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

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

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

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• 1:12Nilay Patel?

  Hey everybody, it's Neil Iff from The Vergecast. On this week's interview episode, 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've wanted him on the show forever. Check it out.

• 1:48Nilay Patel?

  All right, we're here with Peter Kafka.

• 1:49Speaker 03

  Hello.

• 1:50Nilay Patel?

  It's a real honor.

• 1:51Speaker 03

  It's an honor to be here. It's an honor to be invited.

• 1:53Nilay Patel?

  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-

• 1:56Speaker 03

  It's a crossover.

• 1:57Nilay Patel?

  I'm on Recode Media right now.

• 1:58Speaker 03

  This is like Happy Days meets Jonny Chachi. What's a more current version of that?

• 2:04Nilay Patel?

  You're Captain America.

• 2:05Speaker 03

  And you're Spider-Man.

• 2:06Nilay Patel?

  Yeah.

• 2:07Speaker 03

  What's up, bro?

• 2:08Nilay Patel?

  The kid who doesn't know what he's doing. Yeah, that's right. Big Apple event.

• 2:11Speaker 03

  It was a week ago.

• 2:11Nilay Patel?

  It was a week.

• 2:12Speaker 03

  It's so long ago now.

• 2:13Nilay Patel?

  But you went. I didn't go.

• 2:14Speaker 03

  Yeah.

• 2:14Nilay Patel?

  You went.

• 2:15Speaker 03

  Yeah.

• 2:15Nilay Patel?

  You were at the Steve Jobs Theater.

• 2:17Speaker 03

  Yeah, you Bigfooted the Apple event by not going to the Apple event.

• 2:19Nilay Patel?

  I...

• 2:20Speaker 03

  A flex, as they call it.

• 2:22Nilay Patel?

  It was a little bit of a flex. Uh, I had a strong inkling that it would be a lot of sitting through TV show trailers.

• 2:29Speaker 03

  Yeah.

• 2:29Nilay Patel?

  And I was wrong.

• 2:30Speaker 03

  You're wrong.

• 2:31Nilay Patel?

  I was wrong.

• 2:32Speaker 03

  You got that wrong.

• 2:33Nilay Patel?

  Uh, there were, in fact, no TV show trailers.

• 2:35Speaker 03

  Yeah.

• 2:35Nilay Patel?

  But they announced two things, uh, that you, I just think of you as the smartest person I know about this.

• 2:41Speaker 03

  Yeah, yeah, more.

• 2:43Nilay Patel?

  Peter, you're so, you're amazing. You're wonderful. They announced two things that I, 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 entertaining for your, 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.

• 3:00Speaker 03

  Yes.

• 3:00Nilay Patel?

  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 from 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?

• 3:14Speaker 03

  Do you want to talk about what it is or what it used to be? It's actually the same thing, really.

• 3:17Nilay Patel?

  It's the same thing.

• 3:18Speaker 03

  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, Conde 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.

• 3:56Nilay Patel?

  Yeah.

• 3:57Speaker 03

  And that sat there forever. Eventually it was called, it was rebranded multiple times. Eventually it was called Texture, and then Apple bought it a year ago.

• 4:04Nilay Patel?

  Yeah.

• 4:05Speaker 03

  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. All the magazines you can ever read for now 10 bucks a month. And there is also now the Wall Street Journal and the LA Times and a few other publishers, including Vox.com.

• 4:30Nilay Patel?

  Yeah.

• 4:31Speaker 03

  Available there.

• 4:31Nilay Patel?

  Important disclosure. Oh, but you, but you, you're part of Vox. I get it. I'm always like sister site.

• 4:37Speaker 03

  Well, I just say owned by Vox Media, which owns this website, which generally covers it.

• 4:41Nilay Patel?

  Yeah, right.

• 4:41Speaker 03

  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, 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.

• 4:57Nilay Patel?

  Uh, so here, that's, that's my disagreement.

• 4:59Speaker 03

  Yeah.

• 5:00Nilay Patel?

  I think.

• 5:00Speaker 03

  It depends on what you want out of it.

• 5:02Nilay Patel?

  I think it works okay is a low bar for a new Apple service.

• 5:07Speaker 03

  That's where we're at.

• 5:08Nilay Patel?

  That's where we're at.

• 5:09Speaker 03

  It's a, it's for, here's how I would say it. 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 pretty 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 you. 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 are someone who periodically reads a GQ story a month and a New York Magazine a month, New York Magazine story a month, et cetera, you can see how that, that proposition might work for you, the casual magazine reader.

• 5:51Nilay Patel?

  You know, what's interesting is I think most of those people, their discovery happens on Twitter. This is why I think it's, it's a very low bar. It works okay in the sense that you can pay Apple the money.

• 5:59Speaker 03

  Yeah.

• 6:00Nilay Patel?

  And then this app will be signed in and then some things will happen on it. But most people who are hitting those paywalls who are 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.

• 6:14Speaker 03

  Yes, you would have to go, oh, I wanted to read that New Yorker dinosaur article.

• 6:18Nilay Patel?

  Yep.

• 6:18Speaker 03

  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, there's extra steps to get there.

• 6:27Nilay Patel?

  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.

• 6:33Speaker 03

  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.

• 6:40Nilay Patel?

  Yeah. And then the other piece of it that just kills me is, we work for a very digital media company.

• 6:45Speaker 03

  Yeah.

• 6:46Nilay Patel?

  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.

• 6:57Speaker 03

  Right. And periodically they'll say, "We're getting rid of the silos." And he's like, "We still have silos? It's 2019."

• 7:02Nilay Patel?

  Yeah.

• 7:03Speaker 03

  But you do.

• 7:03Nilay Patel?

  But employees at Conde Nast, all over the place, are tweeting, "If you want all of The New Yorker, you still gotta pay us, because nothing that we publish online is gonna hit this app."

• 7:12Speaker 03

  That's right.

• 7:13Nilay Patel?

  And that, to me, is just like, mind-blowing legacy magazine stuff.

• 7:18Speaker 03

  Yeah.

• 7:18Nilay Patel?

  I just, like, don't understand it.

• 7:19Speaker 03

  Yeah. But this cuts to the core thing, right? Does The New Yorker, does Conde 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."

• 7:44Nilay Patel?

  Yeah.

• 7:44Speaker 03

  And we think Apple can sell millions and millions and millions of subscriptions, and we would have a small piece of a very big pie than that big, small. Then have that pie to ourself, and it's a tidy pie.

• 7:54Nilay Patel?

  Yeah.

• 7:54Speaker 03

  This is kind of the economics debate about it. I just got an email from a publishing executive, says, "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. 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.

• 8:29Nilay Patel?

  Yeah.

• 8:29Speaker 03

  It 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 gonna prevent, are they going to entice me to not subscribe to The 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.

• 8:48Nilay Patel?

  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.

• 8:59Speaker 03

  Right. They're not. They're just a thing you click on.

• 9:01Nilay Patel?

  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 gonna win.

• 9:08Speaker 03

  And again, they've already been paid once by Apple.

• 9:11Nilay Patel?

  Yeah.

• 9:11Speaker 03

  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.

• 9:16Nilay Patel?

  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.

• 9:29Speaker 03

  It's a hard no from them.

• 9:31Nilay Patel?

  And the Wall Street Journal, they're taking the prime spot. They're the lead paper of this thing in the LA Times, which we'll see what the new guy does.

• 9:38Speaker 03

  Yeah.

• 9:38Nilay Patel?

  It seems another billionaire has bought another paper. We'll see what happens. But the Wall Street Journal is taking the prime spot. Everyone's like, why would the Journal take this deal that the Times and the Post won't?

• 9:48Speaker 03

  Right.

• 9:48Nilay Patel?

  My sense of it is that they have not been competing on a national level. There's an election season about to start. And they're just gonna take the exclusivity and get some traffic and exposure and maybe some dollars. And all the hedge funders who are gonna subscribe to the Journal anyway are gonna keep subscribing to the Journal.

• 10:05Speaker 03

  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 wanna read the Wall Street Journal." And I wouldn't come out and say that, but that's kinda what they're saying. What they say publicly is, "We're gonna surface general interest stories that would appeal to the Apple News subscriber, as opposed to the Wall Street Journal subscriber. We're gonna 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.

• 10:47Speaker 03

  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 gonna 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 journalists will look down their noses at them. And they'll all aspire to get in the real Wall Street Journal, but we'll see how that plays out. But they're gonna write stuff that is meant for the Apple News audience, i.e. a general news audience. That seems weird.

• 11:20Nilay Patel?

  Yeah.

• 11:21Speaker 03

  Seems like maybe you could take those 50 slots and do other things with them if you were the Journal, but...

• 11:25Nilay Patel?

  Especially as election coverage.

• 11:27Speaker 03

  But you would have to know what Rupert Murdoch and Eddie Q are thinking.

• 11:29Nilay Patel?

  I feel like we've all learned a really important lesson about depending on other people's platforms for monetization with Facebook. And maybe the Wall Street Journal has not learned that.

• 11:38Speaker 03

  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 will build a business under them that will sustain it, and if not, we move on."

• 11:55Nilay Patel?

  Yeah. I mean, that was the eyes wide open argument about Facebook as well, and I feel like that.

• 11:59Speaker 03

  Yeah, I think with Facebook, everyone who said their eyes were wide open were still kidding themselves, because there was a lot of like, "Well, obviously, Facebook is gonna 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."

• 12:22Nilay Patel?

  Yeah.

• 12:23Speaker 03

  As the Wall Street guys say.

• 12:24Nilay Patel?

  That's amazing. Well, speaking of Facebook, you actually broke a story yesterday. Facebook's gonna start paying for news in a new tab in Facebook.

• 12:32Speaker 03

  This is the new, new, new strategy for Facebook.

• 12:34Nilay Patel?

  And they've been saying they don't want to do news forever. Campbell Brown, the head of news, is out there saying, "You're on your own. Like, don't depend on us."

• 12:41Speaker 03

  Right. We want to work with you, but don't count on us.

• 12:44Nilay Patel?

  But now, there's an Apple News, we're gonna 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 repivot? Is that Mark Zuckerberg trying to get people to like him again?

• 12:56Speaker 03

  So this is something Campbell Brown, who is their news partnership person, has been pushing for. Chris Cox, who's the outgoing product guy, 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?"

• 13:21Nilay Patel?

  Yeah.

• 13:21Speaker 03

  The why is Facebook doing it? I'm not quite sure. The what it's supposed to be seems kind of clear. This will be a tab. It'll be dedicated to news. It'll have either full stories or at least excerpts from 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.

• 13:40Nilay Patel?

  Yeah. This sounds a lot like a Facebook Watch.

• 13:43Speaker 03

  Yes. This is the analogy Mark Zuckerberg used when describing it.

• 13:47Nilay Patel?

  Facebook Watch, in my estimation, another deeply failed product. But you're saying they think it's a good idea.

• 13:52Speaker 03

  I'm going to quote from Mark Zuckerberg directly. I happen to have it on my phone.

• 13:55Nilay Patel?

  Yeah.

• 13:56Speaker 03

  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 Axel's Burger. 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.

• 14:41Nilay Patel?

  I do not know a single person who uses Facebook Watch.

• 14:43Speaker 03

  It's a weird product. I mean, Facebook is constantly telling you to watch something on Facebook Watch. I'm still confused about when, if I watch a video in the feed, if that counts as a Facebook Watch. And periodically, Facebook will come out with a stat saying, Every single person in the neon universe is watching a Facebook watch video, but yes, anecdotally, it doesn't seem like this stuff is working.

• 15:04Nilay Patel?

  Facebook watch and IGTV seem like two big bets where, I think this is true of Apple, too. Facebook, Apple, Google, these companies are all so big, they accidentally succeed a lot with bad products.

• 15:15Speaker 03

  Yes, through sheer, sheer size and weight, right? You can force this stuff to work at least to limited degrees.

• 15:19Nilay Patel?

  Like if Apple converts 1% of the known iPhone users to Apple News, they will be the biggest news service in the world.

• 15:26Speaker 03

  This is the Apple argument, by the way. We have 1.2 billion, 1.4 billion users, we want to convert some small percentage of them to subscribers, this will be a giant service.

• 15:34Nilay Patel?

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

• 16:04Speaker 03

  They would, they would, they get away with making bad product just through sheer weight.

• 16:07Nilay Patel?

  Yeah. Facebook watch is like a sort of non-entity.

• 16:10Speaker 03

  And then if there's something that was better, it doesn't get to work because it's crushed by the giants, there's probably a good argument for that.

• 16:14Nilay Patel?

  Yeah, it's like, the fact that, do you read the Joe Pompeo story in Vanity Fair? Like, everyone's like terrified of, and I'm like, this app is a PDF reader.

• 16:22Speaker 03

  Right, it's, it's...

• 16:24Nilay Patel?

  It's a fundamental form.

• 16:25Speaker 03

  The Apple argument, which holds a lot of weight, is, it's in your hand, this is the Oprah line.

• 16:30Nilay Patel?

  Billion pockets, y'all.

• 16:31Speaker 03

  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 to 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 gonna 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.

• 16:55Nilay Patel?

  And the Spotify guys will happily tell you that they also make it harder for you to subscribe to Spotify.

• 17:00Speaker 03

  True that. The publishers won't complain if Apple News Plus is half as successful as Spotify, as Apple Music has been.

• 17:08Nilay Patel?

  Yeah.

• 17:09Speaker 03

  That will be a big pile of subscribers they weren't gonna reach already. They've 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.

• 17:19Nilay Patel?

  Yeah.

• 17:19Speaker 03

  So we'll take it now.

• 17:20Nilay Patel?

  Let's take that argument, because it's working for the publishers who no one's making money, right? So, fine.

• 17:27Speaker 03

  Mm-hmm.

• 17:27Nilay Patel?

  This seems good. That same argument for television.

• 17:31Speaker 03

  Yeah.

• 17:31Nilay Patel?

  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, like fire everybody and make even more money. I mean, I have literally sat with Apple and they have told me, eventually Netflix is gonna have to come into this TV app, because we'll just have everybody.

• 17:50Speaker 03

  Yeah.

• 17:50Nilay Patel?

  And that is just abundantly not true.

• 17:52Speaker 03

  Should we back up and talk about what the app is?

• 17:54Nilay Patel?

  Yeah, let's start. What is the TV? You were there. I wasn't there.

• 17:57Speaker 03

  So...

• 17:57Nilay Patel?

  I was drunk in Miami. What happened?

• 17:59Speaker 03

  Well, there's two things.

• 18:00Nilay Patel?

  Yeah.

• 18:00Speaker 03

  Which is extra confusing. And you used to say this is very un-appley, and now maybe it sort of is appley, to give a confusing keynote.

• 18:07Nilay Patel?

  Yeah.

• 18:08Speaker 03

  So there's one product called, I don't know, TV.

• 18:10Nilay Patel?

  Yeah, there's the box, the Apple TV.

• 18:12Speaker 03

  Well, there's the Apple TV box, there's the Apple TV app.

• 18:16Nilay Patel?

  Yeah.

• 18:17Speaker 03

  Which also works on your box, but it also sits on your phone, and it's essentially, it's a TV guide.

• 18:24Nilay Patel?

  Yeah.

• 18:24Speaker 03

  Which, by the way, seems like a pretty good idea, right? If you look at a world where the bundle's 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. Uh, 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 Starz, 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 gonna watch. Then there is this other thing, I don't know, what's it called? Apple TV Plus?

• 19:03Nilay Patel?

  Apple TV Plus!

• 19:04Speaker 03

  Question mark?

• 19:05Nilay Patel?

  Yeah.

• 19:05Speaker 03

  Uh, and this is the thing that we still don't know what it is, but it's gonna 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.

• 19:18Nilay Patel?

  Let's not forget that Oprah's also mysteriously doing a book club.

• 19:21Speaker 03

  Book club. That part makes sense, actually.

• 19:23Nilay Patel?

  Does it?

• 19:23Speaker 03

  Yeah.

• 19:24Nilay Patel?

  It's like the one thing there wasn't already a press release about.

• 19:27Speaker 03

  Yeah, well, they were mysterious about 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. Uh, so they're gonna 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 gonna charge you actual money for it. I think it's gonna get bundled in some way.

• 19:47Nilay Patel?

  Yeah.

• 19:48Speaker 03

  Um, I don't think they can charge you for it. If they do, it'd have to be so small 'cause compared to what you're gonna get from Netflix or HBO or Disney Plus, it's, you know, maybe thirty shows, but a couple of shows a month. I don't think you can charge people for that.

• 20:00Nilay Patel?

  Yeah.

• 20:01Speaker 03

  But we'll see. So that's what they announced. Now, the Apple, the TV, the TV box obviously existed. The TV Guide has been around for a couple of years. This was sort of their, because we can't do the thing we wanna do, we're doing this TV Guide instead strategy. That was a couple of years old. They, they wanted to get a, 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.

• 20:38Nilay Patel?

  Why couldn't they, that's actually one thing I don't understand. Why, why wouldn't they just pay the money and get what they wanted? Ever, it seems like everyone else can get the same basic deal.

• 20:44Speaker 03

  Apple will tell you they wanted a specific deal. They wanted it at, you know, twenty-five or thirty bucks. They basically wanted to take sports out of the bundle. So this really comes down to Disney primarily. Uh, 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. Kind of, 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.

• 21:15Nilay Patel?

  Yeah.

• 21:15Speaker 03

  To, to do a skinnier bundle.

• 21:16Nilay Patel?

  And Eddie Q just won't. He's, he's not launching without Disney channels.

• 21:20Speaker 03

  He's not launching without Disney channels, but he doesn't wanna take ESPN as sort of a base, base part of it. He wanted to make that an add-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 forty, fifty-ish bucks a month, you get this many channels. It kinda looks the same thing.

• 21:42Nilay Patel?

  So Apple is, they weren't able to launch this sort of over-the-top channels, linear streaming thing?

• 21:47Speaker 03

  Right.

• 21:48Nilay Patel?

  There are SATS PS view, right? It didn't happen for them. So they said, okay, we're gonna spend a billion dollars on Oprah and Steven Spielberg and Jennifer Aniston. We'll make thirty shows. That'll just be like a sweetener.

• 22:01Speaker 03

  Yeah.

• 22:01Nilay Patel?

  And then you're gonna now start using this TV app and the real money is gonna come from Showtime.

• 22:07Speaker 03

  That's what I believe, yeah. When and if they eventually announce pricing, I think it'll become clearer. Everyone sort of wants to describe this in shorthand as a Netflix killer. Again, Netflix is ten to twenty bucks, depending on what you're getting. And you're getting, you know, 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, uh, it doesn't matter because there's a bunch of other stuff there. And so you feel like you're getting ten bucks worth of value each month.

• 22:40Nilay Patel?

  People live their entire life in Netflix.

• 22:42Speaker 03

  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.

• 22:49Nilay Patel?

  Right, which is why Netflix won't disaggregate its content from its interface.

• 22:53Speaker 03

  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 if, by the way, if that show was great.

• 23:13Nilay Patel?

  Yeah.

• 23:13Speaker 03

  Then you just buy the one individual show. It's, it's hard to imagine them coming out with a competing, compelling service, which is why I think they're gonna add, throw this in to iPhone owners, to people who buy a bigger bundle of stuff. We haven't, you can imagine what else could go in an Apple bundle, right?

• 23:29Nilay Patel?

  It seems like the, the bundle that's coming is just start paying us monthly for an iPhone. We'll give you a new iPhone every eighteen months.

• 23:36Speaker 03

  Which I'm already doing.

• 23:37Nilay Patel?

  Right.

• 23:37Speaker 03

  Right?

• 23:37Nilay Patel?

  So we'll just like 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 Aniston.

• 23:44Speaker 03

  So like, so they've got news. They've got music. They're gonna have something, something video. There's a game service that no one seems to care about, but that's interesting.

• 23:52Nilay Patel?

  The virgin audience cares about the game service.

• 23:53Speaker 03

  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.

• 24:01Nilay Patel?

  A classic Apple nickel and dime.

• 24:02Speaker 03

  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, and yeah, and maybe you could buy it on your own, but I don't think that's what they intend.

• 24:15Nilay Patel?

  Yeah.

• 24:16Speaker 03

  But keeping 30-ish percent of your Showtime monthly subscription, that could be a lot of money for them.

• 24:21Nilay Patel?

  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, how do you add yourself some upsell opportunities along the way?

• 24:31Speaker 03

  Yeah. And then, you know, given that 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?

• 24:41Nilay Patel?

  Yeah.

• 24:42Speaker 03

  Amazon, which is one of the great frenemies for them, they're now saying, look, we are gonna, we are so interested in building up this service business, we're gonna go work with people we compete against.

• 24:51Nilay Patel?

  Yeah.

• 24:52Speaker 03

  It's fascinating.

• 24:52Nilay Patel?

  The more you look at it, the more they're turning into Amazon in that way, right? These are Amazon moves inside, like, how does Amazon make money on a Fire TV? They sell you cuts of channels.

• 25:02Speaker 03

  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. But at the time, it was a giant deal.

• 25:15Nilay Patel?

  It was a big deal. I just, I keep thinking about Johnny Ive holding a Roku remote and looking at the mock-up of his app on Roku.

• 25:22Speaker 03

  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 a TCL TV from Costco last summer, and it's got Roku built on it, 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.

• 25:44Nilay Patel?

  Google this all the time. I actually, come look at our design process. Like, Apple's not giving anybody, Matt Panzerino's not going to Apple to watch Johnny Ive design the Roku app. They're gonna fart that thing out, they're gonna pretend it doesn't exist.

• 25:57Speaker 03

  They're gonna do this in the shed, and no one can see what happens.

• 25:59Nilay Patel?

  Yeah, exactly. Do you think it's gonna work? The TV thing in particular.

• 26:03Speaker 03

  I don't know. It's interesting that they have gotten so little traction from the TV app to begin with. Because what they're do- what a lot of this is, is them saying essentially, this TV app thing that we came out in 2016, that's a nonstarter. 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 will adding Jennifer Aniston and Steven Spielberg and Oprah? 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.

• 26:32Nilay Patel?

  Amazon. So Amazon has kind of failed at it. There's a couple of good shows, but they've had like executives turnover, right?

• 26:39Speaker 03

  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 like outsiders come to Hollywood and get rooked and get seduced by hanging out in the red carpet. Actually, turns out that's Amazon.

• 26:57Nilay Patel?

  Yeah.

• 26:58Speaker 03

  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, or actually they initially started off and made a bunch of shows you've never watched and then stumbled their way into a couple of small hits and are now trying to do something at bigger scale. But you know, again, the people who are best at this, the CBSs and Disney's and NBC's, they get it wrong all the time. So the idea that Apple's gonna have 30 shows, maybe a couple of them will be wildly successful.

• 27:22Nilay Patel?

  Maybe.

• 27:23Speaker 03

  Yeah.

• 27:24Nilay Patel?

  I also wonder, you know, there's the stories about Tim Cook asking why all the shows are so mean.

• 27:29Speaker 03

  Yeah.

• 27:30Nilay Patel?

  Like, sort of, Apple executive meddling in the shows. Amazon, just by way of comparison, had like a couple scandals around its shows. Like Transparent had a pretty solid scandal around it.

• 27:42Speaker 03

  Yeah, the guy who run, the guy who ran Amazon's video thing got Me Too'd out.

• 27:46Nilay Patel?

  Yeah.

• 27:46Speaker 03

  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.

• 28:01Nilay Patel?

  Why don't you say, you, you, right now, Jason Momoa, there's like a, he has a tiny little baby, he said something wrong in an interview scandal. He's gonna go do a press tour again for his new show. How on earth, if he says something dumb again, what, like, what is Tim Cook gonna do? This is a brand that is so pristine.

• 28:16Speaker 03

  So you, this is not a theoretical scandal? Cause I haven't heard of it.

• 28:19Nilay Patel?

  It's just a little baby. He said something dumb. It's in, he's Aquaman. He's Jason Momoa.

• 28:25Speaker 03

  I had the bigger thing.

• 28:25Nilay Patel?

  He is his personality.

• 28:26Speaker 03

  I had the bigger issue with Jason Momoa is 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, it brought these stars onstage and had them describe what the TV show might be like. And then Jason Momoa's show is about someone who's blind. So then he said, "Close your eyes and imagine." And then went on to describe what you should imagine, but it was the same thing as watching in real life because there was nothing to see.

• 28:49Nilay Patel?

  Yeah.

• 28:49Speaker 03

  Anyway, yes, talent will cause problems.

• 28:51Nilay Patel?

  That's amazing, by the way.

• 28:52Speaker 03

  For Tim Cook.

• 28:53Nilay Patel?

  I want everyone to take a second and really ponder what Peter said.

• 28:55Speaker 03

  It was good. Close your, and everyone kind of wince because it was, he was, it was absolutely, and it was four or five speakers into it where you realized, "Oh shit, they're not gonna show us anything."

• 29:04Nilay Patel?

  Yeah.

• 29:05Speaker 03

  Which, again, to digress, I still don't know why they did this. But I do know that you probably can't get Steven Spielberg onstage multiple times a year. So this was your one time to have Steven Spielberg and Jennifer Aniston and Reese Witherspoon and Jason Momoa, 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 knock everybody's sense off.

• 29:26Nilay Patel?

  I think you made this point, I made this point, this was an upfront, right? That's what it felt like for a minute.

• 29:31Speaker 03

  An upfront is when the networks get all the advertisers together, put on a big show at Radio City Music Hall over in New York and say, "Here's our cool new shit. We're gonna 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 gonna have stars in singing and dancing and there's some shrimp out back too when you're done. Please buy the ads. And Apple's response is, "We don't have to do that."

• 29:51Nilay Patel?

  Because there's not so many ads.

• 29:53Speaker 03

  Well, but they are, 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 gonna consume this stuff will remember that Apple had a weird-ass event. And they're either gonna like the show or not, which may well be true. I just don't know why you would have this event in the March.

• 30:11Nilay Patel?

  Press rollouts for each individual show.

• 30:12Speaker 03

  Yeah. Still weird.

• 30:15Nilay Patel?

  But that, I mean, that's what I'm saying. Like, you're gonna, you're gonna take your stars, you're gonna make them do press rollouts. They're gonna talk. What happens when one of them does something dumb? Because it always happens.

• 30:24Speaker 03

  Yep.

• 30:24Nilay Patel?

  Have they made that consideration? To me is, this is a brand that does not have scandals.

• 30:30Speaker 03

  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 onstage at Code a couple of years ago. And it was, Roseanne Barr had just done a Roseanne Barr thing. And I said, "Now you're in the, you've been in the telco business and now you're gonna be in the equivalent of the Roseanne Barr business. What are you gonna do when someone does something equivalent?" He said, "Oh." Yeah, I gotta deal with that, basically. I don't know if Tim Cook has thought that through.

• 30:55Nilay Patel?

  Yeah.

• 30:55Speaker 03

  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 gonna behave yourself and not act out. And also, you're all grownups. We're not, we're not signing, there's no Viceland show.

• 31:11Nilay Patel?

  Yeah.

• 31:12Speaker 03

  Maybe there will be one day.

• 31:13Nilay Patel?

  All right, we gotta take a break. We're gonna listen to some ads, we're gonna come back, we're gonna talk about TV service.

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• 32:30Nilay Patel?

  All right, we're back with Peter Kafka.

• 32:33Nilay Patel?

  So I'm putting forth what I am referring to as the Go90 scale of Doom streaming services. The scale is Netflix to Go90. Go90, if you remember, is Verizon's

• 32:42Speaker 03

  God bless.

• 32:43Nilay Patel?

  obviously doomed streaming service, which it was just so bad, and they tried so hard.

• 32:49Speaker 03

  You guys had that video with the Verizon managers explaining that the kids would say Go90?

• 32:54Nilay Patel?

  Yeah.

• 32:54Speaker 03

  He said the word kids, too.

• 32:56Nilay Patel?

  The kids are, the kids are gonna Go90.

• 32:57Speaker 03

  It looked like you guys had made up the video.

• 32:59Nilay Patel?

  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 me."

• 33:05Speaker 03

  It was, it was, it was the, you had made the sort of Verge video equivalent of the Steve Buscemi gif.

• 33:12Nilay Patel?

  Actually, we should probably just run it, ad's dead. I have a friend who worked at Verizon, and he's like... I gotta put my kids in college, man. Like, this thing's gonna ruin us.

• 33:21Speaker 03

  It was a great, you know, everyone gets mad about socialism.

• 33:23Nilay Patel?

  Yeah.

• 33:24Speaker 03

  But that is corporate socialism. They funded a lot of cool businesses. They gave us money.

• 33:28Nilay Patel?

  Yeah.

• 33:29Speaker 03

  They gave Jeffrey Katzenberg and DreamWorks lots of money.

• 33:31Nilay Patel?

  Yeah.

• 33:32Speaker 03

  It was good.

• 33:32Nilay Patel?

  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.

• 33:39Speaker 03

  It's fantastic.

• 33:40Nilay Patel?

  Quibi, that's Quibi. Everyone wants that Quibi money? It's the same people who wanted the Go90 money.

• 33:43Speaker 03

  Nods.

• 33:44Nilay Patel?

  Yeah. So, okay, so you got Netflix.

• 33:46Speaker 03

  Yeah.

• 33:46Nilay Patel?

  Obvious success.

• 33:47Speaker 03

  Yeah.

• 33:47Nilay Patel?

  Yeah, Go90 over here.

• 33:48Speaker 03

  Yeah.

• 33:49Nilay Patel?

  When you failed, you have gone 90. This is my scale. So I'm putting Quibi at like 85 degrees.

• 33:54Speaker 03

  You're putting, you're putting there at most, most, giving them a nearly a full.

• 33:58Nilay Patel?

  Nearly a full 90.

• 33:59Speaker 03

  Yeah, okay.

• 34:00Nilay Patel?

  Where does Apple, what degree is Apple?

• 34:02Speaker 03

  From zero to 90?

• 34:03Nilay Patel?

  Yeah.

• 34:05Speaker 03

  I wanna say, I wanna say four, no, they're not gonna back away from this. They're gonna, they're gonna double down for a while. Again, a billion dollars is a lot of money, but not to Apple.

• 34:14Nilay Patel?

  Yeah.

• 34:15Speaker 03

  So they can keep trying this. I do think you probably have tapped into something where the, reputationally, it's probably more, 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.

• 34:40Nilay Patel?

  Yeah.

• 34:41Speaker 03

  By the way, the Apple guys, when you talk to them about their, their experience in video up to, to date, they will concede that Planet of the Apps, which was a miserable failure, did not work. They will, they will also insist.

• 34:51Nilay Patel?

  Planet of the Apps, it went 90.

• 34:53Speaker 03

  Yes, it went 90. They will also insist that the, the James Corden carpool karaoke thing is a big success. Right, you just, great, we should, we should get a gif of your face there. And they will point to the fact that it won an Emmy. They, they bring this up repeatedly.

• 35:07Nilay Patel?

  Yeah.

• 35:08Speaker 03

  Lots of things get Emmys.

• 35:09Nilay Patel?

  Sure. The Verge has like two Emmys.

• 35:12Speaker 03

  Yeah, we got, there's like Emmy in the, in the break room there.

• 35:14Nilay Patel?

  Yeah.

• 35:14Speaker 03

  Next to, next to our Ellie, it's cool.

• 35:16Nilay Patel?

  That's great.

• 35:16Speaker 03

  Yeah.

• 35:16Nilay Patel?

  Yeah. Okay.

• 35:17Speaker 03

  So I hedge, it's a forty-five. I, I don't, the, the question is, will it be a successful standalone service? No, I don't think it's a successful standalone service. It's gonna 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 gonna go head to head with Netflix. There's just no way that version of reality works.

• 35:43Nilay Patel?

  Yeah. And I, I don't think they're even gonna go head to head with Amazon in that, in that sense.

• 35:47Speaker 03

  Mm-hmm.

• 35:48Nilay Patel?

  So, why didn't they just make a goddamn TV? They would have actually been able to, I think, compete. They would have been able to do this sort of Ben Thompson aggregation theory. We own the interface. Right? What do we talk about Apple news? They, they're in your pocket.

• 36:01Speaker 03

  So the smart person arguments about not making a TV are, TVs are a terrible business.

• 36:06Nilay Patel?

  Mm-hmm.

• 36:06Speaker 03

  Right?

• 36:07Nilay Patel?

  Yeah.

• 36:07Speaker 03

  There's no margin.

• 36:08Nilay Patel?

  Yeah.

• 36:08Speaker 03

  And then you buy one, and it sits on your living room whatever stand for five years.

• 36:14Nilay Patel?

  But then you're monetizing with this service of yours, forever, at a reasonably high margin.

• 36:18Speaker 03

  Yeah.

• 36:20Nilay Patel?

  That, this is, 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 gonna make any money, you're gonna buy one show for nine-nine cents, like, this is, this is stupid. You're, you're gonna buy some, you're gonna buy Apple's hardware to run Netflix's service. Well now, they're, they're trying to, they're a cable company.

• 36:37Speaker 03

  Yeah.

• 36:38Nilay Patel?

  These plays actually do look more like Comcast Verizon.

• 36:41Speaker 03

  I think the more nuanced argument is they made a TV, it's your phone.

• 36:44Nilay Patel?

  Yeah.

• 36:45Speaker 03

  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 gonna be video.

• 36:50Nilay Patel?

  Yeah.

• 36:51Speaker 03

  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 they 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?

• 37:05Nilay Patel?

  Yeah. Are they just, are they just chasing that TV dragon? Cause Steve Jobs said it in the book.

• 37:10Speaker 03

  I don't know. I mean, I think they're, they're just looking for stuff to sell, right? They like magazines too. And if they can, if, you know, the famously, right, it needs to be a billion dollar business for them to care about it.

• 37:22Nilay Patel?

  Yeah.

• 37:22Speaker 03

  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.

• 37:29Nilay Patel?

  So the sort of media folks, a little, you know, some tremors, Apple News, this might be a thing, should we imagine, should we not? What's the vibe from the TV side?

• 37:39Speaker 03

  The TV guys are happy that Apple's in the market.

• 37:41Nilay Patel?

  Yeah.

• 37:41Speaker 03

  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 that Time Warner's in the market. Do they think that 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's, sorry, AT&T's, Disney Fox's, 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?

• 38:20Nilay Patel?

  Mm-hmm.

• 38:21Speaker 03

  And my question is, in a couple of years after people have spent a lot of money trying to build their own services, are they going to go, this is stupid?

• 38:27Nilay Patel?

  Yeah.

• 38:28Speaker 03

  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 sort of the conventional wisdom tilt back at some point and 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.

• 38:55Nilay Patel?

  Yeah. And you've got major players in Disney Plus and Warner, Warner, whatever that thing is going to be.

• 39:01Speaker 03

  Right.

• 39:02Nilay Patel?

  Happening.

• 39:02Speaker 03

  Right. But, you know, 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.

• 39:26Nilay Patel?

  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.

• 39:35Speaker 03

  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.

• 39:50Nilay Patel?

  Yeah.

• 39:50Speaker 03

  My kids.

• 39:51Nilay Patel?

  It's a good thing. Yeah. Mine's not yet old enough, but I can tell.

• 39:54Speaker 03

  Just go ahead and buy it.

• 39:55Nilay Patel?

  It's just kind of, I subscribe to anything, anyway. What choice do I really have? Does this look, just talking about this, this honestly feels like Apple's strategy is much more like AT&T's strategy than anybody else's. We own you, you're paying us some money.

• 40:08Speaker 03

  Yeah.

• 40:08Nilay Patel?

  Now, we're just going to upsell you with other stuff.

• 40:10Speaker 03

  Yeah.

• 40:10Nilay Patel?

  Right?

• 40:10Speaker 03

  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 of years.

• 40:20Nilay Patel?

  Yeah. I just, I get some strong cellphone carrier vibes off Apple.

• 40:25Speaker 03

  Yeah, or a less flattering way of saying it is, we have a product, growth is slowing, right? The Apple, the Apple business is much more robust than the AT&T wireless business, but they're still

• 40:38Nilay Patel?

  Yeah.

• 40:39Speaker 03

  finite, right? They're still slowing. What else can we sell? Let's sell some more stuff.

• 40:44Nilay Patel?

  Yeah. I mean, it's not bad.

• 40:45Speaker 03

  Yeah.

• 40:45Nilay Patel?

  It's, that's what they're paid to do.

• 40:47Speaker 03

  Yeah. And, by the way, they're kind of good at it.

• 40:50Nilay Patel?

  Yeah.

• 40:50Speaker 03

  And, again, they have massive scale, so they can be only kind of good and still be massively successful. It's not inspiring.

• 40:57Nilay Patel?

  The thing I continue to think about is, their size distorts their own perception of how good their products are. The Siri. By, by the numbers... Syria is a massive success.

• 41:08Speaker 03

  Right.

• 41:08Nilay Patel?

  By the experience, Syria is still.

• 41:10Speaker 03

  Right, which they then, then sort of after years of insisting it's, it's, it's awesome. Then eventually they go back and move everybody out and bring in new people. Um, I'll let you do the, the, the criminology of Apple and who works there.

• 41:20Nilay Patel?

  Yeah.

• 41:21Speaker 03

  But, but all, but all, but all, all big businesses have that issue. All big organizations have that issue. How's the Virgin doing?

• 41:26Nilay Patel?

  Virgin's doing great.

• 41:27Speaker 03

  How's Vox Media doing?

• 41:28Nilay Patel?

  Uh, Vox Media's doing great.

• 41:30Speaker 03

  How do you feel about Facebook?

• 41:31Nilay Patel?

  I don't have Facebook on my phone anymore.

• 41:32Speaker 03

  So you built, you, you are someone who, who, um, has spent a lot of time creating content specifically for other platforms for a long time.

• 41:39Nilay Patel?

  Mm-hmm.

• 41:40Speaker 03

  YouTube, Facebook, et cetera. When did you realize, hey, that's not going to work for us? Or maybe is, is it still working for you?

• 41:46Nilay Patel?

  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, do you pay Brightcove and run the thing on your own site? Or do you just like take less money and go for audience on YouTube?

• 42:02Speaker 03

  This is a video player that most, well, some of you know about, but.

• 42:04Nilay Patel?

  Yeah.

• 42:04Speaker 03

  But if, if you, if you clicked on a Virgin's video for a long time, it was a Brightcove player.

• 42:09Nilay Patel?

  Yeah, like one of the most tiresome arguments, uh, in the history of this company was like, do we use Brightcove or do we?

• 42:14Speaker 03

  Yeah.

• 42:14Nilay Patel?

  Like, we're super dumb.

• 42:15Speaker 03

  Yeah.

• 42:15Nilay Patel?

  No one cares. Um, I wish we had made the audience bet on YouTube faster. Um, and I think, you know, we didn't, and so it goes, it's gone 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.

• 42:30Speaker 03

  And that just happened organically?

• 42:31Nilay Patel?

  Yeah, we.

• 42:32Speaker 03

  Cause it's the biggest video service in the world.

• 42:34Nilay Patel?

  It's the biggest, yeah, it's like, that's where they are. We should go there.

• 42:37Speaker 03

  Yeah.

• 42:37Nilay Patel?

  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.

• 42:48Speaker 03

  Here's a Samsung, whatever.

• 42:49Nilay Patel?

  Yeah.

• 42:49Speaker 03

  Yeah.

• 42:49Nilay Patel?

  Or like the, our, this Samsung phone I'm reviewing is in someone else's case. You can buy like, like we, we just won't do it. Um, so we, we have some more challenges, but like, I totally respect the fact they do that, make your money.

• 42:58Speaker 03

  Mm-hmm.

• 42:59Nilay Patel?

  The Facebook bet we made was circuit breaker. We made it.

• 43:04Nilay Patel?

  Do I wish we hadn't put any effort into 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 brain to put it there. Medium worked, Circuit Breaker still exists. It's it as a label on our site, it's a permission slip for people to write silly things about gadgets. I think that's an 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 really, I honestly do.

• 43:28Speaker 03

  Yeah.

• 43:29Nilay Patel?

  Like, I I just think Google is a company wants stuff. Like, they want content. They have a lot of problems. They're an information ingestion organization, whereas Facebook is an advertising organization.

• 43:42Speaker 03

  Two more questions for you. Um, you're you're 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, sort of at your core? We there's a new whatever, we want to tell you about whatever. Or is that now sort of a vestigial part of of your content?

• 44:00Nilay Patel?

  No, it's the heart of it. I think there are less things that are of massive interest.

• 44:04Speaker 03

  Right, that's sort of what I'd get to. Like, if if if we're no longer excited about the new iPhone, right? And we just fundamentally aren't.

• 44:10Nilay Patel?

  Yeah.

• 44:10Speaker 03

  Where does that leave someone like your your company?

• 44:14Nilay Patel?

  Um, well, sorry, people are still really excited about the new iPhone. They're still really excited about the new Galaxy S10.

• 44:19Speaker 03

  Isn't the audience for like when you guys do a rollout thing like steadily decreasing?

• 44:23Nilay Patel?

  Uh, no, it's it's it's very high, but flat.

• 44:26Speaker 03

  Okay.

• 44:27Nilay Patel?

  Right, so it's like, I think we've maxed out on.

• 44:28Speaker 03

  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.

• 44:34Nilay Patel?

  Yeah, our joke from this last event was, what people care about with Apple is new hardware.

• 44:37Speaker 03

  Uh huh.

• 44:38Nilay Patel?

  And so the credit card was the most popular thing.

• 44:40Speaker 03

  Yeah, titanium, man.

• 44:41Nilay Patel?

  Piece of hardware.

• 44:42Speaker 03

  It's titanium.

• 44:42Nilay Patel?

  Um, so whenever Apple has new hardware, massive audience.

• 44:45Speaker 03

  Yeah.

• 44:45Nilay Patel?

  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 1,500 words about a new universal remote control called the Kavo.

• 45:00Speaker 03

  Yeah.

• 45:00Nilay Patel?

  Huge audience.

• 45:01Speaker 03

  Debut on Code Media stage.

• 45:02Nilay Patel?

  Debut on the Code Media stage. Got me super excited. People really loved 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 1,500 to 1,700 dollars you can spend right now is not a new phone or a tablet or laptop. It's a great Dolby Vision TV and a soundbar. That's like, it will immediately upgrade your life.

• 45:23Speaker 03

  Yeah.

• 45:24Nilay Patel?

  I think there's a lot of service to do in that world still.

• 45:27Speaker 03

  And there's still a big, hungry audience for that.

• 45:29Nilay Patel?

  Big hungry audience.

• 45:29Speaker 03

  They're not burnt out on this stuff. They don't have the ennui that people like you and I have, like, uh, you know, battery.

• 45:35Nilay Patel?

  I think a lot of people read us for that escape.

• 45:38Speaker 03

  Uh huh.

• 45:38Nilay Patel?

  So that's the core. It's not going anywhere. We're, you know, we're always trying to like, make it better. We have a lot of great competition, particularly YouTubers are a great gadget competition. We gotta stay ahead of them. That's good. Makes us, makes us move fast. But then there's like, the second element of what The Verge has always been, which is the idea that, well, if you put a camera on everybody's hands, you're gonna, you're gonna necessarily change the culture. Right? And so like, this week at The Verge, Creator's Week, and we're like, what's, like, Bloomberg and 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 gonna do that they're not gonna do? What's the fringe? And to me, it's, well, you got SoundCloud and Kickstarter,

• 46:22Nilay Patel?

  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.

• 46:31Speaker 03

  Yeah. That's super interesting.

• 46:33Nilay Patel?

  So for me, it's, we're, of course, we're gonna cover the gadgets. They're the thing that made the culture. We have to, we have to tell them what cameras and phones do.

• 46:39Speaker 03

  Have you guys parked yourself at VidCon before?

• 46:41Nilay Patel?

  Yeah. It's wild.

• 46:43Speaker 03

  Yeah.

• 46:43Nilay Patel?

  It's wild. So, you know, we, this week, we're like, spinning it up. We're, we got, we have a team of like, five or six people who spend their time thinking about creators. And we had a new series about hardware startups, and like, the challenges they face. Like, 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, no one cares for them. Like, no one, there's no journalism for them. Like, let's, 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.

• 47:18Speaker 03

  Yeah, I have, I have found that, that, that the Recode audience for stories about YouTube creators is very small.

• 47:24Nilay Patel?

  Yeah.

• 47:25Speaker 03

  They're not a good crossover. Last question for you. Verge is free. Almost everything that Vox Media publishes is free. We, I keep hearing Jim Benkoff saying, "We're gonna start selling stuff."

• 47:34Nilay Patel?

  So I was in the audience at South by, Benkoff was on stage, and he goes, "We're doing this subscription thing. We'll start in a baby with Fox." And then obviously, you know, the Verge explanation. And my phone just blows up.

• 47:43Speaker 03

  What are you gonna sell them?

• 47:44Nilay Patel?

  Uh, I don't know.

• 47:45Speaker 03

  Is there gonna be a paywall in front of Verge stuff?

• 47:47Nilay Patel?

  We're not gonna, I would, I think Jim has said this too. I don't think our, our goal is to take things away from you.

• 47:52Speaker 03

  Is to add extra stuff.

• 47:53Nilay Patel?

  Or to make your experience better.

• 47:55Speaker 03

  Yeah.

• 47:55Nilay Patel?

  There's like a very specific way we can make the Verge experience better, but we gotta figure out that, that.

• 48:00Speaker 03

  By the way, I saw that Vox Media signed up with Scroll, which is basically a subscription ad blocker, so.

• 48:04Nilay Patel?

  Yeah.

• 48:04Speaker 03

  That's a thing.

• 48:05Nilay Patel?

  That's out there. I mean, it's, it's a baby. It's like, we'll see what happens.

• 48:08Speaker 03

  All right, let's do round two.

• 48:10Nilay Patel?

  Yeah.

• 48:10Speaker 03

  Another, in a year.

• 48:11Nilay Patel?

  Oh, yeah, in a year.

• 48:12Speaker 03

  Deal?

• 48:12Nilay Patel?

  Or maybe more. We'll see.

• 48:13Speaker 03

  Maybe more. We have to wait more than a year?

• 48:15Nilay Patel?

  Well, if it goes 90 or not. I'll just have, I'll just do period, we should do periodic call-ins on each other's show.

• 48:22Speaker 03

  Yeah.

• 48:22Nilay Patel?

  To do the Go90 scale of streaming services.

• 48:24Speaker 03

  All right, done. It's a recurring segment.

• 48:25Nilay Patel?

  Handshake.

• 48:25Speaker 03

  Deal.

• 48:26Nilay Patel?

  Thank you so much, Peter.

• 48:27Speaker 03

  Thanks.

• 48:27Nilay Patel?

  All right, well, that was Peter 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 him 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 Verge cast 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 gonna get

• 49:12Nilay Patel?

  paid making stuff for these platforms. It was wild. So, that's coming next Tuesday. Check it out. We'll see you soon. Bye.

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