Jacob Weisberg (3:13)

Well, I am about as far from a vaccine expert, Felix, as you can get. But I think there were a couple things that really made the people who seem to know about this very positive. And one, the main one was the 90% effectiveness rate. So if anything like that holds up, that's so much better than what they were thinking would be a good enough vaccine. I visit the Church of Dr. Fauci, and Fauci is now saying, not necessarily just because of this vaccine, but as a contributing factor with other things that he knows more about than most of us do, that he thinks there will be vaccine for everybody who wants it by, say, April. And that points to the economy coming back and functioning, people getting on airplanes, people traveling, staying in hotels, people going to concerts and movies, you know, maybe as soon as this summer, which is a lot better than I think people were anticipating before that news.

Emily Peck (4:11)

Right. And so I think that what we saw in the markets was actually fairly rational. Like, I don't think it was a massive shift in strategy. I think it was people just updating their expectations that, well, we thought we were maybe going to get a vaccine that was 55% effective and we didn't know when it was going to come. And all of a sudden now we got something that was far better. So you did start to see a shift a little bit away from some of the work from home tech stocks towards some of leisure and travel stocks that now are anticipated. Those companies will do a little bit better than we had thought three weeks ago.

Felix Salmon (4:42)

Although that's what we saw in the markets for the first, what, 30 minutes or something. The stocks went up, and then eventually on Tuesday, they went back down. Some of the moves were just. Some of the moves were crazy, though. Like, peloton went down by 25%, right?

Emily Peck (4:58)

What you saw was a little bit of a. You saw a little bit probably of an overreaction initially, which is very common, both because you have also algorithmic trading, you have options trading that tends to accelerate moves in one direction or the other, and then you have a little bit of a shift back usually the next few days. But we definitely have started to see a little bit of a shift in terms of how investors are seeing different companies.

Anna Shymansky (5:21)

I think it's important to note that what we know about Pfizer's vaccine at this point is basically based on what Pfizer has told us, that the vaccine is in phase three trials, which is the last phase before something gets approved and it's been tested on human peoples, but that their results have not been peer reviewed and the FDA has not signed off on the vaccine yet. There's also going to be issues with distributing the vaccine. Apparently it's two shots. So you get one shot of vaccine and then you have to come back 21 days later for another shot. Given the limits of the supremely, what's the technical term, fucked up American healthcare system, that's probably gonna be a challenge, and a challenge particularly for rural areas, because this vaccine apparently has to be kept very cold. So I feel like there's a lot of exuberance and expectations for this vaccine, like it's going to be some miracle drug. And I do really hope it is. And the 90% effectiveness rate that Jacob cited sounds amazing, but I feel like the exuberance is a little too exuberant right now. I don't know, maybe I'm just a cynic.

Felix Salmon (6:32)

I'm having a lot of difficulty calibrating exuberance right now. The one thing I was very clear about in my own mind before this news came out was that people have been placing way too much faith in a vaccine in general. And that vaccines, while certainly a very important part of fighting any pandemic, are rarely entirely sufficient. And that you need a really good testing system, you need a lot of other things going on as well over and above just a vaccine. Especially given the really surprisingly enormous numbers of people who have gone on happy to go on the record saying they will never take a vaccine. Now, if a vaccine is like 95% effective, and honestly, when Pfizer says 90%, they are being conservative, I think it's probably even better than that. Then the percentage of people you need to take the vaccine goes down in order to give that herd immunity. But even once a vaccine is available to anyone who wants it, that is not the end of the, the coronavirus pandemic. And I don't think anyone should kid themselves that it is partly for the reasons that Emily was saying and partly just because I think coronavirus is going to be with us for decades and it's going to change the way that we navigate the world for decades.

Emily Peck (7:55)

It is still a very good sign that we will likely be able to get the country back to something approaching normal, hopefully at some point next year. Not that it will be normal, but that it will certainly be far more in that direction.

Anna Shymansky (8:10)

Oh, one thing I wanted to ask Jacob regarding the politics of the vaccine. There was a lot of back and forth on Monday about thanks thank President Trump for Operation Warp Speed. He's the reason this is happening right now. And then there was the pushback. Obviously don't thank President Trump. Da da da da da da da da. Like does the Trump administration deserve any credit for how quickly this vaccine has been developed?

Felix Salmon (8:37)

The answer to that question is no. It's an empirical answer. Right. There are some companies which are part of Operation Warp Speed and did get a lot of money from the US Government precisely to try and accelerate the development of the vaccine and get it out in record time. Pfizer is not one of those companies. It did not participate in Operation Warp Speed. The United States government is not at the front of the line when it comes to getting the Pfizer vaccine. Pfizer will distribute the vaccine in the US but it will also distribute the vaccine in many, many other countries in the world. And while the US Government is definitely going to have to play a very high level role in trying to work out how to prioritize who gets the vaccine first in the United States, that's basically the first time that the US Government is going to be really coordinating with Pfizer.

Anna Shymansky (9:30)

Right. And it might even be better now. It's definitely better now with the Biden admin. There'll probably be more trust in the vaccine if and when it it is actually released.

Felix Salmon (9:39)

And most importantly, like the people who need it most will get it first. I think with Ron Klain in the White House and Biden in general in the White House, we have much more faith in that than a kind of laissez faire Republican ideal, which would probably be like whoever can come up with the most money gets it first.

Jacob Weisberg (10:01)

Felix, I wanted to pick up on the thing you said about Peloton, which intrigued me. And I do think the stock market's reaction is weird. Not necessarily just because it's getting ahead of itself, but because I understand why Delta and Marriott and Carnival Cruises go up if there is a better chance of them making more money sooner. I don't understand why all the pandemic darling stocks go down so much because it seems to me those technologies stay with us Slack and zoom and all the working from home. I mean, maybe people watch a little less Netflix if they can go out at night, but it seems to Me the lessons of economies that convert to new technologies around big events, whether they're wars or pandemics, is that those technologies remain. Peloton is not like a weapon developed for a war that we're not going to use anymore. Those people have pelotons now.

Emily Peck (11:02)

I think that that's a good point. I think though that if you look at how these stocks have behaved, they've gone up like 300% and then they came down 15%. So it's not as though they completely reversed. It's just that when you're investing, you have an expectation of how much cash you think this thing is going to throw off, which is related to the value of the stock. And if you think, ok, now our expectations have shifted slightly because we think if people can go back to gyms earlier than we thought, that maybe fewer people who are going to buy pelotons or buy the peloton subscriptions, that's going to slightly alter the value of the stock. It doesn't mean that people aren't going to use pelotons, as you said. It doesn't mean that things like Zoom and Peloton and Slack and all of these things don't have a lot more value than they probably did a year ago. It just means that expectations have shifted slightly.

Felix Salmon (11:48)

I think Anna's right about this. I think if you wanted to reverse engineer a rational explanation for the decline in peloton stock, that would basically be it. That peloton stock was pricing in another X months of crazy growth and now it looks like X is going to be smaller than we thought it would be. And to your point, Jacob, once we get back to normal, it's probably true that most of the people who have pelotons will continue to have pelotons and will continue to pay those monthly subscription fees. But it is probably not true that peloton will continue to be able to sell these $2,000 bikes at the kind of pace it is right now. If you haven't bought one by April, then you're probably much less likely to buy one ever. And indeed a lot of those existing pelotons might start coming onto the second hand market and that kind of thing. It's a complicated cash flow, discounted cash flow calculation which you probably could use to explain a 25% drop. But your deeper point I think is super interesting, which is the question of once you make these changes, do you unmake them at the end of the pandemic? Are they here to stay or do you get a kind of mean reversion.

Anna Shymansky (13:09)

I think that is the question with consumer behavior.

Felix Salmon (13:12)

Yeah, I'm team meat and reversion on this one. I think there is a lot of behavior that feels like it's here to stay right now, but that in a year's time we are going to look back on with a kind of feeling of revulsion and like, oh, my God, that was horrible. Do you remember those pandemic days? And something like Zoom is kind of at the top of the list. If you have been stuck on multiple Zoom calls per day for a year, you love the idea of getting away from that. And there's this almost, you know, it will be associated in your mind forevermore with the terrible days of trying to homeschool your kids. And if you get to avoid ever having to see a Zoom screen again, you will jump at that chance. And I, I'm not saying that's what's gonna happen, but I'm saying that there are definitely going to be pandemic darlings, which really did will turn out in hindsight to have been pandemic darlings, and that people will drop like a hot potato the minute they get the opportunity.

Jacob Weisberg (14:16)

Felix, respectfully, you are totally wrong. You think people are gonna go back to conference calls. I mean, people may hate being on Zoom all day because it's a really effective work and work is tiring and people would rather not work effectively all the time. I mean, I was, oh my God.

Anna Shymansky (14:32)

That'S such a manager thing to say.

Jacob Weisberg (14:34)

And I was, I was, I was. But it's just, it's just, it's true of me. I mean, if you're, when you're on a multi party zoom call and then you imagine doing it at a conference call, you'd think, well, I lose all these visual cues about who's when to talk and how, whether people are paying attention. Nobody's going back to conference calls. We've got Zoom now. It's better, it works better, it's in technology that came out.

Emily Peck (14:58)

I don't know if I should interrupt.

Anna Shymansky (15:00)

Or not, but I'm going to because I'm on the. I'm on a call and I have no visual cue here. But perhaps for work, Zoom sticks around. But the absolute zoom saturation from this pandemic must go away immediately. For example, last week I was on a Zoom. I had to attend a Zoom funeral, and that was terrible. No one should ever have to attend a Zoom funeral. It's. It worsens the experience for everyone, including the people who were there. And one of the people who was Mourning had to like fix the settings on the Zoom midway through the funeral because people were talking on it. I mean, that was, that was just awful. And like, no one should have a family reunion, a wedding, a bat mitzvah, any of those things. They should never ever be on, on Zoom. In my opinion, like, maybe it's okay for, for work, but there's definitely been overuse of that platform. And when there's like the Great recalibration post COVID 19 if happens, I think we'll definitely see, I guess I'm in the Felix camp. We'll definitely see some things kind of revert to a norm, you know, that were really popular, that we'll feel kind of like disgusted by. And then other things we'll like stick with like comfortable pants, as I've been talking about for months, and other, other conveniences.

Felix Salmon (16:18)

The one thing which I think if you really want to short a sector which probably actually hasn't risen that much would be edtech. Like for many, many years I've been hearing all of these companies go, we're going to revolutionize education with the use of technology. And then it turned out this was their great opportunity to revolutionize education with the use of technology. And everyone hates that technology so much that they will never give it a second chance.

Emily Peck (16:44)

Although snow days are done. No, no kid's ever going to have snow days again. But I do think though that what we're talking about, it kind of relates to actually what we saw in the market, which is that, yes, I do think we will not have the levels of growth in these work from that we've saw during the pandemic. But that doesn't mean going forward that they're just going to go away and a lot of these behavioral patterns won't have changed. And the other thing I kind of wonder is if you look historically, when you've had massive crises in the United States wars, you often get a lot of technological advancement partly because you have a lot of money thrown at things. And I kind of wonder if we're going to have something like that, a kind of potential moving forward productivity boom of we had all this technology pulled forward. We're also getting a lot of money thrown into biotech. I just wonder if maybe, I mean, not saying that makes it worth it, but I just do wonder if that's a kind of silver lining coming out of this.

Felix Salmon (17:31)

There are two things going on here. One, you're absolutely right is that we get the classic boom era thing of freely available liquidity and investment. So a Lot of money is going into a lot of technologies right now, and that will pay off in some way down the line. The other thing we're seeing is, I think with both Zoom. The zoom is the equivalent of the pressure cooker. I think in, like, the Second World War. Video conferencing existed for years before COVID and Zoom existed before COVID I used Zoom quite a lot before COVID but it wasn't ubiquitous in the way that it is now. And pressure cookers, I think, are the prime example of this. Pressure cookers existed for decades before the Second World War, and no one used them. It just wasn't. It had no real uptake in the broader population. And then what happened was the war came along, and, you know, women had to actually get real jobs, and they just didn't have time to spend all day in the kitchen cooking food. And they started buying pressure cookers because they were so convenient. And that just changed the way that people cooked from then on in. It wasn't that like people invented the pressure cooker in order to deal with the war, but people adopted the pressure cooker for the first time in large numbers, and then they never went back. I think that on some level, Jacob's right about that, that if something is genuinely more convenient, and I think telehealth falls into this category. Once doctors finally get over their issues with telehealth, because they have to for the pandemic purposes, and once they realize it is not only acceptable, but in many ways is actually better than what went before, you will wind up seeing that continue long after Covid is a memory.

Jacob Weisberg (19:20)

When it comes to health. What about behavioral and medical changes comparable to the adoption of antibiotics at the end of the Second World War? I mean, imagine wider acceptance of vaccines, but also wider social acceptance of masks comparable to what's normal in Asian countries. What if, in this country, people started wearing masks when they felt cold and flu symptoms? You could have real changes in the ordinary diseases that we had before the pandemic. I mean, I just think there are big social changes that turn into economic changes that come out of an event this transformational.

Felix Salmon (19:59)

I can't believe that you, Jacob Weisberg, the initial creator and founder and host of trumpcast, is the one saying that there's gonna be broad acceptance of vaccines and masks. I think if it wasn't for Trump, you would be exactly right about that. But that Trump and Republicans more broadly have managed to politicize vaccines and masks in a way that I would never have thought possible. And that is the thing that scares me the most is that the same people who are saying, I'm never going to wear a mask are the people who are going to start saying, I'm never going to take a vaccine. And that would be really bad. Right.

Jacob Weisberg (20:37)

But before the Felix, nobody wore a mask. And now half the country, at least more than half the country gets that. Masks can protect you and protect other people. And if they can protect you from COVID turns out they can protect you from other things as well. I'm concerned about the same things you are and the attack on social trust that Trump is leading. And obviously all that could be particularly devastating around uptake of a vaccine. But let's not assume that the result will be purely negative.

Anna Shymansky (21:06)

I'm of two minds. They're also cautiously optimistic that the pandemic could change public health for the good, but then skeptical because of all the Trump issues around masks and the politicization of masks and vaccines. But we're also headed into or we're in this third wave right now where I think in over the next few months, it's going to be harder and harder to not know someone who's been sick or get sick yourself. Like, the pandemic's getting really, really, really bad. So that might push more people into the camp of maybe let's wear a mask. You know, maybe a vaccine would be a good idea kind of a thing, because it's just going to get so much worse.

Jacob Weisberg (21:48)

Yeah.

Felix Salmon (21:50)

Okay, Jacob, we invited you on here for a reason. And it turns out that it was not that you are a vaccine expert, and it turns out it is actually rather that you are a podcast expert. You have started, I guess, two podcasting companies, or three, if you considered, if you kind of count the slate, podcasting operation. And Megaphone is two separate ones, is that right?

Jacob Weisberg (22:15)

Well, let's say two, but I was the co founder of the company that became Megaphone when I started it. It was called Panoply.

Felix Salmon (22:22)

And so I guess, congratulations, Renaudi, you just managed to sell your company for $235 million.

Jacob Weisberg (22:28)

Yeah, somehow I didn't. It turned out I didn't own any of it, but I won't make that mistake next time.

Felix Salmon (22:34)

Wait, you didn't have any of that famous shadow equity that people are talking about?

Jacob Weisberg (22:39)

I don't want to go into any detail, but no, I don't. I don't.

Felix Salmon (22:43)

Commiserations, Jacob. I'm very sorry to hear that. I hope you make it all up with your Pushkin stock when Pushkin gets bought by either Spotify or iHeartMedia or possibly SiriusXM, because there seems to be this massive land grab going on in the podcasting world right now. And obviously the news right now is the Megaphone got bought by Spotify, but there's been a bunch of other deals. Midroll got sold to Stitcher. Give me sort of overview of how the podcasting world works and why everyone is trying to buy everyone else right now.

Jacob Weisberg (23:23)

Okay, well, first of all, let me just tell you about Pushkin. We quite like being independent and it becomes even more fun to be independent when everyone else gets bought up. So not just being coy, like nobody's made us a big offer yet, it's really podcasting still has a wonderful spirit of independence about it, and being a company that is not a part of a larger conglomerate is only becoming more appealing to me. So do not look for us to join this parade anytime soon. But I think what's going on is the industry is at a predictable stage of consolidation, standardization, the sort of wild west of make any kind of podcast at any length with any business model for any group of consumers is probably coming to an end. There wasn't an economic basis for a lot of that. Now podcasting, like blogging or the Internet more broadly, is still open to anybody. Anybody can make a podcast for not very much money and distribute it and find an audience and that's wonderful. But the commercial side of the business, that is the stuff that costs money to make, where people need to get paid, like for example, slate money or the shows Pushkin makes, I think are going to be increasingly rationalized, standardized. I think formats are going to become more, not regimented, like radio. But you won't have the crazy sprawl around podcasts that you have. And I think there are alliances being struck with these big sort of centers, pillars of the podcast world. And one of them is obviously Spotify. Another, as you mentioned, is the rolled up SiriusXM Pandora stitcher midroll. Another is iHeartMedia, where Pushkin recently announced a deal to have our ads sold. But the sleeping giant is Apple, which still has the vast bulk and majority of all podcasts listening, but hasn't commercialized podcasting and weirdly doesn't have a business around podcasting. And when the sleeping giant awakes, I think it will shake up the industry more than anything that's happened yet.

Anna Shymansky (25:43)

Can someone talk to me about the nitty gritty here of the deal between Spotify and Megaphone as it relates to podcast advertisements? Because one thing I read was that part of what is I guess exciting about this is that Spotify has technology that lets them target ads to individuals like as they're listening to podcasts and now can distribute that technology more broadly to like podcasts in the megaphone network. And one thing I like about podcasts is the like weird way that the ads are delivered. Like when Malcolm Gladwell starts talking about wine or whatever, like I enjoy that. And when it's like those auto pre rolls, I'm not, I'm kind of bummed out about this. So I was just hoping to maybe Jacob, if you understand it or someone else could explain it to me.

Felix Salmon (26:31)

So yeah, shout out to the one listener. We have one listener who is a Slate plus member because he really wants to listen to the Slate plus segments on Slate Money, but listens to the regular feed of Slate Money for the first bit of the show because he really likes the ad reads. Thank you. One listener who really likes the ad reads. But Jacob, I share Emily's question because I genuinely don't actually understand what's going on here. If I am listening to a podcast with host read mid roll ads, how can those ads be targeted? Aren't those ads always just sold on a per podcast basis?

Jacob Weisberg (27:10)

At the risk of boring listeners to death, I can explain all of this to you. No, no, I mean it's please do, please do. And it does represent absolutely a shift away from the host read advertising to radio style prerecorded advertising, which I agree with all of you, is much less quirky and much less fun and just sort of ashamed that that's going to happen. But the host read advertising isn't standardized and hence isn't scalable. What Spotify has that no one else in podcasting really has for advertising is first party data. It knows a lot about the people listening to podcasts on Spotify. And it can insert ads, podcasts because it streams them and doesn't download them, can insert them in real time. So the ad is targeted to the person listening. That makes the ad much more valuable. What Spotify doesn't have, surprisingly, is a lot of people listening to podcasts. It's still less than 10% of the overall market. So what they want to be able to do is use some version of that technology to be able to target their advertising and make it more valuable off platform, off Spotify. And I think that's what buying Megaphone does for them because Megaphone has developed something called mtm, the megaphone targeted marketplace, which is built to target advertising outside of Spotify, where you don't have all that first party data and the technology of doing that gets sort of complicated. But what Spotify could potentially do, and this is both a little alarming from a privacy point of view, but also presents upside in terms of the value of the advertising revenue, is use its own first party data, what it knows about its listeners, and match it up to what those same people are doing and listening to podcasts in places other than Spotify, and use that to sell the advertisement. Sort of like Facebook does with, I think it's called the Facebook Audience Network. You can buy ads on Facebook, but you can also buy through Facebook ads that will target Facebook users. You using all that data they have on the Internet, not on Facebook.

Anna Shymansky (29:24)

Is that like the equivalent of how, like, if I shop for boots or something at L.L. bean, the ads for the boots, like, chase me all around the Internet?

Felix Salmon (29:30)

It's a little bit like that. The way if, I mean, correct me if I'm wrong, Jacob, but the way I understand it is let's say I have a Spotify account and so Spotify knows who I am, and then I listen to Slate Money on Spotify. Now, Spotify does not control the ads in Slate Money, but it knows who I am. And so it can use that information about who I am and the fact that people like me listen to Slate Money to then use megaphone to reach the 90% towards reach all of Slate Money's listeners and target them even when they're not using Spotify to listen to the podcast. Even if they're using Apple to listen to the podcast.

Jacob Weisberg (30:18)

Yeah, absolutely. Let's just take an example. I mean, imagine an advertiser for a product that appeals mostly to one gender. Let's say, I don't know, sports betting, FanDuel. I suspect that it's got a heavily male clientele, so they don't really want to spend money advertising to people who aren't male on Spotify because Spotify knows who its listeners are. They can buy advertising and say, we're just buying men. In fact, we're only buying men ages 18 to 35 because we know they're the primary sports better on podcasting outside of Spotify, you can't do that. You can't even say, I want to target to men rather than women. It's an RSS feed. This technology used to distribute the podcast, and it doesn't bring any real data back about who the listeners are, bring some data back about how long people listen or whether they finish the show. So if I want to come, I want to buy an Ad on Slate Money and just target men. I can't currently do that. I have to pay for all the women listening to the show too. And I think this is potentially what this transaction is ultimately about, isn't it?

Emily Peck (31:29)

Partly because right now, although you do have a lot of people who listen to podcasts, the revenue that is being generated is still relatively low. And partly that is because these ads, it's just not scalable. The revenue they can throw off is just limited. Because of how podcast advertising has worked.

Jacob Weisberg (31:47)

Up to this point, advertising has shift very heavily towards targetability and trackability of audience. So advertisers wanted to say, here's who we want to reach and we want to know that you've reached them. What people in the podcasting business like me say is, well, forget all of that. We have a level of engagement and response that's way better than you get with advertising another medium. And the way we know that is because direct response advertisers like Harry's Razors and Meundies and whoever else spend a ton of money because they track the response and they know it's so good that it justifies paying CPMs, which is the term of art, for ad prices that are way higher than they are in almost any other industry. But for big advertisers who are gravitating towards search ads on Google and ads on Facebook, they say, that's very nice. We want to target who we want to target and we want to know we've reached them. So that's, you know, and that points towards a more programmatic approach to advertising. And all the stuff that sort of ruined the Internet, you know, is now, I think podcasting is starting to look down the barrel of that.

Felix Salmon (32:59)

Although you said that everything is going to change when the sleeping giant Apple wakes up. Apple has always, in terms of big tech, been the last bastion of privacy. And one of the things that podcasters used to hate about Apple was precisely that it would give them no information about who was downloading the podcasts and made it very difficult for them to sell ads and that kind of thing. Given how enormous Apple is, given how much money they make in other bits of the business, given that podcasting is never really going to move the needle for them, what makes you think that they're going to suddenly change their mind on their fundamental privacy values? Or can they somehow wake up and become a big player in podcasts without doing that and without allowing targeting?

Jacob Weisberg (33:44)

Well, yeah, it's a good question. I think podcasting hasn't been a big enough business to date to be relevant to them, but they are benevolent, sleeping giant because they've let people build big businesses using their distribution and they don't. Unlike with the App Store or a lot of other businesses, Apple doesn't take any share of it. So you distribute your podcast on Apple. They promote lots of podcasts on the top of the Apple Podcast page out of the goodness of their heart and because they love podcasts and you don't pay them anything. So I think podcasters generally, I mean, Apple invented podcasting, but it's still more than half of all listening in the United States. So whether or not they end up commercializing podcasts and they don't seem very focused on ad supported businesses, so I agree with you. That may just not appeal to them. They're still going to be at the heart of it. And I don't think people investing in the Spotify system, where there's less than 10% of listening, can say, well, this is ultimately what's going to dominate the market when the company that dominates the market is still there figuring out what it's going to do about it.

Felix Salmon (34:54)

I have one last question for you, Jacob, which is we're seeing all of these deals for Joe Rogan, for Gimlet, for Megaphone, for Serial, which just got bought by the New York Times. Some of them are for content producers like Gimlet and Cereal. Some of them are for ad tech companies like Stitcher and Megaphone. They all seem to be quite big deals. But tell me how it shakes out in terms of where the money goes. If we have about a billion dollars a year right now being spent on advertising on podcasts, how much of that money goes to what you might call talent or creatives or the people making the podcasts? And how much of that money goes to ad tech and middlemen and all of the other sort of bits of the ecosystem, including Megaphone.

Jacob Weisberg (35:45)

I think creators in podcasting have attracted large audiences, are doing very well. I mean, Joe Rogan being a super extreme example. But if you can build a large audience, there are lots of ways to monetize it. And Spotify has, because it has its own funny economics whereby it's a music platform that doesn't really make any margin on people listening to music. It has incentivized itself to overvalue people listening to podcasts. And so it's paid very large sums of money for podcast money in the hopes that it can get people to do something on Spotify other than listen to music, I.e. listen to podcasts. And because they're a buyer in the market, that affects the value of all podcast content companies and in fact other kinds of podcast companies. So in a way, I think they're blowing the froth into the marketplace. I mean, there was enthusiasm before that, but that's what's driving these kinds of valuations.

Felix Salmon (36:44)

I guess my question was less about the size of the market and the valuation for the creators and more about the valuations for these other bits of the ecosystem like Megaphone. How much of any given ad deal does Megaphone skim off, basically? How big are its commissions on an ad deal?

Jacob Weisberg (37:06)

Well, Pushkin's been a client of Megaphone's. I mean, I'm not just a co founder of the company, but I'm a user of the product, which I very much like. But I can't tell you what their percentage is. They both do hosting for podcasts, so you can use, and I believe Slate Money is hosted and distributed via Megaphone. And they don't take a significant margin for that. That's a fee based business based on bandwidth charges and hosting costs and so on. But then the percentage is around the targeting of advertising where they're able to do that and they take a share like any other business like that.

Felix Salmon (37:44)

And the idea of hosting on Megaphone is that if you host on Megaphone, then you can target your ads versus if you host on Apple Podcasts, then you cannot, even though hosting on Apple Podcasts is free. Is that right?

Jacob Weisberg (37:57)

Yeah. I mean, not to get too technical about it, you don't host on Apple Podcasts. You need a platform to distribute your podcast to all the different podcatchers and players people use, including Apple Podcasts, Overcast, Pocket Cast, and that's what you do on Megaphone. And then they try to track the data you can get back and create a platform for the users. And it's a very nice interaction for the podcast creators. The one place they don't fully distribute is Spotify because Spotify streams rather than using RSS feeds. So Spotify has its own distribution platform that you have to plug into.

Anna Shymansky (38:34)

I have one more question on podcast, less technical, I think. One thing, when I was preparing for this conversation, I was reading Spotify's press release and they said they have 1.9 million titles of different podcasts. And then more generally, I was speaking to my husband today just about how many podcasts there are right now. It just seems like it has that feeling of like 2013 Internet, when there were so many different, like news sites all kind of doing the Same stuff. And not to say that every podcast is doing the same stuff, but like, if I want a daily news podcast, I think there's like six or seven options. Now I can't possibly listen to like the Washington Post and the New York Times and the Slate one and the Vox one. It just seems like there's a glut right now.

Felix Salmon (39:21)

And don't forget the Axios one, which is one.

Anna Shymansky (39:24)

I mean, it just seems like we're in a bit of a bubble, right?

Jacob Weisberg (39:27)

Well, I mean, how many books are in the Library of Congress? I mean, I think that number of the, you know, the, the total number of podcasts created isn't super meaningful. It's nice that people are making podcasts, but most of them aren't being listened to by any significant number of people. The more interesting question is the overall listenership and how big the audiences are for the biggest podcast, you know, the bestseller list. And I think those numbers are going up in a, you know, in a healthy, stately fashion. They took a podcast listening took a hit at the beginning of the pandemic. It seems to have generally recovered and grown to the point where I think it's larger than it was. It's back on a growth trajectory as people have established new listening habits that don't involve car commutes as much. But just that number of how many podcasts there are, I don't know. It's like, how many blogs are there? There are probably fewer now than there were during the period when blogs were kind of cool, because back then you would have started a blog and now you start a podcast. But that's not really the business of podcasting.

Anna Shymansky (40:27)

There's still too many podcasts though, to possibly keep up with all the good ones.

Jacob Weisberg (40:32)

I agree with you. Yeah, I've only listened to 1.3 million. I can't keep up.

Anna Shymansky (40:36)

Fair enough.

Felix Salmon (40:37)

Okay, Jacob, the other reason why we invited you on this show is because you are an expert on all things hype beast and skate kid. So the first thing I'm going to ask you for listeners who might not be quite as cool as Jacob Weisberg, is what is a hype beast and what is a skate kid?

Jacob Weisberg (40:57)

I can help you with this, Felix, because I checked in with my 19 year old son who is a skate kid but not a hype beast yesterday, and he explained to me everything I need to know about Supreme. And he said the hypebeasts are the people who wait in line for their limited edition products at one of their 12 stores. And the limited edition Product might be like a brick that says supreme on it, which they sell for $30. And then because there's artificial scarcity, you know, they resell for lots of money, up to $1,000.

Felix Salmon (41:33)

By the way, at one point, those bricks were selling for $1,000 on eBay, which is everything you need to know about Supreme.

Jacob Weisberg (41:40)

It's a nice brick, it's a cool. They're a cool company. But what, what Nate says is that at the skate park in the Lower east side, anywhere anybody wearing supreme is a douchebag. I believe is the term of art. Unless they got the supreme stuff for free, because supreme gives it to them because they're such trendsetters. But, you know, it's interesting. It's a fashion brand. It's not like. It's not really. It's a fashion brand that's associated itself with, with skateboarding chic. It's not something skateboarders are wearing at skate parks in cities because the stuff's really expensive.

Felix Salmon (42:19)

It is very expensive. And the gross margins are enormous. And that helps to explain why supreme, and this is the news hook which we will finally get to, sold this week for $2.1 billion to VF Corporation, which also owns Vans, which is another skatewear brand, and Timberland and the North Face and people like that. And $2.1 billion is a lot of money to spend on a brand that only has 12 stores, as you say, and six of those stores are in Japan. But the idea behind it is presumably that with VF spacking, Supreme can grow and expand and open in other countries. And the question which everyone has the big sort of question on Twitter when the deal was announced was, is it possible for a cool brand like supreme, which is built on artificial scarcity, to remain cool and also grow at the same time or by the sheer laws of supply and demand? If you grow, does that reduce the artificial scarcity, reduce the coolness factor, and make it make the whole brand just kind of dilute away?

Anna Shymansky (43:36)

Well, I don't wear Supreme. I am not their target audience. I'm just like some middle aged lady. But I read a good piece on Quartz about this. That was about this research done, this marketing research at some university in the Midwest that basically makes the distinction between niche cool and mass cool. There's this idea that once something becomes mass and, you know, everyone starts wearing the thing or everyone knows the brand, that it's like no longer cool anymore. And that's a definitive rule. But the researchers in this paper said it doesn't quite have to Be like that. Like you can make the shift from niche cool to mass cool. It is actually possible. So I thought that was kind of interesting. And one of the brand examples they had, and we could argue about it if you like, was Nike, which is like a mass cool brands.

Felix Salmon (44:28)

Absolutely. Nike also is a great example of a massive multinational corporation that at the same time can simultaneously retain the artificial scarcity thing that they do. Drops of limited edition sneakers, or they'll just give a few sneakers to their basketball stars or something. And if you go onto StockX or any of the resale platforms for sneakers, the overwhelming majority of the sneakers on those platforms are Nikes. Many of those Nikes are selling for hundreds or even thousands of dollars a pair. And sure, the bog standard pair of Nikes you've got molding away in the back of your closet is worth nothing, but that doesn't mean that Nike doesn't have the ability to still create incredibly desirable and collectible cool streetwear.

Emily Peck (45:22)

Yeah, I think that's exactly right. That because right now supreme is so limited, as you said, only 12 stores are not in many countries you can still have that balance of. There's a significant level of growth they can have, but as you say, still have some of those limited edition items. So they still maintain some of what made this company valuable in the first place.

Jacob Weisberg (45:42)

I have a question for you about this Supreme. Did it just Jack Barbara Krueger style turn it into a $2 billion company and never pay her?

Felix Salmon (45:52)

Yes, this is 100% what supreme did. And I wrote about this in my newsletter this week. But I can go into a little bit more detail because I'm not in smart gravity format here on Slate Money. So Barbara Kruger, as we all know, because we are, you know, old and we are much more familiar with art world brands than we are with streetwear brands. Barbara Kruger is a very established artist who basically made her name writing in Gill Sands extra bold italic white on a red background. And what supreme did when it launched was it created this logo which was just the word supreme in white extra bold, Gil Sands italic on a red background. It looks exactly like Barbara Kruger. And Barbara Kruger never got paid for that. They totally stole her trademark style. And she famously told Foster Kamer when he was at Complex magazine that they were fools and it's a clusterfuck of an organization. And she's very rude about them. And she totally deserves a whole bunch of the money from this deal and she is not getting any of it. But the next step from once you understand that Is, I think, exactly what Nate, your son, was talking about, which is that supreme is actually not very cool. It is scarce, it is valuable. People will line up for a long time in the rain to buy it, because when they buy it in the store, they then have something that is worth more than they paid for. But the cool factor is not as great as I think a lot of people think. If you turn up to a skate park wearing a Supreme T shirt, people aren't going to sort of look at you and go, oh my God, you're cool. They're going to look at you and go, actually, you're a bit of a douchebag. And for that reason, supreme doesn't need a cool factor in order to remain profitable, because it hasn't had a cool factor all along. And it has created this incredible demand for its product. What it has is this just sort of self fulfilling prophecy of you're going to hate yourself for buying this stuff because you know it's not cool, but you're going to buy it anyway and you're going to call yourself a hype beast, which that very word is like self loathing. There's a whole sort of self loathing aspect to these people who line up in the rain and buy overpriced T shirts just because they will become even more overpriced on the secondary market. It's this incredibly sort of self lacerating postmodernism around it, which is not what we sort of Gen Xers would think of as like, ooh, that's cool, I want to be like that.

Anna Shymansky (48:31)

Although it does seem kind of Gen X to be like a slight self loathing brand that pretends to be cool but isn't cool, that you still kind of want that feels very, very Gen X Y to me.

Felix Salmon (48:41)

Maybe that is Gen X. Yeah, I.

Jacob Weisberg (48:43)

Think we just leave it as self loathing postmodernism.

Emily Peck (48:48)

Is there any other type of postmodernism?

Felix Salmon (48:53)

All right, Jacob, you're the podcast expert. You know where to end these things. Let's have a numbers round. What's your number?

Jacob Weisberg (49:00)

I'm going to give you 20%, which is the amount that Twitter's labeling Donald Trump's post election tweets as misleading and unreliable reduced their social spread. And I think it's really interesting Twitter became much more aggressive right before the election and since the election in labeling bullshit coming from the president about the election, as in its slightly more genteel way, unreliable and referring people to real information. And it turns out that people still share it, but they are Meaningfully less likely to share it. And given that this was sort of an early experiment in seeing if you can reduce the virality of misinformation by labeling it, I thought it was really encouraging.

Felix Salmon (49:50)

Anna, you're nodding away. What's your number?

Emily Peck (49:53)

I do think that was encouraging. My number is £445 million. In January, Barclays, Jefferies and some other banks underwrote $445 million of pure gyms debt that it was using to acquire another fitness company. So Pure Gym is a UK fitness company. So unsurprisingly these banks then had to postpone the actual debt offering because nobody really wanted to buy the debt of a UK gym company during the pandemic. Now the bond sale was set for this Monday and the banks expected to be taking a big loss. But then the vaccine news hit and so they ended up actually only having to sell at a slight discount. So it's just an example of the importance of timing.

Felix Salmon (50:44)

Wow. Timing. I mean that reminds me of the Bill Ackman trade. The other big thing that happened in the debt markets on Monday was that Bill Ackman recreated exactly the same bond market short that he put on in February. I don't know if you remember this, but in February he spent $27 million basically buying credit default swaps to hedge against the bond market imploding. And that was such a good bet that he wound up making $2.6 billion on that bet. Now we all know how big of a problem the pandemic is. The pandemic is very real. It is growing around the world. And he managed to put on the same bet at the same prices, which is absolutely astonishing to me. Like his counterparties lost $2.6 billion last time around and they're like, yeah, I'll take that same bet again. You're like what? Which actually brings me to my number which is 150,526, which is the latest number. We're recording this on Friday. So this is Thursday's number for the number of new Covid cases in America. Like we've, it's, it's basically taken barely over like a week and a bit for the number to go up from 100,000 to 150,000. The seven day total is now 910,003. That's 900. We're basically up at this point to a million new cases of COVID a week in this country. This is unprecedented levels. Like even at the height of the crazy in March and April, we were nowhere near that. Just to give you an idea of how ubiquitous this disease is now in America. Every state in the union is seeing cases going up. It is no longer confined to like an area here or an area there. And it's going to be incredibly hard to get a handle on this at this point because it is just so widespread. Even if we get a vaccine and obviously the vaccine is not going to.

Anna Shymansky (52:43)

Be available and we're headed into such a dangerous period. I was just reading a piece on the Times by Austan Goolsbee talking about the time between during a transition when one president's been voted out and another administration's coming in is a time of like extreme basically weakness in the federal government, which was already weak to begin with. Any kind of crisis or precarious situation is going to be exacerbated during this time. So the next I know people are happy that we're getting a new that Biden's coming in in January, but the time between now and then is going to be really bad, I think.

Felix Salmon (53:19)

And Austin knows whereof he speaks because he was a key member of the Obama transition team. And what you had in the Obama transition during the financial crisis was incredibly close cooperation, especially when it came to economic policy where Austin was working, working between the outgoing Bush administration and the incoming Obama administration, they really worked hand in glove. And if you look at the economic policy of the two administrations, it was basically identical. What Tim Geithner did when he came in as Treasury Secretary was basically exactly the same thing as what Hank Paulson was doing when he went out as treasury secretary. And even given this super close cooperation and even given the fact that policies didn't really change, that transition, ask Austin, was super chaotic and really difficult to navigate. Right now, what we have is an outgoing administration which is refusing to cooperate at all with the incoming administration and a massive 180 degree U turn in a whole bunch of different policies and areas. It is like literally impossible to do that smoothly and we should expect a huge amount of of chaos.

Jacob Weisberg (54:31)

Cool.

Felix Salmon (54:32)

Definitely.

Anna Shymansky (54:32)

Emily, what's your number more fun than than chaos? My number is $60. That is the original price of the Palomino Brown modern khaki at Gap, made famous by MSNBC host Steve Konaki. Apparently this after New York Magazine uncovered that these were the Gap Palomino Brown khakis. Sales of the khakis were up about 90% according to Gap, as published in Business Insider today. So I guess MSNBC and Steve Kornacki are basically saving the gap. That's what you need to know.

Jacob Weisberg (55:10)

So on the one end, you have Supreme. On the other hand, you have pleated pants from the Gap. America loves the pleated pants from the Gap.

Felix Salmon (55:19)

Sorry. But you do know, Jacob, that if supreme took those pleated pants from the Gap or unpleated pants from the Gap and put a little supreme logo on them, that would be a $500 pant right there.

Anna Shymansky (55:35)

Also, I think they're on sale now, so they might be much less than $60 to anyone who is interested in.

Felix Salmon (55:40)

Supreme should just buy them.

Anna Shymansky (55:42)

They should.

Felix Salmon (55:42)

Exactly. On sale. Just sew some labels into the bag, call them the Kornacki pen.

Jacob Weisberg (55:47)

Steve Konacki just turned out to be so watchable, you know, on election night and the days after, you've gotta turn into. And it really just turns into a gut check of who you can stand to see for hours on end. And Steve Kornacki, I mean, I do think he was better at the information and he was on top of it and wasted less of your time, but he was also just like a pleasant dude in his khaki pants to have there. I kind of miss him.

Emily Peck (56:12)

Me too.

Anna Shymansky (56:14)

Also, I recommend going to Leslie Jones's Twitter feed and watching her react to Steve Kornacki, which is a whole other thing that's related. And it's just so fun.

Felix Salmon (56:25)

You see, there are still good things in the world. I can tell all of you who are worried about CFIUS that TikTok is still up. So we if you still want to get TikTok smiles, you can still get TikTok smiles, even though there was an order from the US government to take it down. I have no idea what's going on there. If you have an idea what's going on there, do let me know. Just email sleep moneyleep.com and maybe if any of us ever get an idea of of what is really going on with TikTok, we will talk about it on this show. Other than that, we have a Slate plus coming up. But for the rest of you, thanks for listening to Slate Money. Thank you so much, Jacob Weisberg, for coming on this show. It's been extremely awesome, as it always is with you. Thanks to Justin and Molly for producing and we will talk to you next week on Slate Money.