Introducing our 7th Lead Advisor!
The secret is (almost) out! Join 7investing's founder and CEO Simon Erickson on Wednesday, January 19th at 11 ET as he announces this extremely exciting addition to our team...
Simon Erickson has spent the past few days attending the Wall Street Journal’s annual technology conference. He takes a break from the show to update us on three big stories he’s following from the conference -- ViacomCBS CEO Bob Bakish on the streaming landscape, Reddit CEO Steve Huffman on the company’s role in facilitating discussion that has impacted the stock market, and Creative Arts Agency Co-Chair Richard Lovett on Hollywood’s power shift. He’ll also give us an overview of what’s happening at the conference and share any surprises that happened on day three of the big event.
October 20, 2021
Simon Erickson has spent the past few days attending the Wall Street Journal’s annual technology conference. He takes a break from the show to update us on three big stories he’s following from the conference — ViacomCBS CEO Bob Bakish on the streaming landscape, Reddit CEO Steve Huffman on the company’s role in facilitating discussion that has impacted the stock market, and Creative Arts Agency Co-Chair Richard Lovett on Hollywood’s power shift. He’ll also give us an overview of what’s happening at the conference and share any surprises that happened on day three of the big event.
Sam Bailey 0:13 Welcome to 7Investing Now, a show that teaches you how to take a long term view on investing by better understanding what’s happening in the market now.
Dan Kline 0:23 Good afternoon 7Investors and welcome to the Wednesday edition of 7Investing Now. My name of course is Daniel Brooke Kline. But I actually don’t matter today we have Simon Erickson. Simon is taking a break from the Wall Street Journal tech conference, we are not gonna have a lot of preamble here. But Simon, normally when you go to one of these shows, and I go to a lot of shows, you go to a lot of shows, there’s like two or three really interesting things in the day. And then maybe you have some meetings and some coffee. And sometimes there’s like cupcakes and snacks. When you go to a digital version of a conference, it’s really different, right? It’s basically all hits, no filler?
Simon Erickson 0:59 Oh, gosh, Dan, oh, these are always something I like whether it’s digital, whether it’s in person, wherever the conference takes place, I think of it as drinking from the firehose, where you literally just go, and I’m the guy that’s typing everything down. And it almost doesn’t make any sense for me until I get on the plane ride back, or at least I have a day to digest everything that’s happening. We are right in the middle of the action here today, like you said, I’m stepping away from the conference, to do the show here with you. But it’s a lot going on, it’s back to back, you know, PhDs and innovative leaders of companies sharing their vision of the future. as investors, there’s a lot of takeaways for us, I always love conferences like these.
Dan Kline 1:36 It’s very, very intense compared to an in person conference, because they have to hold your attention. And I’ve gone to some cool shows like this money. My 2020 does 20 minute presentations. So you’re getting like three CEOs back to back. And it’s almost too much. If this is not enough, if what you’re watching here on this program 7Investing now doesn’t give you enough, Simon has been doing a rolling advisor update. So if you’re a 7Investing member, and you go to advisor updates, you’ll see the Wall Street Journal, tech live, and you can really read his notes, they’re very well done notes that sort of take you through everything that’s happening as it’s happening. And he’ll continue to update that as we go. But Simon, I have a bunch of topics here we promoted some topics we’re going to do, we’re not necessarily going to make those the focus. But before I start throwing things out rapid fire, what are the one or two things you really wanted to highlight that because we do have limited time today?
Simon Erickson 2:28 It’s really neat. I mean, the world is kind of going through this big transformation post COVID. And I think that most companies are realizing what is this going to mean for me? I mean, I think that the two of the topics that I’m kind of interested in that have been talked about has been adhere to data privacy, and big tech regulations. You know, that was one that they’ve spent a lot of time on, had you know, Google CEO on there, and just kind of a whole discussion about how is Europe regulating privacy? How is Europe regulating its tech companies, America is having those conversations too. There’s a lot of bills on the table right now of how companies should or could be regulated, that’s a really big thing for me.
And then healthcare post-pandemic, everybody’s talking about COVID. That’s a big one. But we just heard, you know, CEO, and co-founder from 23andme, who’s now a publicly traded company, and how she is actually working with biotech companies with Glaxo and you know, the other drug developers out there of understanding the human genome to actually make personalized drugs. That’s a topic I’ve been talking about for a long time really interested in. Really, really interesting to hear her perspective on where that world is going too.
Dan Kline 3:28 Simon COVID was a big topic, but not so much about the fallout from COVID as what happens next. Are cities going to look different, someone from Lime spoke about like sort of in Look, if you’re the CEO of Lime, you’re going to believe scooters are part of the future. But But talk about like the office and sort of some of the changes that came up because it came up through a bunch of different presentations.
Simon Erickson 3:52 So first and foremost, the world is changed from COVID. Yeah, there’s a lot of kind of thinking that we’re going to go back to the way that things were, that’s not necessarily the case. You know, this is kind of work from home and remote work, these are trends that are here to stay. And even the largest tech companies, they’ve said, Hey, we’re gonna have offices available, and maybe two days a week you can meet in person, because meetings are more effective when you’ve got a whiteboard that you can talk about things behind you on. But when the work needs to get done itself, you don’t need to be sitting in a desk in the office by yourself doing your share of that, you can do that from home, and a lot of them are adapting the 5 day/40 hour work week to maybe more of a two days in the office.
And then you know, you can work on the weekends, if you want to take the middle of the week off. It’s kind of a lot of change that’s taking place. In addition to that there’s a lot of infrastructure behind the scenes that’s trying to keep up with this new reality that we have. There are a lot more attack surfaces that bad actors are tapping into right now. So what is the future of cybersecurity going to look like? And then how do you get everybody on the same page? If you’re not sitting at a desk together, doing the work together? How do you actually get pieces from remote workers, maybe international workers, maybe workers, you speaking different languages with one another, onto the same project and tap the highest talent out there in the entire world. I mean, it’s topics like these are fascinating questions to discuss the reality is they’re very challenging, but there are companies that are rising to the occasion.
Dan Kline 5:13 So Simon, the Googles, and the bigger companies of the world seem to be facilitating this with their tech. But I want to just quickly go back to Lime because I think it touches on it. And this was a Wang Ting, the CEO of Lime, he talked about how we’re engineering cities differently, and I do sort of believe that, but I also don’t believe it’s going to be scooters that are getting us around. So is it light rail? Is it sort of facilitating better internet connections, more ability to get places? Talk about that as a theme from the show a little bit? And then we’ll certainly move to other areas.
Simon Erickson 5:45 It’s an interesting one. I mean, like city design, and urban design has always been built around the cars, right? Like, how do you get to a restaurant, how do you get to a show or a stadium or a conference, or whatever it is, you got to have giant parking lots, you’ve got to have places for people to get to those things. ride sharing is kind of the first evolution of that where you can now if you’re in a city you don’t know or you don’t live in, you know, you don’t necessarily need to rent a Hertz car and get around on your own you can have Uber drop you off and things like that. But even that maybe there’s other options, you know, is there an opportunity for light rail to replace vehicles and a lot of places it.
Scooters, you know, it’s kind of under discussed topic right now, everyone’s kind of dismissive of them, but it’s still mobility. It is a definitely a much less pollution than the 30% of pollution isproduced by transportation in urban areas is coming from cars right now. And we also got an interesting statistic that Wang pointed out that the number of driver’s licenses requests among 16 year olds has fallen 40% during the past three decades, right? We’re not going out and getting cars that’s getting cars and we turned 16 anymore. It’s kind of like a there’s other options. How is the city adapting to that? How are commercial enterprises adapting. Pretty fascinating topic.
Dan Kline 6:53 I don’t want to poo poo scooters, but I think we’re ahead of the game there. Because you need dedicated lanes. You need cities close to traffic. We’ve gone through three or four waves of scooters here in West Palm Beach and they all get destroyed. We both saw in Alexandria, there were Alexandria, Virginia had 17 different scooter companies. Alexandria has cobblestone streets, that is not great for scooter riding, but it works really well in closed tourist areas in Orlando. So I am bullish on scooters. I just think they’re not being deployed. But this is part of a bigger discussion on infrastructure and resources. And I think we’re in like inning one of a big change of how we sort of all are dealing with that.
But Simon that that touches on some other things. One of the segments you went to was one of the early ones was about the growth of e-commerce and it was the one of the executives from instacart. And he threw out a lot of numbers. What he didn’t throw out is that as the pandemic lessened, we went back to pretty normal pattern. So we had, we’ve had big growth in in curbside pickup and some growth in delivery. But for the most part, we have not seen huge increases in e commerce. Am I missing something there? I know he was very bullish. But if you’re the CEO of Instacart, again, you should be bullish about grocery delivery.
Simon Erickson 8:10 And it’s a French woman, right? Apologies if I’m mispronouncing you know she’s CEO of Instacart.
Dan Kline 8:18 I keep forgetting I wasn’t gonna try it. I shouldn’t be trying it. I
Simon Erickson 8:21 I apologize that I mispronounced it for sure. But she said that, you know, groceries right now people that are ordering groceries online is only like 10%. Right? It’s below retail as a whole, as you know, Dan, but she says that, you know, even in the bullish expectations that she has, she thinks it might possibly get to 30%. And so she knows that seven out of 10, people are still going to go in person to the grocery store. But what is the interest of those 30? Those 30% of people who might be buying groceries online? What are they buying? It’s the same thing. They’re like Whole Foods went through and they got acquired by Amazon, can you get them to buy prepared foods, which have higher margins? Can you get them to buy more expensive things or find the brands they’re interested in? I mean, you’re getting a lot more data, aside from just the transactions. When you’re ordering things online, having a delivered to your doorstep, it’s could be a good opportunity. Even if it’s not the majority of people to change your behavior.
Dan Kline 9:11 I think it’s going to be a bigger percentage. And there’s also and we don’t talk about this because it means people I don’t want to say losing their jobs, but jobs are going to shift. There’s hundreds of 1000s of people picking grocery orders that are not going to be picking grocery orders. This is one of the first areas we’re going to see widespread automation. But and I don’t want to belabor this, there is a breakdown of the delivery and I order instacart pretty regularly. My order this week was just delivered to another house. And there’s nothing you can do there because you can’t just walk around and pick it up.
And their customer service was actually pretty excellent in terms of making a refund. That did not help that I couldn’t cook dinner. So I’m going to throw a couple of rapid fire ones that we’re going to get to some of the ones that we promoted a little bit before the show. So I’m pretty excited about this assignment. You made it clear we’re all going to space I assume we’re going as a team Um, I don’t know. But this was in your write up that I’m forgetting the gentleman who but someone it one of the speakers said that going this space will be accessible to everyone. That is a big change from where we are right now.
Simon Erickson 9:11 Yeah, it was a Chris and Glenn were kind of two citizens that, you know, commercial guys and just had made a lot of money from success from their ventures. And they were kind of too or the the, the first space tourists, right? They’re becoming kind of the poster children, if you want to call it for for the space tourism industry and they said, Hey, it wasn’t expensive. They said, Yeah. Was it expensive to this day? They said, was it awesome? It was awesome. And they kind of say that they were happy to be the early adopters that paid the price tag just to enable this industry because they said it’s it’s something that they would they would think of is everybody would love to enjoy this experience at some point in the future. And they recognize that costs are going to have to come down, we’re still talking hundreds of 1000s of dollars, even to reserve a spot for a space tourism in the future. But you didn’t you see more more companies making that available now maybe it’s something that is, you know, $10,000 at some point in the future, and how many people would love to go see outer space for $10,000? Even $1,000? Depends on how to get those price points down.
Dan Kline 11:09 Yeah, it’s got to get to $1000. For me at $10,000. I am doing the two day Disney Star Wars adventure. Before we get into some of the specifics here, I actually wanted to talk to the one thing that seems really clear to me through all your notes. Is this a really optimistic crowd? Everybody seems really positive even with the cybersecurity. Even with the the economic disruption that was that was acknowledged a bunch of times, it really seems like technology, people are pretty optimistic.
Simon Erickson 11:38 It’s an interesting blend, right? So Dan, it is Wall Street Journal tech live. So you’ve got a tech audience, for sure. You know, these people that understand the technologies, a lot of them are academics, a lot of PhDs, you know, they’re presenting on stage. So definitely an embrace of technology, people are very optimistic about it. But they also recognize technology as a tool for society to do its thing with, right when you talk about Facebook, and there’s a lot of criticism of Facebook right now. But they’re saying, hey, the decisions that Facebook is making in the buildings in the meeting rooms are based on what is the impact we’re going to have on society as a whole.
We’ve got billions of people on this platform, every decision that we make now isn’t just Okay, let’s go flip the switch and see what happens. I mean, it’s becoming much more sensitive. If we do this, what are people going to do now that they have our technology in their hands now that we have a platform that’s got billions of people in their hands. So that’s why things like cybersecurity are so important data security is so important. Content moderation is so important. AI is so important. These are all building blocks that at the end of the day are like what do you want your company to accomplish? And how do you keep your company preventing the bad things that unfortunately might accomplish? If you don’t think about this?
Dan Kline 12:42 Did you hear any interesting security solutions? Because the problems you just laid out? Like it’s hard to do content moderation? On the seven investing website where we I don’t think allow comments, like it is a you know, it is very difficult than a Facebook group to do content, moderation, let alone across Facebook. Did you see any viable sort of next steps here? Because we’re again, in the infancy?
Simon Erickson 13:05 I mean, a lot of it from technologists perspective would be the the AI for using content moderation, right, find something that is bad, take down that thing as soon as possible, especially for user generated content, right. And a lot of this right now is being protected. There are new protections for the platforms that have user generated content like Facebook, like, like YouTube, you can go post anything, and hopefully you’re not posting harmful things. But if you do, they aren’t liable for user generated content today, Europe is taking a much stronger regulatory approach to this where there should be not only fines, but you know, you can be sued as a platform that doesn’t immediately flag that and prevent it in the first place from happening.
Or perhaps there’s protections that would mandate a certain age for people to even get on these platforms in the first place. Right? If you’re eight years old, should you even be able to get into YouTube, or you know, even if they’re in there, you know, there’s got to be kind of customization of what can be seen and what cannot be seen. It’s kind of this – It’s a gray area of debate. It’s whether this needs to be upfront specified by regulators and saying you cannot do this platforms, or it’s more of self-regulated, where there’s tools that are available in commercial enterprise. Of course, they don’t want to be in the news for bad things happening on their platforms, either. America is taking a very, very different perspective than Europe in a lot of ways for this. And then China is a completely different ballgame, which has got a much more restrictive and censored government either of those two regions.
Dan Kline 14:30 So I want to hear about what’s happening in Europe, but before I do that, I will point out that a senator Amy Klobuchar was one of the speakers of this event and I don’t want to go particularly into what Senator Klobuchar had to say. I don’t want to go into what she said but it wasn’t overly partisan. So if you want to read Simon’s wrap up of that, you have to be a 7Investing member. How do you become a 7Investing member? Very simple, you go to 7Investing.com/subscribe. Now, Simon’s wrap up is great. I really enjoyed it. But that is not the reason you join 7Investing, why do you join seven investing, because each month we make our highest conviction stock pick.
We write out very detailed reports I’ve started my report for next month, and Simon um, two sections in 1100 words in it’s kind of get edited, like but that being said, it’s a company I’m so excited about that’s such a part of my life in sort of a way I never really saw coming. And then you look at what the business is doing. And I’m just excited. I think we all are and then we do a video presentation. And then after the picks come out, we do what are called company updates. Now, do we update every little bit of news? No. But do we update when something major happens or when there’s a seismic shift in the industry or where there’s a real rumor of an acquisition. I know one of my companies came out with a really cool new product today. And it’s it’s not going to be a giant material piece of their business. But it’s so cool. I’m probably going to write about it. But then we do things like go to a conference and do diaries. I can’t wait. So I’m at a conference that’s big enough that I could do a live diary because that’s a format. That’s really neat.
And maybe we could do some interactive things so as a member, you get access to so much research I think Simon did the math with with our Director of Marketing Sam Bailey and it came on to like it’s worth like five cents per hour like is what you’re paying for all the work you’re getting. But you don’t just get me, you don’t just get Simon, you get the global perspective, the emerging technology perspective from Anirban Mahanti, you can healthcare from Dana Abramovitz, who is incredibly thoughtful in that space, you get biotech Maxx Chatsko is so excited about biotech, that he’ll post like a 2000 word piece to Slack that all of us don’t understand and have to ask him about personally. But when he posts for members, he posts knowing he’s going to members that he’s speaking to people that perhaps don’t have an advanced degree. You’ve got Matt Cochrane talking to you about payment talking about entertainment, so much more. Steve Symington in the technology space, I’m not being fair to everybody, because the depth we cover is unbelievable.
So if you want to pay us $49 a month, we’ll let you do that. That is how we do a basic subscription. But a better deal. A much better deal is $399 a year you pay us $399 a year, that’s like four months free, you get access to all of our picks, all of our past picks, and people say oh my god, we saw this in customer service today. You got a lot of picks, how do we deal with that? Well, maybe you look and you say, hey, my life’s a little bit like Simon’s. I live in a similar place. My family makeup is similar. And I really liked the types of companies he has to talk he talks about. But I’m also really interested in healthcare.
So maybe I’ll pepper in some of Dana’s that’s up to you, we’ll give you some ideas as to how we do that I talk a lot about how I buy Maxx’s picks as a counter act, to my own sort of conservative nature, and Anirban and I talk a lot about some of his picks. So I’ve made some purchases there. But we will be very excited to have you as a member. But Simon, as we get through regulation here, I want to come back to that a little bit. Europe is taking a different approach. They’re maybe putting stricter regulations. And ultimately, if you’re not talking China strict, in some ways, if a company has to make changes in Europe, it’s actually kind of more likely that they’ll just make those globally right, because these are such big companies. You can’t turn a cruise ship all that easily. And these are really large cruise ships.
Simon Erickson 18:23 I mean, this is an interesting one that Amy, you know, pointed out she’s he’s obviously you know, a US Senator here. And then we also heard one of the commissioners from the privacy regulators over in Europe speak to it’s just it’s so nuanced. And I mean, the world has different internets. United States internet is different than Europe’s internet different than China’s internet. And so if you’re a global company like Facebook is, you want to have a universal bar, you want to have a universal privacy like okay, great. This is what the regulation is we’ll do whatever we can to make sure that we’re compliant for all the regulations. But it’s not that easy. It’s never that easy. Every region is different, every consumer region is different too. And you know, it makes it a kind of a moving bar, which is very, very challenging. I think this is why you see Facebook not able to crack the code in China. Now there was Netflix. Neither what you know, Google has struggled in China is basically backup China, we saw LinkedIn backing out of China’s because they can’t deal with the erratic-ness of China’s regulators.
Even China’s own tech companies have a difficulty understanding the regulations that are constantly changing out there. And so I think that one thing that you know, he mentioned her in her presentation again, I won’t get into anything political because we don’t want to talk politically. But you know, one thing that she said that she agrees with Facebook and with Mark Zuckerberg on his that there it would be really nice for at least America to have a universal privacy law and kind of set that bar and the expectation that’s sustainable for years, if not decades, that these platforms can abide by. Because they want to be compliant as well. It’s certainly good for them to know what the rules are and have them in place so they can build the infrastructure required for it.
Dan Kline 19:51 I thought it was a really interesting piece. And frankly, it didn’t feel particularly political to me, mostly she was addressing their problems that need to be solved and every tech leader will agree because look, I had to moderate comments when I worked at the Boston Globe. And stories that weren’t political were taken as political comments would go in directions. And it’s like, wait on this story about a new flavor at dunkin donuts? Should I be deleting these political comments? Or is that censorship? It’s, these are tricky questions. And I’ve talked a little bit about this on the air, I have a very close person in my world who went to work at Facebook. And when he told me what he was doing, it was so unbelievably specific, that as much as you’re going to, you’re going to question the overall motives of Facebook, on the boots on the ground level, they’re actually trying very, very hard to get it right.
That doesn’t forgive everything. But it just underscores that these are gigantic problems, like figuring out whether search is is producing valid results or non discriminatory results or however you want to look at it is not something that you can like settle over like a couple of drinks. I mean, Simon and I could but like the beer would be good. The sound I want to get to a few things that we said we talked about, we only have a few minutes left, you have to get back to the show here. Read its CEO spoke about the so called Reddit rally. And I don’t want to say I got offended by this. But I did a little bit I get it. I’m an old man like it comparatively. But he basically said, oh, we’re monitoring things. And we’re trying to be really careful. And we don’t want there to be manipulation. And as far as I can tell, read it’s kind of okay with manipulation. That’s all I’m gonna say for editorializing. I know, I’m not being fair there. So feel free to jump in. I won’t talk again.
Simon Erickson 21:26 It’s an interesting one. Right. And you know, catching up is kind of drinking again, from the firehose. Trying to give at least some some insights as to what Steve Huffman Helton was talking about who founded Reddit, he wants it to be a genuine place where people are not censored, where people have the ability to go out and be authentic and be like hey, I think this. You know, and then they can come in and he puts it to the communities to figure out what is in bounds and what is out of bounds of saying oh no we don’t like this thumbs down every every post. Even down to the post level of Reddit has got a way for the larger audience to kind of vote on on good or bad content.
And he wants to just go back and flag and say okay, is everybody saying this is offensive or harmful content? Scrape it off. If it’s not, he thinks controversy should be embraced. He actually would like what you just said you know, at the end of the day you consider something to be manipulation or you know, you’re waving your fist get off my lawn he might see another group that would say well hey, but Dan Think about it this way. For him that encourages discussion that’s the whole point of genuine community discussion. He just wants to keep it in a way that can be civil that people aren’t lighting the torches that each other because they hate what each other is said no,
Dan Kline 22:28 And he seemed like a Steve Huffman is his name and he seemed like a genuinely honest good guy. I actually believe in his intent. But here’s the problem Simon, if you and I create a Houston Astros Facebook group, and somebody comes into that group and says hey, you know that call that third strike that the Red Sox would have walked off and not given up seven runs of the night? That was actually a strike and as a Red Sox fan, I’ll say statistically it’s only called the strike 23% of the time so I’m not arguing that the call actually. But if we’re in an Astros group, we’re all gonna say no no no, and we’re gonna shout down the Red Sox fan in there who says Hey, that was a strike isn’t that the danger you’re in that like Wall Street bets is a somewhat closed community.
You and I could not go into Wall Street bets and say hey, like you know what’s not a great stock to own GameStop like that’s going to get shouted down so the intent is good and we have a quote Simon actually summed up sort of what Steve had to said if don’t make JT do all these graphics and this assignment summary: Reddit is building its policies to encourage authentic and often controversial discussions, but in a way that hinders harmful behavior or market manipulation. Great intent Simon but a ways to go I’ll give you the last word on this one.
Simon Erickson 23:40 And I mean, like the quintessential example of this mundane is the Wall Street Bets GameStop example right? Was that market manipulation that you had a whole bunch of retail investors on Reddit the power of the crowd was very clear they pushed up that stock price and there are a lot of people that were saying oh, that’s manipulation you can’t do that. But is it or was it just a response to a short to a shortly a thinly traded stock It was a lot of short sellers were were taking advantage of and perhaps manipulating themselves because there was no catalysts on the horizon. This is making us rethink if you have a small bricks and mortar retail gaming company that all of a sudden could have a group on Reddit say yes, we’re gonna stick it to the suits and we’re gonna unlock some value. I mean, that makes a lot of people think twice about that. Again, I don’t necessarily have a problem with doing that I just want investors to think long term so you’re not stuck holding the bag at the top when everybody else gets on the stock drops to 80%
Dan Kline 24:31 So I’ll say no than yes, because the there it’s long been a tactic to notice short interest and then bet against it. But then at some point when you have like the celebrities out there. The you know, I won’t even name them but you know, the internet celebrities, you know, who are doing the the hodl in the diamond hands, they’re selling and that to me, and that’s not necessarily Reddits fault, but again, I’m gonna go back to none of this is easy, because the intent of what Reddit is trying to do is maybe even more pure than the intent of what Facebook is trying to do. So I don’t want to come off as as too much, you know, shaking my fist guy here, but I do want to talk a little bit about – So Bob Baker, Bob is the CEO of Viacom that identify him as Robert, but everyone calls him Bob. So I don’t think I’m being insulting there. And he had a lot to say about streaming. Simon did he tacitly acknowledge that CBS Viacom has a long way to go in this space? Because you know, I root for them, but I am not a fan.
Simon Erickson 25:28 It’s a tough one. Right. And this was an interesting interview, because the the tone of the questions asked to Bob was almost a little antagonistic, you know, there was kind of thing, aren’t you following behind? Or Shouldn’t you be spending more, Aren’t you concerned about? I mean, it’s kind of the recognition that Netflix now has a larger content budget than Viacom, that CBS does every year in terms of the streaming services, and Viacom has got only 42 million streaming subscribers, which is a fraction of what Netflix has internationally. So I would agree with you, Dan, that, you know, you know, the media space is much, much better than I do. But it does seem like even though they’ve got several decades of a head start, and they are embracing streaming, they’ve got 42 million, like we said, streaming subscribers, a lot of those from Paramount Plus, there is a need and a question also of how large of a media library should you have? And how much should you charge for that? And do the do the largest players keep getting bigger? Is there some kind of ceiling that they reach, where you can’t charge more than X dollars a month that people just aren’t gonna pay it?
Dan Kline 26:29 The problem is one Mandalorian is worth more than 10 Star Trek’s. And if you really look at the content library, and Bob is aware of this, the problem is when you look at every secondary streaming service, what are they going to do? Are like Peacock and Viacom gonna merge? How would that work? And does that become this confusing array of rights like there’s like Premier League rights are coming up and they might get split between multiple vendors well, that becomes really really tricky so I liked what Baker’s had to say and that touched on and we’ll close with this – there’s also sort of a we’re at a weird tipping point when it comes to talent right because this has happened before when we first had even say DVDs. Movie stars went wait a minute like not as many people are going to the theater because they’re going to buy the DVD? Why don’t I get a cut of the DVD now if you’re Tom Cruise you get a cut of the DVD. If you’re the third assistant grip. You don’t. That’s a strike right now in Hollywood that all has to be negotiated. Baker’s talked about that and so did other people right?
Simon Erickson 27:27 Yeah, this is Scar-Jo with with Black Widow right the Disney controversy is suing Disney over Black Widow in the way that she’s getting paid because the contract was originally like so many other contracts for talent in Hollywood, our structure is based off of box office receipts. Now how many box office receipts to the theater get when this when this movie came out? Its opening weekend, first couple of weekends, whatever it is. And then COVID happens nobody’s able to go to the movie theater and everybody’s watching it on Disney Plus. So okay, all of a sudden throw out the old contracts. And now it’s got a big – it’s this strange convolution of data now of like, how do you assign what the talent is worth? Certainly there’s some kind of – it’s a lot more challenging to figure out you know, the viewership within Disney Plus how many subscribers you get from this, how many people are there just for that show versus everything else? It’s not as easy as Hey, I bought a ticket at the theater. And that’s kind of restructuring a lot of those relationships that have been in place for decades in Hollywood.
Dan Kline 28:21 And there’s always been a lack of transparency but even if you have transparency, so I’m gonna watch Black Widow probably this weekend. It’s free now on Disney Plus. Ostensibly some percentage of my Disney plus membership I keep it because I can watch Black Widow is that two cents, is that $1 it’s all very tricky. Now. Here’s the problem. We’re out of time. Simon has to go back to the show. So I will point out again if you want to get
Simon Erickson 28:53 Dan I’m not sure if it’s just me or everyone else, but I think I’ve lost Dan’s feed for a moment JT, are you able to confirm that? Can you hear him as well?
Dan Kline 29:03 Let’s end the show. We will be back on Friday with an Anirban Mahanti. Simon little bit of a technical glitch there. I don’t know if I was down or you were down. We’re not going to worry about it. You’ll get back to the show. We will revisit some of this later on. JT. Thank you for the reminder there. We’ll see everybody Friday.
The secret is (almost) out! Join 7investing's founder and CEO Simon Erickson on Wednesday, January 19th at 11 ET as he announces this extremely exciting addition to our team...
Join 7investing's founder and CEO Simon Erickson this Wednesday, June 22 at 11 AM ET as he introduces our newest Lead Advisor!
There was a time not all that long ago when the valuation of stocks, tech stocks included, could be calculated based on a discounted cash flow analysis. Sure, there was lots...