They're all doing great Apple coverage. We're the only people that cared about that for a while. What are we going to do that they're not going to do that they're not going to do. What's the fringe? And to me, it's, well, you got SoundCloud and Kickstarter, Instagram and YouTube and Patreon. You've got, like, these generation of platforms

that have enabled these creators to use these, like, cheap tools. No one's paying attention to them. No one's doing the service for them. Yeah, that's super interesting. So for me, it's where we, of course, we're going to cover the gadgets. The other thing that made the culture. We have to, we have to, you have to, have you guys, park yourself at VidCon before? We've got to, yeah. It's wild. Yeah. It's wild. So, you know, we, this week, we're like spin it up, where, you We have a team of like five or six people who spend their time thinking about creators. We have a new series about hardware startups and like the challenges they face. Like the gadget stuff is still there for us.

We're just trying to connect it to this wider world of, oh, we actually created like a bunch of millionaires on YouTube. No one cares for them. Like no one, there's no journalism for them. Like let's do that. And it turns out when we do that journalism, they're also the mainstream audience. Like they're not a bunch of recode readers, right? they're not media executives. Yeah, I have found that the recode audience for stories about YouTube creators

very small. Yeah. They're not a good crossover. Last question for you. Verge is free. Almost everything that Vox Media publishes is free. I keep hearing Jim Bankov saying we're going to start selling stuff. So I was in the audience at South Bay, where Bankoff was on stage.

And he goes, we're doing this subscription thing. Well, it's starting to baby with Fox. And then obviously, you know, the Virgin Estination. And my phone just blows up. What are you going to sell them? I don't know. Is there going to be a paywall in front of a bird stuff? We're not going to...

I think Jim has said this too. I don't think our goal is to take things away from you. To add extra stuff. Or to make your experience better. Yeah. There's like a very specific way we can make the verge experience better, but we've got to figure out. By the way, I saw that Vox Media signed up with Squirrel, which is basically a subscription ad blocker, so that's a thing.

That's out there. I mean, it's a baby. It's like, we'll see what happens. All right. Let's do round two. Yeah. Another in a year. Oh, yeah, in a year.

Deal? Maybe more. We have to wait more than a year? Well, if it goes 90 or not. I'll just have, I'll just do period. We should do peer out at Collins on each other's show. Yeah. To do the Go 90 scale of streaming services.

All right, done. It's a recurring segment. Handshake. Deal. Thank you so much, Peter. Thanks. All right. Well, that was Peter at Kafka.

You can listen to his show, Recode Media. It's great. I listen to it every week. Talks to the smartest people in media about what they're doing. Does not pull any punches. Super fun to have them on. You might notice he didn't pull any punches with me at the end there. So just a taste.

And we're colleagues. We got the regular Vergecast coming up on Friday, lots going on. And then next week on the interview episode, I've been trying to get this interview for so long. I'm so excited. We have Jaron Lanier, who has written tons of books, most importantly, to me anyway, is You Are Not a Gadget, which came out in 2010, really influenced a lot about how we think of The Verge. He's a pioneer in VR. He's a fellow at Microsoft now. We got into it about the state of technology, about prediction mechanisms, about how people are going to get paid, making stuff for these platforms. It was wild.

So that's coming next Tuesday, check it out. We'll see you soon. Bye.