548: Starting to Count Chickens

37:33I mean, that's why it makes no sense what I do with my apps. But like that, it's not like, oh, I can't, I can't be motivated. I'm so tired, like good sales. No, good sales makes it worth your while. Because if you have a subscription, and you have people using the app, you should invest the time, because you need them to keep subscribing. So the app needs to be good, right? Whereas if people are buying it, and those people think, well, I paid$5 once 10 years ago, you should keep updating this app for me forever. That's great to think that but economically, it doesn't work out. You can't, you know, If you make all your money the first year, you can't make$0 income for the next three years as you work day and night on the app to satisfy the people who paid$5 three years ago, right?

38:08So don't think that it's a matter of laziness or not being able to get your juices flowing or whatever. It's just plain math. You need to do things with your time that will make money for your family. And if essentially no one is buying your app anymore, don't spend the next three years heads down working on it. Exactly. And that's what's great about subscription-based pricing is you kind of have a constant demand level established. That as long as the app continues to work, you can be reasonably sure that not all, but most of the current subscribers will probably stick around at the next interval, whatever that subscription is.

38:51And again, it's not all. You mentioned earlier, Casey, you mentioned like, oh, I'm guaranteed basically. and you know that you're not and and i know you know that but just to clarify like you will lose some people but you'll also you'll also be bringing new people in hopefully on you know continuously as time goes on and so hopefully you know the goal with any kind of you know subscription-based plan is whatever you're losing to churn hopefully you're making at least that many new subscriptions happen and that way you know you stay ahead of of the number and every improvement you make can be like a ratchet because now suddenly your app is more attractive to new customers it's more valuable it has better features it's better at doing what it does and after several years of you working on that your app is is defended better against competitors because they can't get all the features that you've got in the amount of time that you spend on it so now you have a competitive advantage and it's just you know the ratcheting mechanism of like yeah there's a lot of churn but i want to get just a little bit more just a little bit more just a few more customers and you do that by improving the app and that also reduces your churn because the app gets better and better people like they come to love it more they come to rely on it more they're delighted by the new features that you add you know there are minor annoyances in the app that you fix and they appreciate that and that that motivates them not to to churn out i don't know what the technology is in the or the terminology is in the world of streaming services or whatever different things we talk about churn this churn out a thing but anyway i think the verb is also just churn like it causes them to churn i i don't like that yeah i think that's probably right as well but i don't i just don't like it i kind of i'm not i'm the merlin now but anyway yeah it's With subscription, you can see the value of investing your time.

40:23You see it right there. And it's a virtuous cycle. As you make your app better, you reduce churn. And you increase the satisfaction of your existing users. Exactly. And in fact, one thing I thought of, probably better I didn't bring it up last show because you were already in a hesitating kind of mood. But with all this press attention, you're probably going to get copycats. Probably fairly quickly. that thought has crossed my mind as well just wait until you search for call sheet and see that they've put call sheet in their keywords then you know you've arrived yeah exactly it'll be you know free call shoot or whatever and it'll be it'll be like a crappy clone of your app but free and filled with ads um and so i think it's interesting to you know at kind of as a as a thought experiment you should be mentally prepared for that to happen and to kind of have some kind of game plan even if the game plan is change nothing um you should have some kind of plan for what do you think you want to do when, not if, when a competitor comes out to the app store that is similar enough to your app to cause problems for you and is free with ads and will therefore undercut you.

41:27Because that will happen. It's the app store. It might have already happened. And if not, certainly it'll be there by next week. Because the amount of press attention that you got, it's great, but it's a double-edged sword. It shines a big light on you and on this app category that, oh, there's a market for that hmm and so i guarantee you there's people right now working their butts off trying to clone your app as quickly as possible um and and if they aren't if they aren't already shipped they they will be soon you know probably soon i i had clones within a week so casey you will have clones yeah foolish clones thinking that i was there's some lucrative market they're tapping into it's like suckers and there's no sales here yeah but yeah right but anyway like you know you are you are leaving room for them because you don't really have like a free plan in the sense like a free unlimited with ads um and you probably i mean you know you expressed in the past when we talked about this on the show why you didn't really want to go that direction and that's probably the right move for you if like if that's still how you feel you probably still shouldn't make an ad plan or whatever um but be prepared for that to happen and that preparation could be as simple as you're just going to keep working making your app always be better than theirs that's not going to necessarily sharpen sharpen your marketing message to emphasize the fact that yours is the one without the ads like yeah it should be like the amazon title call sheet no ads no garbage no sign in yeah call sheet movies tv no ads no garbage no sign in yeah i would like to revise my prior statement i have made no money in fact i've made negative money on this app you it is it's been a disaster nobody should pay attention to it well as of right now you haven't made any money apple takes a long time to pay well that's true actually are probably negative in the sense that you probably like you know paid some money to get it you know have the account up there get it listed maybe you've bought some ads here and there already you know but yeah like be prepared for when when the clones come if they haven't already have a game plan in mind of like how how you're going to deal with that because it will happen and it's better not to be too surprised when it happens um but you know it's interesting like a huge part of the appeal of your app is that you are replacing something that is ad filled with something that is better and not ad filled so that that actually gives you a little bit of defense because something else that comes in and is filled with ads will not have the same appeal that you have.

43:42Right, right. But that will happen. And if some other even decent, not even good, but if some decent app comes in and is full of ads, they will probably get way more installs than you. Probably, yeah. It's going to be like 3s versus 2048 all over again. You can have the nice one, but if an ad one comes in and it proves to be a popular enough category, like they can explode and they can they can you know possibly even make more money than you if they if they you know play their game right and so you got to kind of decide like you know do you want to try to capture that market yourself because that market exists or are you willing to give that up in exchange for having your app be the premium option but that won't necessarily mean you are leaving a lot of market behind for someone else to pick up yeah i don't like that you're giving everyone a game plan here, Marco.

44:33Maybe we should move on. I totally hear what you're saying. I have thought about this a smidge. I haven't spent any meaningful time thinking about it because I've been like the Tasmanian devil for the last two weeks. But yeah, this thought has definitely crossed my mind. And honestly, I'm not really sure what I'm going to do, not yet anyway. My inclination is I want to be the premium product in this space. And I have a premium price when compared to free, but it's not that expensive. And so... Oh, it doesn't matter. It's not free. That's it. The app store has two prices, free and not free. Free and expensive.

45:08Yeah, exactly. But I will say that the chat room has had some interesting ideas. Mike C. Wells said, what if someone creates a clone called Flookup? Perfect. Or Wedge says, hear me out. The clone is named Flawsheet. F-L-A-W-S-H-E-E-T. I mean, IMDB is kind of already the free junked up clone, so you've got that going for you. Yeah, that's true. You know what I would like to see? I would love if everybody who reviews... Maybe I shouldn't give people ideas. I was going to say everybody who reviews Callsheet in the App Store should somehow work in a list pun to the review. Please, don't encourage this.

45:47Oh, come on! That's a flawless That's a flawless procedure. It gets my full endorsement. But anyway, no, thank you so much to everyone. I really do appreciate it. And yeah, if you find an app that's a clone, I don't want to know because I'm riding high right now. I don't want to know about it. We are sponsored still by ATP membership. So yes, this is kind of weird that we have all three spots this week taken up by ATP membership. This is not a common thing, but it's becoming a not uncommon thing because the ad market is really cyclical and it's in a down market right now. We're going to talk about it a little bit later in the show, but just if it is, we're leaning into membership a lot more heavily these days and it's wonderful.

46:32We are so, so thankful to have so many of you as members. And if we can get a few more, it would really help us out a lot in terms of the current ad market. So atp.fm slash join. again you get the ad free feed you get the bootleg you also get occasional access to other bonus things so we will occasionally do member exclusive specials that'll be things like we watch a movie and comment on it together or we try a new food or you know most recently we did a tier list ranking all of the iphones and we you know we're going to do more kind of apple hardware stuff like that in the near future um so occasional exclusive content as well you get occasional um discounts on our membership on our merchandise.

47:14So if you want to buy a t-shirt or something during the sales that we say like, hey, here's a new shirt. Buy it before this date. You get a discount on that in your member panel. Other fun little things get thrown in sometimes like Casey had his entire beta test for call sheet all to members only. So it's a cool program. Join it if you can. It's eight bucks a month at ATP.FM slash join. Once again, eight bucks a month, ATP.FM slash join. It is the best way to support the show, and we really appreciate you giving it some consideration. Thank you so much for considering becoming a member, and talk to you soon.

47:51Everyone in the little Apple ecosystem, ecosphere, I almost said, this little section of the world, has been talking about a very interesting rumor that has been perennial, but has sprung back up. It has sprouted, if you will. And the rumor is that Apple is thinking about considering, or at the very least could, buy Disney. Like the Disney. Like Walt Disney World Disney. And this all started, I believe, by an article in the Hollywood Reporter, a quote, veteran Hollywood executive quote, told the Hollywood Reporter, this executive said, I don't think Apple would buy the company that is Disney as it presently exists.

48:35But if you see Bob Iger, CEO of Disney, start to divest things, that feels like he's prepping for a sale. And there's clearly no buyer like Apple. Not long after that, writes the Hollywood Reporter, Iger went on television and hung a possibly for sale sign on Disney's TV businesses. And just like that, it was a little more possible to see the outlines of a slimmed down Disney that could be a tempting acquisition target. We're going to talk about this a little more in a minute, but I wanted to point out when I was doing my research for tonight's recording this morning, at the very, very bottom of the Hollywood Reporter article, and maybe, Marco, you can make this the show or the chapter for this chapter if you don't have a better answer.

49:13at the very bottom of the article there's a a chart if you will or an image big hollywood small fish for m &a mergers and acquisitions and it shows a bunch of red circles and that represents the approximate you know worth or value of all these different brands and so you know paramount is a little you know it's a little pin if you will of 11 billion fox corp is the circle is a little bit bigger than paramount 16 billion warner brothers discovery 35 billion and disney is looking pretty big. It's on the bottom left corner and that's$158 billion. But then you look immediately above Disney in this chart and there's Apple at$2.8 trillion, which is like five times bigger.

49:55I just buy visually five times bigger. I don't want to do that math in my head. I'm sure I'm wrong. But visually it's... Well, you can do the math because I put the numbers down and the show notes here. So I did them in billions. Disney,$160 billion. And I tried to put Apple in billions too just because some people don't have to do it. So it was$160 billion. Apple is 2 ,780 billion. So it's an order of magnitude. Hundreds, 160 versus 2 ,700 is an order of magnitude larger. And the other dots here, they put Amazon up or whatever, but Google, 1 ,650 billion. Amazon, 1 ,420 billion. These are tech companies that are in the thousands of billions, a.k.a.

50:32trillions. And Disney is in the hundreds of billions. Even though you think of Disney, they own everything. They have all this IP. They're Disney. They're so big. 160 billion. It's peanuts compared to these tech companies. Yeah, it's absolutely bananas. And we're going to talk more about that here in a second. But Jason Snell had right up at six colors. And then there was a really, really good and long, but great segment about this on Upgrade with Mike Hurley. Speaking or reading from Jason at six colors, the Apple buys Disney concept has been floating around for years, but it was never seemed more likely than it does right now.

51:04That is not to say that it seems especially likely, but given his current business issues and the return of former Apple board member Bob Iger to the CEO job there, it doesn't seem as outlandish an idea as it once did. Apple buying Disney would certainly be unexpected, but after many years of shaking my head at the idea, I'm hesitant to do so now. While Apple has slowly been creeping toward being a company that's as much about digital services as hardware and software, a move like this would be instantly transformational. It may simply be the fact that the tech industry is about to eat the entertainment industry whole.

51:37If that's the case, Apple may not find a much better match than its old friends at Disney. And again, there was a long conversation about this on Upgrade, and we're going to, I think, kind of crib some of the approach that they took there. And then Jason, again, this time over at Macworld. So if it's inevitable that in an era of streaming media, the tech industry will eat the entertainment industry whole, why would Apple buy Disney? It could be as simple as this. It's potentially an avenue of further growth for Apple. If Apple believes integrating Disney's intellectual property, customer experiences, theme parks, cruises, and the rest into its ecosystem will form a virtuous circle that will send Apple's revenues and profits ever higher, that's probably reason enough.

52:18When you're as big as Apple, you need to get creative in order to seek growth. There's a lot to unpack here. There's a lot, a lot. And when I was doing this research this morning my initial reaction was well i agree that it is more likely than ever before but no freaking way and then i saw that chart on the bottom of that hollywood reporter article and then i thought to myself this really isn't that big a big a deal for apple is it part of the reason apple has all that money though is that they don't spend a lot of it like they they buy little companies all the time they can buy like 100 companies a year but they buy them for pocket change like stuff they find on the sofa disney is a little bit bigger than stuff they find on the sofa but still well within their their reach but if they bought you know 100 200 billion dollar companies routinely they wouldn't have 2.8 trillion dollars like that you know a couple hundred billion here a couple hundred billion there soon you're talking about real money so their apple is not uh is not kind of like uh they're not gung-ho like their money isn't burning a hole in their pocket they're not like we got to spend this it's not it's not brewster's millions right that's why they have all that money so that's why i think the discussion about this with uh jason and and the surrounding discussion and hollywood port and everything has not has basically said like apple's got to have a reason and part of the reason it's kind of like the the manifest destiny of the the current uh economic conditions in the u.s the idea is that the tech companies have all the money and it's inevitable that they will eventually eat the smaller fish that are trying to do the same thing and in this particular context the smaller fish are all those media of companies that own things and they all started their own streaming services.

53:55So there was Netflix and these companies are like, why are we selling our things to Netflix? We should have our own streaming service and everybody thought that. So now there's a Paramount streaming service and there's the Disney streaming service and there's the Peacock streaming service. Everybody wanted to have their own streaming service and then they pulled their stuff back and said, now if you want to see our stuff, it's on our streaming service and here's the thing. These companies' core competencies are not running a streaming service. The tech companies are better suited to that but most of the tech companies don't have content, except for netflix which has got its own original content and amazon's paying for its own and now apple's as well so here i have all these companies that have streaming services and a lot of these companies like you know paramount plus or whatever they need to make their streaming service make money but amazon and apple they have other ways to make money like aws and iphones and so they don't necessarily need to make sure immediately that their streaming services make money because apple on Amazon, just to name two, have paid tons of money to make TV shows and movies, right?

54:53You may have seen many of them. Those cost a lot of money to make. I don't think either one of them is making enough in subscribers to their services. Although Amazon, it's part of Prime, so I don't actually know how that works out. But they don't have to worry that much about that. Whereas Disney spent so much money making programming for Disney Plus, but now they're like, okay, Disney Plus, it's great that you had this big launch and you got all the subscribers, but do you see a future in which you can be profitable for us because we kind of need you to make money yeah we make money from lots of other things too but we don't have an iphone sitting in the side making billions and billions of dollars for us so i i need to at least see a roadmap where the streaming service would become profitable everybody's saying that everybody who's got a streaming service is saying you know we spent up front uh and they're all i think i think jason said this on one of his shows like they all want to be the last company standing like we're all gonna spend a bunch of money up front and we're just going to say spend billions make the best shows you can get tom hanks on the phone like we we're just going to spend this money and make the best shows and the goal is not to make money don't worry the first few years we're just going to lose billions and billions of dollars but we just need to outlast the other companies and they go under and they get consolidated and they get bought out that it'll just be netflix amazon apple and us and everyone wants to be the us and they're not all going to be um so the the manifest destiny is tech companies well in this sector because their circles are the biggest as casey pointed out and they'll outlast you they have they can lose money for longer than you can uh and they have especially apple have so many huge businesses that are like i think people are showing graphs like which ones of apple's businesses makes more profit than all of disney and it's like airpods like i mean the ipad like pick a random ass like side business for apple like a hobby business or whatever yeah that makes more profit than than all of these other companies right forget about the iphone gigantic monster and you know it's just or or services which you know is its own giant amorphous blob of stuff right so if you think the tech companies are going to own everything and you're looking at how this how is that going to happen how are tech companies going to earn anything are all the media companies going to go out of business no someone's going to buy them so if if you believe in that manifest destiny and you look at the world and you say okay so who's going to buy who the reason people always talk about apple and disney is because there is kind of a culture and ethos a a level of taste and quality and uh you know brand well-earned brand fame there are a lot of similarities between apple and disney and also apple nintendo which we've talked about in the past that they're companies with a reputation for caring a lot about the quality of their product they have earned a reputation for producing a quality product they have lots of attention to detail and both companies have at various times been willing to do things that are against the grain because they believe they're the right thing to do and they make for the best long-term success of the business even if in the short term they're expensive and other companies wouldn't do them that's why apple is apple and that's why disney is disney that's why people always talk about these two and if you buy into the tech eats everything apple eats disney it makes perfect sense i'm not entirely sure i buy into the tech eats everything i'm not entirely i'm not entirely sure that disney can't just outlast this on its own like you know if anyone's capable of weathering the storm it's disney that owns everything now right and owning everything is lucrative and if disney is just managed well it can hunker down and wait for the other ones to get eaten up and and it can be the last one standing right i believe if you have to pick one which one is going to be the last one standing i I think Disney's got enough other businesses to keep itself up.

58:34But I'm kind of in the same camp as Jason where I had previously entirely dismissed it. And now I can no longer do that. I can't entirely dismiss it. I can still say that I probably wouldn't bet on it. Although speaking of betting, when Gruber talked about this, he said I would bet on it. No, I think he said I would bet against it. And if anyone knows Gruber in betting, whichever way he bets, bet the opposite. So that means if we're going to follow that strategy, and I'm talking about actual bets, Gruber bets on actual things. his track record is not great if he would not uh bet for it then we should be expecting it to happen because he's going to lose that bet because that's the gruber way uh so i don't know what to think right now but i do believe that it makes more sense than it has ever made and i'm definitely watching it a lot more closely than i have marco any immediate thoughts before we start talking about what is disney anyway i think i i can't see this going this way unless major major changes at disney happened like divesting a lot of their stuff you know this is this is part of you know what we're about to talk about and it's part of what upgrade uh covered in their segment on this the thing is apple has as mentioned a lot of money turns out again going back to our financial analysts from last episode um apple makes a lot of money turns out the thing is apple could buy lots of companies they could buy almost any company there's there are very few companies in the world that apple couldn't buy but they don't because what would they do with it if they bought it a lot of times they can get the benefit they need to out of a company without buying it and so why would they spend not only the money but also then like the organizational overhead to have this additional company as something they owned you know a good example of this is like if you look at things that would benefit apple in you know to their core products look at all the components that go into an iphone .

1:00:21you don't see apple buying samsung display or whatever like you don't see apple buying memory companies and stuff like that like they still buy components from other companies why because they don't need to buy those companies they can just strike deals with them and you know spend their money that way in you know and then not have the the mess and liability and and risk on their hands of running those companies and not only do they not want to buy those companies but they're willing to spend billions and billions of dollars on those other companies like a lot of the chip stuff they've done and the manufacturing stuff they've done part of the deal is apple pays for the equipment that will like machine out their little apple watches or whatever apple pays for that and the the companies that build the stuff for them use those machines but apple had to pay to get the machines and apple doesn't get to keep them like i think they belong to the other companies like they're basically willing to invest in these companies and it's like well at that point why don't you just buy the company it's like well no i don't i don't want to apple doesn't want to be in the business of manufacturing things because it's not like you can run a company just manufacturing apple stuff although tsmc's third three nanometer thing is actually kind of doing that because i think apple bought all the three nanometer chips that the company can possibly produce but on an ongoing basis the fact is that at a certain point apple will no longer need any more of widget x but the company that builds the factory that builds widget x or whatever certain kinds of screws or whatever that building still exists those employees still exist and they have to find new customers to pay for them to manufacture something that can be manufactured in that giant building that's what apple doesn't want so apple is so averse to buying these companies that they're willing to pay billions and billions of dollars not to basically say here company take a whole bunch of our money so you can be better at making the thing we want you to make but we we don't want to own you when we're done when we're done with you we're done with you if we decide we're not using you anymore we're going to use a different manufacturer in a different country we just wipe our hands of it and say you know it's great that we bottle those cnc milling machines and we use them for 10 years and uh you get to keep them uh see you later we're going somewhere else now yeah exactly like apple could buy lots of companies but they don't because they largely don't need to and i think disney could be similar i mean it's a little bit more complex in that the areas that we think of as as you know what that would mean what what disney owns and what would come along with such a thing um that includes a lot of things that we think Apple would probably want like movie and TV content obviously like that that's like the number one thing that you that you can think of like what would Apple want Apple doesn't want to run theme parks you know Apple doesn't want probably like to run cable networks you know there's all sorts of things that Disney owns that Apple probably doesn't want to be in the business of I don't think Apple wants to be like you know writing new songs for Frozen 4 or whatever and then licensing that music to people or you know whatever there's so many parts it's such a big company most of that stuff apple doesn't really have much use for and and i think what it would actually be pretty averse to owning uh so i there's a lot of that that you know you can just toss right out the window like that apple wouldn't buy it as long as that's part of the company probably or apple would buy it and immediately divest it themselves but you know even looking at the core stuff okay so they'd have a lot of like you know movie tv and maybe some sports stuff through espn or whatever like okay that's i mean that's interesting that's valuable but is that worth buying the whole company or can they just spend way less money and have way less on their plates and just make deals with the company or whoever buys it to license that content and that's probably the more likely outcome you can also you know also whatever they would charge like suppose they bought you know disney's you know video content and everything that that whole library well why would they want that to have a streaming service presumably well they already have one it's called apple tv plus disney already has one it's called disney plus i think if apple bought disney i honestly think those would remain two separate services now apple could have a nice bundle where they would sell both together for some discounted combined price uh but apple tv plus can't absorb all of disney's content without blowing up itself into something where you'd never able to find anything ever again and disney plus is doing so well on its own relatively speaking why would apple want to like dissolve it and put it into apple tv plus which is you know a much more kind of low uh you know low visibility low scale service compared to disney plus i assume those are better off being kept separate and again just maybe having a bundle at some point but it makes sense to keep those things separate they they have different it's you know in the same way like one one company can own multiple tv channels that have kind of different styles of shows on them apple tv plus and disney plus have very different styles of content that go on each one and it doesn't make sense i don't think to combine those things similarly you know buying buying disney and all the and all the many properties that they own um yeah that will give you that will give you give you access to a whole bunch of you know a whole lot of tv content like a huge library of old TV and movies and everything like that.

1:05:29But that also doesn't really fit in Apple TV Plus. Because again, TV Plus is much more like HBO, at least the way HBO used to be. Much more like, we're going to make original stuff and it's going to be this curated thing in this certain style that is going to appeal to certain demographics. That's Apple TV Plus. It doesn't make sense to dump all of Disney's back catalog into that and all the many, many companies that Disney owns. That doesn't make any sense to me. So I don't see it going for that reason and you know maybe i think sports you know they have a bunch of different things in sports that are relevant i don't understand sports enough to comment on how relevant those are but we already see apple throwing around big money trying to buy sports rights in general through other companies and that seems to be going fairly well overall i mean they don't have everything they want i'm sure but i think they can just keep doing that so i again i I don't see the value in Apple buying an entire giant conglomerate or even assuming Disney might divest some stuff before a sale.

1:06:34You'd still be buying most of it. And I just don't see why Apple needs to buy it. I think they'd much better spend their money just taking advantage of it as a third party. I think you're not thinking like a big-time executive, Marco. I mean, as you know, I have a lot of experience being a media executive or it's the CEO of Apple, you know, so obviously. I mean, the reason, I don't know about Apple and Disney, but the reason, quote unquote, analysts are looking at this is they kind of look at the same things that you just described and they come away from it with a different take. Like, so you just mentioned Apple TV Plus and Disney Plus, right?

1:07:09Well, so think of it this way, if you're trying to get into their mindset. Apple has been over the past several years paying money to creative people to make television shows and movies. and that is something that apple previously didn't do right they at all and apple decided we want to be in this business and the reason they wanted to be in the business is because they wanted to have a streaming video service because that would get someone its services revenue they would get people to pay apple a monthly fee in exchange for a service and once apple has you paying for one service they can try to get you to pay for others they can do bundles they like that whole you know recurring revenue subscription services is a growth area for apple so they said we're going to have a streaming service and they started from zero and they had to hire a bunch of executives who know how to find people who can make television shows and movies and they apple gave them billions and billions of dollars and said throw this money at movie stars find people who know how to make good tv shows bid against them to get them to not make it on netflix but instead to make it on our new thing apple tv plus and they started with carpool karaoke and uh planet of the apps and they came all the way to again having movies with tom hanks in them and well-regarded tv shows like severance and all sorts of stuff right that's the thing that apple did they did that for a reason that made sense to the business i think that still makes sense to the business that apple wants to have a streaming video service with content if you want to grow that business and say how can we make apple tv plus better how can we make streaming video better acquiring disney and all its assets and its streaming service is a shortcut to that because apple's going to say we like the kind of content you have you have the best ip in the entire world no they probably wouldn't combine it into a single service but having apple you know as jason said on one of the shows apple tv plus being kind of like the hbo icon inside the disney plus streaming app or having them cross link to each other or even just keeping them separate it is a shortcut to saying rather than organically growing our streaming service over several more years as we have organically grown from zero acquire this company and all of a sudden we have the ability to we get all the subscribers to disney plus and we have the ability to grow it even more because unlike disney who's worried about where they're going to continue to fund this content for because disney plus is doing well from a subscription perspective they got a lot of subscribers not doing well from a balance sheet perspective because disney paid tons of money to make tons of content for it and that costs a lot of money up front and they're not really making all that back on subscriptions yet or it's not quite in the balance they want apple's like don't worry about that we get the iphone we make that much money in a week it'll be fine and they would it would be a shortcut to growing your business so from a big time ceo perspective you're like services is great we want more subscribers for service here's our graph of how apple tv plus has been growing we're doing great but if we simply acquire disney plus look what happens to the graph instantly after the acquisition the number of subscribers goes up like this and we think we can turn their business around and make them profitable and fund them for a few more years or whatever.

1:10:08So that's a synergy that I think makes sense, even though, as you noted, it's not like you're just going to combine them all into Apple TV+. You're probably not going to combine them all to Disney+. You'll probably keep them separate, but it's still services revenue, and there are still synergies to be had there. And I think the same is true for IP, movies and stuff like that. Apple has made movies. Apple won an Oscar for one of their movies, right? Disney has a lot of IP and a lot of movies and a lot of people know how to make movies. So Apple's been trying to hire those people and find people who know how to...

1:10:35Like, Disney's done that already. They have them. They're there. They've got Star Wars. They've got movies lined up. They got all the Marvel. Like it's already there. It's ready-made. It is a shortcut to growth. And that's what Jason was getting at. Like when you're as big as Apple, you're looking for where is the next growth going to come from? Now you can say Apple should stop. They're the biggest company in the world. They don't need to grow anymore. But for in this particular realm of like making movies and TV, that ship has already sailed. Apple has decided this is a thing they're going to do.

1:11:02And they're doing it because I think it's a growth opportunity. So you're either going to say Apple stop doing Apple TV plus and don't buy Disney or Apple. If you're going to keep doing Apple TV plus buying Disney starts to make a lot more sense. So the particular one where you that you were hung up on, like their content and the movies and TV, I think from a growth at all cost, not growth at all costs, but from a growth in avenues that Apple has already chosen perspective, it makes perfect sense to me. Like unless you're going to argue that Apple shouldn't be in streaming video and that the technology sector is not going to eat the media sector when it comes to streaming video i don't think you can argue against apple buying disney just to get the streaming stuff but now we should talk about all the other things that would come with disney and which ones we think disney should divest itself from before it becomes palatable for to apple but disney plus definitely you want that to be part of the disney that you buy i think yeah so uh we're taking a page out of upgrade a little bit um but mike had the good idea to run through you know the stuff that disney does like the broad businesses that Disney participates in.

1:12:04And, you know, I don't know if this is the exact same list that Mike and Jason worked through. This is not his list. This is my crappy list. I'm sure his list was more thorough. But I did want to just touch on some of the stuff so that people realize, especially if you've never looked at the giant Disney org chart or haven't looked at it recently, to realize all the stuff that Disney owns or, you know, the diversity of stuff. This is not all the stuff. This is like a sampling of the things that Disney owns that you may not have thought about. Indeed. So Disney parks. So this is Walt Disney World, Disneyland, Shanghai Disney, Disney Sea, Disneyland Paris.

1:12:36They have parks all over the world. And I know Marco, like me, is a super fan of these Disney parks. But genuinely, all kidding aside, I really am a super fan. Like I was snarking about Marco, but I really genuinely adore Disney World. I have gone there as many times as I've seen Pulp Fiction. Goodness. There's hope for you yet, I think. Look at it this way. You have a bunch of fun new things to experience. But anyway, I totally understand if Disney parks are not for you. That's okay. But they are for me. I love them. I adore them. We try to go as a family every few years. We were just at Disney World in January.

1:13:18I adore Disney parks. In a lot of ways, they're very appley. Actually, earlier today, we went to King's Dominion, which is a local amusement park. And I like King's Dominion just fine, but it is stark, the difference between King's Dominion, which is admittedly a little bit on the rattier side, than Disney World, which is what if we spared no expense? You know, because we're basically printing money. And not that Disney World is perfect by any means, but it's just stunning the difference between the two in every measurable way. Cleanliness, how modern everything is. I rode a ride that was originally based off the Italian job.

1:14:00And now it's like, I don't know, some stunt coaster or something like that. And there's a billboard in the ride because you're riding in, you know, pretend mini coopers and it's supposed to take after the movie, even though they lost the rights to the movie. And at one point, you know, you're supposed to be driving kind of sort of on a street and there's a billboard, you know, I don't know, 30 feet from your face. And the billboard has clearly seen years and years and years of sun and is almost white at this point. I can guarantee there is zero chance that an equivalent billboard in a ride at Disney World would look anything but brand new.

1:14:33Ever. Ever. And that's a very Apple-like attention to detail. I adore Disney parks. They are such incredible user experiences. And in that sense, I see so much in common with Apple. But why on earth would Apple want anything to do with this? Like, I just don't see that as being something. I don't see Disney parks as being something Apple would be interested in. I think they would definitely have to keep parks. And part of that is the old diagram that you'll see from, like, the Walt Disney drew, like, on a piece of paper. I don't know if he drew it himself, but it's part of the original Walt Disney era.

1:15:08It's a bunch of boxes and lines and arrows that have changed over the years, but the fundamental idea is still the same. How does Disney make money? How does that company work? And the lines basically are like, we make a bunch of movies. that kids we make we make good movies that people like and kids love them too and we make toys from the movies that people buy we have television shows that kids want to watch because they have their favorite characters and then they come to disney world and pay us for these very expensive tickets so they can see their characters and ride the rides and it's like it's like this cycle that says we create the content and then we get money from people who like the content because the our movies are good like we make good movies we make good tv shows we get fans and those fans want to give us money and the parks are one of as casey knows one of the really big funnels for getting that money so if you take parks out of the equation part of what you're buying in disney like you've broken the machine a little bit now the downside to parks is as i think ben thompson has talked about recently because he's mr businessman parks don't scale right it's kind of like being a consultant like people think i'm gonna program or i'm gonna be a consultant or i'm gonna run a consulting company and people are gonna hire us and then we're going to you know write their code for them or whatever and it's like consulting or anything like parks or that involves people whatever it scales with the number of people that you can run through the machine so if you have a consulting business the amount of money you can make depends on how many people you have how many programmers you have because you can't say some company says we want you to write all this billions of lines of code for us you're like uh but i don't have that many employees and i can't hire them that fast it doesn't scale you know what scales streaming services selling software things where when you make a new copy of the software it doesn't cost you anything or streaming services you pay some minimal fee for the extra bandwidth they're going to cost or whatever right those businesses those kind of software businesses where the unit cost per extra customer is very very small or sometimes even close to zero depending on how you're going at it those scale really well but parks there's only a certain number of them and you can't have one around every corner and if you did have one in every around every corner it would take away from the specialness so parks don't necessarily scale but they are very powerful very good money funnels for casey and his family that is an important part of the cycle you watch the movie you see the thing oh now there's a star wars land you love star wars busy love star wars and it's saying oh there's a frozen parade and the people like that's part of the disney machine so you absolutely have to keep parks because otherwise you've broken disney like why would you like disconnect that part of the cycle the second thing is parks as you mentioned kind of feel like appley because disney has that attention to detail it's part of the cultural similarity between the companies that they care that that they would care that their billboard is faded they would not accept that it's faded they would fix it right someone would note it like there's a culture of everyone who works in those places and the companies that run is that we want to have a quality product and if it's not quality we need to fix it and so many companies aren't like that so apple and disney have that in common but that said the very first thing i thought of when i was seriously considering this is that Apple's particular culture and design philosophy is especially poorly suited to Disneyland, I feel like.

1:18:13And the analogy that sprung to mind immediately was like, you know, in Disney, they do a really good job of incorporating the garbage cans into the landscape. They'll be styled like whatever land you're in. They're not like out in your face with an ugly trash bag on them with flies buzzing around them. Like that's part of the disney experience so disney you know hidden well incorporated trash cans they're right where you need them to be but they're not in your face until you're looking for one when you're looking for one you find it and it's pleasantly integrated but otherwise they're not like you know stinking up the joint and getting in your way right an apple solution to that would be no garbage cans kind of like in the apple store they said you know what lines are annoying apple store no lines no registers and how many times have we talked about i wish i just wish there was just a line and some registers like apple's philosophy is very often aspirational when it comes to human nature we wish humans would act this way uh caleb sasser i'm caleb i might there's a friend uh my daughter has a friend named caleb cable sasser um recently posted a thing about uh things people put in theme parks that are used in unexpected ways by patrons like if you if you build anything in the theme park anything at all that can be sat on by humans they will sit on it because they're tired and it's hot and you're like but that's not a seat and people shouldn't sit there so then they have to like patch them by like putting a bar or a sign you put a sign people don't care like you build like a sculpture that's supposed to be like a sculpture that's part of like whatever you know i don't know if it was like part of avatar land or the aliens ride or some some uh you know property franchise that had some particular thing that it fits within the world but it's chair height people are gonna sit on that and you can't stop them and if you put rope around it it looks ridiculous or whatever.

1:19:53And that's Apple's blind spot when it comes to design of physical spaces. Talk to anyone who's worked in Apple Park. It's an amazing, beautiful building and a bunch of the stuff in it is, again, aspirational with respect to human nature. You know, it doesn't reflect the actual physical reality of humans. Sometimes it leans too far into form and less into function. And Disney strikes a much better balance than that than Apple. All right. So that brings me to the next thing as we go on this list, kind of like when Apple bought Beats or when Apple buys anything. The question is, does Apple buy them and, you know, Star Trek Borg-like assimilate them and make them be just like Apple?

1:20:31Or does Apple allow the company that it acquired to maintain its individual culture and continue to do what it does? And I think if Apple ever acquires Disney, it is absolutely essential that Apple allows, for example, Parks to continue to do what Parks does well without, I know this isn't a problem now because it doesn't work there, but without for example imagine if johnny i was still there do not parachute johnny i've into disney parks he will ruin it like he's great and the thing he's things he does this is better than anyone else but disney parks does not need johnny i've's help at all what you know what does what that part of disney needs is apple's money and apple's overarching philosophy of quality attention to detail long-term thinking you know just that that whole vibe which disney mostly has but like having more money loosens that up.

1:21:18So by all means, Apple should lean on the idea of like, it's really important for us, you know, at big corporate Apple for you and parks to do a great job, but we're just going to let you do that. Like, we'll make sure you're doing a good job, but we're not going to tell you how to do it. We're not going to say there's too many garbage cans here. Why don't you just get rid of them entirely and just tell people to carry their garbage with them back to their car. We'll give them little bags that are made out of recycled paper so they can do that. And the parks people should say, Apple, step back.

1:21:42Like we've been doing this a little bit longer than you have. I think we know how to do this. And so that is the danger of buying something as big as Disney is Apple has to have the wisdom to know and to back off. And I think they do. They mostly let Beats continue to be Beatsy. Like Beats didn't turn into Apple. Like the AirPods Max is different than the Beats products that probably have a lot of similar tech under the covers. Beats was allowed to still be Beats. And that's just Beats. Disney is Disney. So if Apple acquires Disney, A, they should keep parks, and B, they should keep their hands off parks.

1:22:18See, I don't know that Apple, I don't know that they want to acquire things that they would have to keep their hands off of. Agreed. But they did it with Beats? Not quite. I mean, they sort of, I mean, we don't know all the details of it. It seemed like a lot of the reason they bought Beats was really also to get Johnny Iovine to be an executive there for a while. It was actually kind of an acqui-hire, I think. But, you know, Beats, modern Beats headphones are nothing like the Beats headphones when Apple bought the company. But they're also nothing like Apple headphones. No, they're actually, so modern Beats headphones are, it's like the sport version of equivalent Apple headphone models.

1:23:02but but can you ever imagine imagine apple shipping anything apple branded that look like beats headphones i can't honestly well it depends i mean but it is it's it's clearly a sub brand of apple you know like there's lots of there's all lots of like you know high-end goods that have like sub brands you know like i know but like that's just beats though i i wish i could think of a better one because apple doesn't buy lots of big companies beats is actually one of their larger acquisitions but like but disney is disney and i think like that's the thing you can't if you're going to buy disney you can't break disney you can't break the machine that is disney nor can you assimilate them borg like you have to let them be disney i mean i agree with you that you would have to let them be disney i just don't know if that's really in apple's dna because i i hear what you're saying about beats and beats is certainly way more an island on their own than than i think any of us expected but they're not an island they're best a peninsula like what was it wasn't a claris or something what makes it like file maker or something oh poor claris that's a little bit so this actually leads me to the next thing this was an ask atp question and it is actually relevant to this this is a random ask atp chucked into here um aaron thomas asks it seems like nintendo sony etc have good relationships with game developers what can apple and google learn from video game manufacturers to have better relationships with their third-party developers this might seem like it's not that relevant but i feel like it is so this whole thing of apple allowing some subset of its company to do its thing without interference maybe beats wasn't the best example because maybe their headphones have become more apple-like than i realize over time but a good example that's relevant to this question about nintendo and sony and game developers is apple tv plus apple had nobody at the company who knew how to make movies and television shows because apple had never done it before and they had to start from nothing and build their way up by hiring essentially industry people who have experience doing that paying them a whole bunch of money and saying we don't know we don't know how to make movies we don't know how to find directors and scripts and like and who to give money to and how you can tell when you should back a project and like we don't know any of that so they hired people to do it and there was all those stories early on about exactly what we're talking about is apple messing around like is tim cook coming and said there's too much swearing in this movie i don't like it we only want to make family-friendly things uh change the blood to green that's a nintendo reference uh is that mortal combat on the uh super nintendo right yeah yeah because nintendo had a you know the family-friendly thing yeah they've changed it to sweat i think that it was just i think it was just green yeah well one of them had green blood so maybe it was doom that had green blood i forget the exact reference yeah you had to have a genesis to see the actual blood in mortal combat yeah and so there was that was the story before anything really happened with that it was like Apple interfering.

1:25:49Tim Cook says that there's too much violence in this show or too much sex in this or whatever, right? Because that was people's fear that Apple is going to screw it up. But I think now enough time has passed and enough content has been produced on Apple TV Plus, both movies and television. I think we can safely say that Apple is not really messing with the content. They are not ensuring everything is family friendly. There's tons of cursing, tons of nudity, tons of violence. Everything you could possibly imagine is there. It's not, you know, over the top. It is branded in a certain way, but pretty much like HBO stuff was branded, right?

1:26:22That it is high quality, you know, highfalutin stuff, like, you know, a smaller number of better quality things. But as far as I can tell from the outside, Apple has let the creative subdivision of its company that makes television shows and movies do its job without much interference. Because how could they interfere? There's no one in Apple who knows anything about that. that the way Apple supports them is we will hire the best people who know what they're doing and then not mess with them I don't know if they're doing that with the car because that seems to be not successful but the tv and movies we can see they they're I don't think Apple has messed with them I think they built a wing of their company that didn't previously exist and essentially are letting it run like a television and movie creation studio because if they weren't I don't think they would be successful because Apple previous executives have no expertise in this area they just would have screwed it up so i think apple can keep its hands off in areas where it knows it doesn't have expertise their only job is to find the people who do and let them do their work and guess what in disney you don't have to find them they're already there for the most part except for the star wars directors you want to talk about that a little bit but anyway i think apple has demonstrated that it can keep its paws off of stuff that it doesn't understand even within parts of its own company that it builds up from zero let alone acquiring disney so i am much more optimistic that if they did acquire disney they absolutely would be able to keep their hands off of things that they don't know anything about all right animation that falls under the category of people who make tv shows and movies the reason i listed that is because they have disney animation but also pixar of course don't forget about them acquired by disney a while back and in relation to apple um anything like that where people are doing creative things i think even steve jobs not that he's there anymore but showed that he more or less like he you know acquired Pixar and ran it for a long time he didn't mess with stuff on a creative he news I don't know how to make movies I just know how to hire smart people who do and I may offer a bit of advice here and there but read everything you can about the history of Pixar Steve Jobs is not going into individual scenes and saying I think this guy should move over there like that why is he saying this nope Steve Jobs did not do that uh and Disney has a whole bunch of animation they've got 2d animation their their computer animation all the you know frozen all those franchises pixar animation marvel star wars all the stuff from 20th century fox which i can't believe we can't call 20th century fox anymore but it makes perfect sense because it's not owned by fox it's just what is it called 20th century features i forget what it's called like that yeah all the disney ip snow white seven dwarves donald duck mickey mouse all that stuff all the people who make that content and all of the the content itself a apple super duper wants that and b apple would not should not and probably wouldn't touch the people who are making it because they know what they're doing they would guide it they would herd it in the right direction they would insist on quality they would sort out any issues with funding and you know acquisitions new acquisitions of ip and stuff like that but when it comes time to make the actual movies i think they would let the people who do it do it and that's this is all exactly in the realm of like hey we have a streaming service where people to watch a video, this all feeds into and supports that.

1:29:30And this also relates to Marvel and Star Wars, and like you said, in 20th century or whatever. All the Disney IP, I think, was it Marco earlier that said it? I'm sure it was John. It's always John. But I thought it was Marco that said, why would Apple buy Disney? I think if it were Apple, they're fine without any big marketing agreements other than Toy Story on your watch. I don't think they need to buy Disney to get this. If anything, I would see Apple swooping in as Disney gets ever more desperate in just saying, here's a bunch of effectively free money, and the only thing you need to do is let us use some of your IP and stuff that we want to do it in.

1:30:09I just don't see buying Disney as necessary, like Marco was saying earlier. Why bother buying it when you can give a seemingly ever more desperate business a bit of a parachute to get to do whatever the hell you want? Then you're betting on Disney not being the last company standing because you're saying we're just going to sit here with our arms folded. And we think Disney is essentially going to have to give up on their efforts to have a streaming service. And at that point, Disney will then be out there saying, OK, well, we tried to do this on our own. It didn't work out. So now we have a bunch of IP that we're willing to license you.

1:30:40And Apple, do you want to license it? Netflix, do you want to license it? Like kind of where they were before they had Disney Plus, like Disney content could be available elsewhere. And, you know, of course, Disney sells things through the you could buy Disney movies on Apple's iTunes store or whatever the hell it's called now. Um, I don't know if I want to take that bet though, because I think if I'm thinking which is going to be the last company standing, I think Disney can weather the storm of, uh, oh, we just blew a lot of money up front on Disney plus and a bunch of content for it. And, uh, you know, COVID really, uh, hurt our movie ticket sales or whatever.

1:31:11And everyone's not doing well. I think Disney can weather that. And so first of all, Apple doesn't want someone else to acquire them because that would be bad. Like some other tech company, cause then Apple's getting none of that. and second Disney's not going to license anybody that stuff when they're still pursuing their own strategy of doing a streaming service so it's kind of like all the companies I don't see them as equivalent I understand what you're saying but the sort of licensing I'm talking about isn't broadcasting Disney stuff or making new Disney or new shows with Disney IP what I'm saying is Apple would want to do like they do today like let's make a watch face with Toy Story characters a watch face with Toy Story is nothing you want 100 million Disney plus subscribers to be paying you money every month You want to be able to make new movies in Star Wars.

1:31:52Like that's where the show is. Again, it gets back to if you think Apple is and should, you know, are they are they pursuing having a streaming service where they pay for content to be made? Disney and all of this stuff is a way to massively grow that business and to have a potentially insurmountable moat of IP against all of your competitors in, you know, in the tech world. Right. It's not it's not about a Mickey Mouse watch face like that is that is peanuts. Like it's that's that's a fair point. And actually, the more you talk about it, the more I'm getting convinced, not that this will happen, but I think the avenue to this happening could be a defensive play more than it could be anything else.

1:32:30Like, I don't feel like Apple is in the position that they're really desperate to find new ways to earn money. I agree with what Jason said, that they are getting to that point, but I don't think they're there yet. They're not desperate, but it's like, again, that's a C-level executive thinking, which is foreign dust. It's like, you're already the biggest company in the world. you already make so much money but it's like but but where is the next big growth going to come what if we made more yeah what where is where is the next big you know in services revenue that's why they're pursuing the services revenue look look at the service revenue line going up how can we grow that even faster a disney acquisition would be part of that well but like isn't it kind of like doesn't the the relative sizes of these companies now kind of kind of prove that maybe this wouldn't be enough to move the needle for apple oh that's a great point too yeah but but it would so think of it this way uh if you look at how apple tv plus has grown organically like by itself versus how much disney plus has grown organically by itself you can look at those things and say i mean we don't know apple tv plus subscribers but i'm going to go out on a limb and say disney plus has more i would assume so just has disney has more content and disney has better content apple has done a good job with the content that it's made but it cannot compete it couldn't even compete with disney had before it started buying every company under the sun and now that disney owns everything under the sun like you know if if if it's not going to be apple you apple doesn't want one of its competitors to get that and it can't organically race to catch up with it yeah it's small potatoes in the grand scheme of things but what you have to do is not compare the disney dot to the apple dot compare the disney dot to the apple tv plus dot which we don't know how big the dot's going to be but i'm going to say it's going to be very small and again that's not the only like there is it is a disney machine it is not just like a streaming service system ip it is a bunch of things that all work together to get people to love disney properties and go to disney parks and go on disney cruises and buy disney toys and and license disney stuff which then if apple owns then they're getting the licensed material and it all circles back so it is a shortcut to growth because somebody has already built a entertainment you know mecca of just everything under the sun that tons of people want that makes movies and tv shows and all the people who know how to make them, that's ready-made sitting there for you, just$160 billion.

1:34:39Although we should go through some more things that they own, because there's a bunch of crap in there that Apple definitely does not want. Stuff Apple doesn't want? Well, so here's the next line item here is Disney also has Hulu, apparently, in the US. Yes. I mean, I guess they would take that because it's part of a streaming service, but then we get to things like ESPN, and I think that's part of what the discussion of selling things off. I do not think Apple wants to have anything to do with what they call in the biz apparently the linear tv market which is code word for television that is not like an internet streaming service uh that is a big world and it is a big world that is going through a lot of radical changes and i think apple wants absolutely no part of that so disney owns abc fx the disney channel disney jr a bunch of channels that are in part of cable packages abc is a network right i don't think apple wants any of that because it does and they shouldn't it doesn't fit into any of their businesses.

1:35:31I don't think that Apple wants ESPN, the cable network, but I think that's kind of, you're not thinking far enough past the end of your nose. I think Apple would love to have access to all the sports deals and sport-related things that ESPN has access to. But those are two separate things. That's what the CEO was saying. They were trying to sell the linear part of it. Apple does not want the linear part. That I agree with. They want the other part of it. And so a lot of these things like are separable so abc has a streaming service and a bunch of ip but abc is also a television network a lot of these companies especially like espn make money by being part of cable packages or whatever apple doesn't want any part of that business i don't get you know that business of making money by being part of everyone's cable package is on its way out we don't want that but we do want to your point whatever sports rights that espn has uh you know streaming sports rights or whatever like the type of deals they did with mls or whatever apple definitely wants those but does not want the linear things and i don't know how they're entangled but i don't know how easily they would be to separate but the divesting of loser businesses a lot of it is divesting of the stuff that has to do with all world cable linear television while trying to keep the stuff that apple or any acquirer does want which is oh i have the rights to broadcast these sports teams or whatever and how cleanly separable are those how how long would it take to separate them are they separable at all but i think in the end if any of these things are encumbered by linear tv baggage and can't be separated apple doesn't want them and i don't i don't blame it because look again look at what apple does is apple trying to get into linear television no everything they're doing even the stuff i can do with sports rights is internet focused streaming focused the rumors are vision pro focused right it is you know they they do not want to be you know as evidenced by apple tv plus they do deals with cable providers so you can get apple tv plus at a discount as part of your package but it's not a channel on your cable television dial and what the hell do you call it now they don't have dials on your cable television box but whatever so anything that has to do with old-fashioned cable television or broadcast television like abc is broadcast over the air right that apple does not want that and so if disney wants to be as attractive as possible to apple they need to rip out the the old crappy linear TV cable bundle broadcast crap from the juicy, delicious intellectual property and other stuff and contracts and sports rights and everything that are part of that.

1:37:59I don't know. I, I, I'm happy to talk about this as long as we want, but I'd still, other than defensive posturing, I'm just still unconvinced. I just, I don't think the juice is worth the squeeze. I really don't. And, you know, as, as we were thinking or as we were talking about it earlier, I couldn't help but reflect back to the w w wdc 2013 intro video the dots speaking of dots and although a lot of that video was very cringy as i would say or cringe as the kids would say now um i i think it did do a pretty decent job of explaining the apple ethos to those of us who are not within apple and from the best i can tell and you know i i was scanning through it as you guys were talking and there were a couple of lines that stood out to me.

1:38:48One of them was, if everyone is busy making everything, how can anyone perfect anything? And I feel like the way that's applicable here is that Apple has already spread a little bit on the thin side. I mean, granted, they could hire, they could do a lot of things to make more stuff work, but it certainly seems like they're spread a little thin. And if you look at reports about how the betas are going right now, apparently not great, Bob. And so iOS 17 is coming in hot this year. Right. And so it seems to me like adding a whole bunch of very, very different types of businesses to that plate just doesn't seem like a recipe for success, much less the probably hundreds of thousands of employees.

1:39:33Like it's just in so many ways, it just seems like a, what year was the dots video 2013. Yeah. So this is another comment that Jason made, uh, and various in his various discussions of this. if your picture of apple is the apple of i think he said 2010 that's not the apple of today i remember that's true i remember the dots video but that apple did not decide to start a movies and television studio to support a streaming service that apple i think had not decided to try to make a car or whatever the hell they're doing there that apple didn't even have a headset in the works right uh i'm i think that apple had maybe wasn't yet planning the watch like apple today is different than it was and so like this is the thing apple has decided that it wants to pursue these new things that it didn't do before for whatever reason is it because of growth is it because they think they can make an impact or whatever but they've already decided to be in a lot of the areas where disney works and the things that don't seem like they work like parks or cruises just i keep thinking of succession every time i say that um it seems like well yeah but that's like apple's not into that apple has a park but you're not allowed to go to it and apple doesn't have cruises they don't have cruise ships like that seems like it doesn't work but parks and cruises is part of the disney machine like i said that if you get the ip you shouldn't also break the machine so that is kind of a new thing but that that machine does have kind of a cultural fit with that but apple disney also has music and apple i don't think apple doesn't make any of its own music does it doesn't pay to like you know like a record label as far as artists to make music right but disney does you know disney does that and that would also be a new thing but it does have some synergies right so the the thousands no thousand no's for every yes the apple that had that philosophy it's not that it's it's totally changed and they're not like that anymore because they are and i think the way but but they're definitely different than they were like as evidenced by what they've done forget about any acquisitions just look at what apple itself has decided to do uh and again setting aside the car which they haven't actually done yet but they decided to pursue that and have been pursuing it for years and that that is a little bit of a different tack than those dots were leading us towards so i think the way apple's attitude that you're both getting at and a vibe that i also feel from them is that they're not going to do something like this unless they can do it on their terms and very often they can't very often like apple is in the bidding war for like sports rights or apple is uh you know trying to acquire a company or whatever and if it turns out that that company won't accept apple's terms apple walks away yeah and that's why they miss out on a lot of things and i think that's how the thousands of no's manifest i do not think apple is going to acquire disney if they can't do it the way apple wants and if that's the you know that apple wants that disney to get rid of x y and z they don't want to buy these parts they want these things to be separated whatever their conditions are and if you hear rumors about like the conditions that apple puts on companies that it's acquiring or companies like Apple's conditions are complicated and onerous and unexpected and Apple does not budge on them.

1:42:34So that's how I think the modern Apple manifests that a million no's for every yes. But given the special relationship between Apple and Disney and particularly their new slash old returning CEO and how those relationships might exist at the level of the board of directors and everything like that the possibility that they could come to an agreement that meets all of apple's requirements is probably higher than it was for say like the nfl or whatever where it's just like some company that has never really had direct contact with apple coming into contact with apple and being like you can't just dictate term like no and apple's like well i'm sorry we're we're not budging on this and it's like well you don't get the deal then and apple's like fine you know a thousand no's forever yes uh but with disney again And not that I think it's absolutely going to happen, but the odds of Apple getting the Apple style deal that it wants out of Disney are higher than with another company that Apple has had less contact with.

1:43:32Because Disney knows what to expect from dealing with Apple, even though Steve Jobs is gone or whatever. But like Disney has Disney has definitely had direct contact with Apple for a long period of time, including the actual CEO being on the board of directors for a while. So I think it's possible they could get the Apple-style deal they want out of this. Just to go back a quick step, WWDC 2013, Apple unveiled redesigned models of the Mac Pro, Airport Time Capsule, Airport Extreme, and MacBook Air, and showcased OS X Mavericks, iOS 7, and iWork for iCloud. So just to put things in perspective.

1:44:05That was the whole, the dots video was about iOS 7. They had, you know, was it a thousand nodes for every yes? A million nodes? I don't remember how many nodes it was. A thousand. There are a thousand nodes for every yes. There we go. A thousand notes for every yes, but then iOS 7, the fonts were still way too thin, and they fixed it. Johnny Ive! Thank you to our members for sponsoring this episode. You can join us at atp.fm slash join, and we will talk to you next week.

1:44:46John didn't do any research. Marco and Casey wouldn't let him. Because it was accidental. It was accidental. And you can find the show notes at atp.fm. And if you're into Twitter, you can follow them. At C-A-S-E-Y-L-I-S-S. So that's Casey Liss. M-A-R-C-O-A-R-M. anti-marco-r-ment s-i-r-a-c-u-s-a-siracusa it's accidental they didn't mean to accidental tech podcast so long so that's an unusual outro for the show because this week we were exclusively member supported and this is not the first time this has happened but it's certainly not a common thing and it's becoming more common and that's because our ad sales have been in the toilet recently and there's a bunch of kind of bigger picture moves in the industry and the economy that are causing this we wanted to discuss it here just because okay look let me let's start by saying we're fine the show is fine no one's in trouble not even you alex no one's in trouble everything's fine so anyway what what i've seen in not only our show but in the podcast landscape in general including things like overcast podcast ads that that like those little banners that support a large part of overcast business something happened around january um and you know there's obviously been some economic changes in in the you know the larger landscape um but since january ad sales and ad prices have dropped significantly uh to to the point where like we i've never seen a drop like this since we since i've been selling these kinds of ads either either since we've been selling them for this show or or the the ads in Overcast.

1:46:58It's on the order of 50 % lower prices this year, and fewer sponsors, fewer buys, and lower prices. So it's been a tough environment to try to sell ads in. And for podcasts like ours, there's been a lot of factors for that. The industry, the kind of ad that we do, it's called a host read, which means I read it, and they're baked in, which means that I record them and I stick them in the show and everyone gets the same copy of the show with the same ads in it. And that also means that no matter how many downloads that show gets, those ads are going to get that number of impressions, which might be higher or lower than the advertiser might want.

1:47:41And over time, those ads aren't changed. So if you go back and listen to an episode from five years ago, you're going to hear the ad that was in there five years ago, not like a new ad. So that's the kind of show that we do and the kind of show that we've always done. that's not where the industry has moved largely. The industry has largely moved towards, first of all, dynamic ad insertion. When you download a podcast and every download might have different ads spliced into it at download time. Now, sometimes this is for somewhat innocuous reasons. Like, you know, if you want to have the same ad spot, you know, included in four or five different episodes, you can do that.

1:48:20If you want to put new ads into new downloads of old episodes like if you get a lot of back catalog traffic for your show you might want to monetize your back catalog a little bit better and you know and sell ads that will run in back catalog episodes so they get spliced in that way but it's also often used in really annoying or creepy or both ways so for instance um because dynamically add dynamic ad insertion can check your ip address upon serving it to you it can then do various targeting things based on tracking and other behavioral information that they can derive from you either themselves or through other services that they're sharing all your crap with and tracking you across and it's really super creepy and that's why you can get like personally targeted ads in dynamic ad insertion or dai um you can get those injected into your show or they can use your ip address to perform rough geolocation and figure out roughly what region you're in and for instance serve you a an ad for a local car dealership like a radio ad like stuck in your podcasts listeners hate this like it's it's awful for listeners as you know if you listen to any shows that do this and most large podcast publishers are now doing this this style of ad for us you know first first the ad market for shows like ours first got abstracted away from us by ad agencies you know when we first started the show we were largely being contacted by sponsors directly or we were contacting them directly and we would talk to you know their ad person or whatever and they would buy it and that'd be it over the years that has shifted more and more towards we have to deal with agencies and the agencies deal with the sponsors and there's pluses and minuses to that but it's i think it's proven to be mostly a minus now we're even moving away from that into these dynamic ad insertion worlds and and when you have when people are buying dynamic ads, largely they're not saying, you know, give me episode 546 of ATP.

1:50:17What they're saying instead, because they have access to not only dynamic insertion, but also they have access to some kind of demographic targeting usually, what they're able to say instead is they're able to go to a large ad exchange or platform and say, all right, I want to buy 100 ,000 impressions at this CPM or lower, this cost per thousand or lower of men, age, 25 to 34 in the US. They're able to target it to that level. That's not the kind of ad that we sell. And frankly, that's not the kind of ad that we want to sell. We don't want to track you or to get your information like that. Or critically, we don't want to enable anyone else to track you in that way.

1:51:00We don't want to make a show full of dynamic ads, ad insertion, because listeners hate it. Like, and again, you're all podcast listeners. You probably listen to at least one show with DAI, and you probably hate it. We also don't want to join some kind of big ad marketplace, you know, for lots of reasons. Chiefly, we probably make a lot less money. And part of that's because they will, you know, ad marketplaces take their own cut, and it's usually huge. And they also would take away control from us. and that would give us less control over things like we don't want to track people and be creepy and stuff like that um we also don't want to join a big podcast network and it honestly would have to be a big network uh to make a difference here because the small networks are having many of these similar issues um but you know we don't want to join a podcast network because like we are our own show like we we don't want to share our branding we don't want to have some network you know badge on our artwork and and have atp just be another show brought to you by big network x like that's not our style that's not our show um meanwhile you know in 2020 we launched this membership program and membership started out as a nice kind of side bonus income kind of like when we sell merchandise you know when we sell t-shirts and stuff that makes you know decent side income it was nowhere near the main income of the show but it's decent side income membership started that way but membership is growing and it's it's been going really well and we really so much appreciate that and and we wanted to all get you know we wanted to say first of all how much we appreciate that because right now as you've heard like the number of sponsorships on our shows has has gone dramatically down since the beginning of the year and if you look at previous years like the the amount of times that we had less than a totally full ad load like less than all three ads before 2023 it almost never happened and now in 2023 i think it's more unusual when we have a full three ads than not um and meanwhile membership is is going great so we wanted to just kind of brainstorm in public like you know where kind of what directions we might want to take the show uh because the landscape is is has so radically changed in the last you know six seven months to the point where the ad business is really it has become something that not only is it not working nearly as well for us as it used to but the direction that the podcast ads have gone has gone in a direction that we don't really want to go you know right when we when we first launched the membership program what we said and and this is still the goal was we don't want to take anything away from the show we want to only be additive you know so members will get things that were never given to everyone else for free it was you know extra content here and there um you know extra perks like you know side stuff and i think now i think where we are now is i don't think the show is ever going to go like you know behind totally behind a paywall because none of us want that um but you know at some point because the landscape is now very different i have argued you know we don't all agree on everything here but but i have argued i think we should put more behind the member paywall if we're going to be a more member supported show and what everyone else does is like their their after show their or their pre-show like everyone that's what like if you look around the landscape of other podcasts that have member programs kind of in in the same you know extended universe as our show that's a pretty common thing a lot of relay shows do it you know like there's a lot a lot of shows that do that and we kind of wanted to you know discuss this you know with you the listeners i know you're not like here in the room with us but but kind of just get some feedback like i can see a future in which we might go all membership and have no ads and then and just put like you know the after show and maybe chapter markers or something you know some combination of like you know most of the show would still be free and we would have on a regular basis promos for membership in the show the same way we have sponsorship breaks now we would have like you know a member promo or two or three in every episode and then the maybe the after show becomes member only and chapters or you know something else whatever we come up with plus the stuff we do now you did so well before telling everybody they weren't in trouble i think you need another disclaimer now we are not announcing anything we're not changing anything chill out we're just this is just discussing it because and the reason by the way the reason we're discussing it like marco alluded to this but to be more concrete um so yeah the ads are super duper down this year right uh but we're not thinking of doing anything right this second but for example if next year has a similar decrease to this year like if the ads just go away like not by our choice but like hey guess what no one wants to buy these kinds of ads anymore they only want to buy the kind of ads that you don't want to have on your show and by the way even before dynamic ad insertion and everything we were already kind of out of step with the market in that where we have 100 control over what ads we run and we're picky we will you know reject ads from companies that we don't want to have ads on the show we have always done that we continue to do that even though we don't have enough advertisers to fill the slots they still get the same thumbs down we will remove advertisers that we thought were good but turned out not to be that is not something that happens in a marketplace where people are like oh i just want these ads everything is a commodity i don't care what shows they run on blah blah it's just you know we've always been out of step with that so anyway if we continue down this road and it's like next year and the year after the ads just disappear we need to think about how can we support the show so that's why we're musing about this at first a that's not why we're making any we're not making any changes right now about this but we have to start thinking about it because thinking ahead is an important part of running a business you don't think about this after the ads go away entirely you think about it when you could see a possibility that they might go away or dwindle to a point where they're no longer worth having at all and then you have to think about what can we do to you know how can we how can we get some of that back and so this year um membership which used to be uh so you know in all previous 10 whatever years of the program advertising is how we made the vast majority of our income and then membership came along and advertising was still the way we made the vast majority of our income suddenly this year membership it's flipped membership has become the way i think it's edged out ads and not because membership has grown that much although membership has grown and we thank you a lot for it the ads have gone way way down which is not the way you want to see things go like if your income is going to flip from like it used to be you know mostly it was this and then this was a little pool on the side if it flips fine but if it flips because the thing that used to be big becomes really really small that's not great so we're staring at this and saying what do we happen if that what happens if that ad number which used to be the majority of your income like think about this with your own income if the way you make the majority of your money went down by half you'd be thinking about stuff yeah you'd be thinking about what you know what can we what can we do about this what can we change going forward so we're definitely thinking about things and it's tricky like we if you think about it i'm sure people will send us feedback or whatever but like part of what you're buying as part of membership um is you get an ad-free version of the show but if the show is already ad-free that makes that less valuable because everybody gets an ad-free version of the show so why would you pay extra for it you just don't have to be a memorator you can get the average in the show you know we also sell the bootleg you get a merch discount uh you get to get the member specials there's all sorts of stuff like that that's why marco was musing about okay in a world where there are no ads how do essentially we shore up the value of membership because if we just got rid of the ads we think membership would go down but people would say oh i was being a member because i didn't want to hear the stupid ads now the ads are gone and now also membership gets cut in half and it's pretty soon pretty soon our income just goes down down you know so you can see why we're thinking about this yep uh my idea which we may or may not do we haven't discussed it yet uh is you know i sent out that survey about uh what was what was the survey about originally i forget oh well it was about tech versus non-tech stuff right oh yeah that's right we did a survey about the member special because we wanted to hear if we were doing the right things for the member special and that was incredibly valuable we found out that we our mix of tech versus non-tech was incorrect but also that it was kind of about in the middle and it wasn't that you know anyway it was really valuable it's like a three question survey or whatever so probably at some point i would like to send out another survey that asks people's opinions about membership now this is tricky because you can ask people what they're going to do like if we did x how would you feel about it how do you feel about membership now and people will give their opinions but people's own predictions about their future behavior is not always accurate that's just part of the world of surveys so we'll have to think about whether that's worth doing or if you know if we're going to do it all or how we're going to do it but basically you the listeners have always been the most important customer that's part of our value to advertisers is you our listeners because we think our listeners are more valuable than the average listener which is why we get pretty good ad rates because the people who listen to the show who are interested in technology are not the same as just random people who are flipping through a bunch of podcasts on spotify like our audience is valuable and no we're not going to give you all their demographic information and, you know, give you their IP addresses so you can figure out where they live or whatever.

2:00:38But we know for a fact that they are valuable because advertisers get value out of them. Because, you know, people with services that appeal to this audience, we can we can characterize the audience by the kind of show we are. So the audience of this show is where all the value is. And so that's why we're very interested in what the audience of this show thinks about the value proposition of membership of the current ad thing of things that they would find attractive going forward and things they would find not attractive going forward so we are definitely musing about this but as you can see if you think about it it's not an easy problem there's no sort of like just do this and you'll be fine none of those exist so we are thinking about it we'd love to hear your feedback from it uh about this issue um and maybe at some point in the future we will compel you to we will ask you nicely to fill out some other terrible google forms thing where we'll gather some data the problem the problem with the surveys though is like are the people the number of people who filled out that survey about membership even though it was not confined to members like hey what do you think of our member specials very few people filled it out in terms of the percentage of our audience.

2:01:45but the question we have about the future of the show really needs more of our audience to fill out but who wants to fill out surveys all right so i don't know like i'm not a survey master i don't understand sampling theorems and stuff like that but uh even when the time comes i'm sure the same subset of enthusiastic people who really care about the show will answer the survey but when it comes to questions like this that enthusiastic subset is probably the ones that we need to listen to because they're the ones who care the most about the show they care to fill out a survey or whatever anyway uh we're thinking about it we hope you're thinking about it too we just wanted to keep you in the loop so you know what we're dealing with over here and why we're thinking about this topic at all and also like i think it's it's worth you know for for you for you hearing and you know trying to throw out ideas and or thinking about like what we should do and everything we could be a solely member supported show in theory like that that is actually within reach you know we're not there with today's member numbers but seeing how seeing how far we've gotten with membership, you know, without having that much that's member exclusive, I think we could get there.

2:02:46Like, I think we could replace our previous sponsorship income 100 % with membership in theory. Again, it would take some growth from the number base, but it's not like a totally ridiculous, unattainable number. It's something that we have now proven is actually within reach and could be done. I'll show you the numbers after the show. You're being very optimistic. I also believe we could do it, but it is not a slam dunk, especially in light of the things I just mentioned. It's like, oh, so you don't have ads anymore? Membership could go down. That doesn't grow membership. That decreases it. So there's a lot of thinking we have to do.

2:03:22And I'm sure people are already writing their emails right now that are saying, I would be a member if you just lowered the price. I can tell you that the math about lowering the price, because obviously, as we talk about Casey's app, whatever your price is, it needs to be lower until it's free. And then we get back to advertising-based things or whatever. So it's really hard to make that back in volume. Like if you cut your price in half, you'd get twice as many customers is almost never true. I'm sure there's some economic theorem involving the elastic that I don't know the term for that explains this or whatever.

2:03:51But if you do the math on it, especially with where you're changing things, where a lot of people, what people are paying for with membership is an ad free show. And now the show is ad free for everybody. It's not so simple. Again, I agree with Marco that is definitely plausible, but it is not simple or easy. And it's not something, you know, we would have to, again, ask our listeners how they feel about it before we say, oh, this will totally work because it's very easy to just not only not fix your problem, but just to make it 10 times worse. You know, I think it's important. We talked about this a little bit already, but I think it's important to say it again.

2:04:26You know, I'll speak for myself. ATP is the lion's share, overwhelming majority of the List family income to the point that everything else is basically like it's a Disney-sized dot, if you will, compared to everything else, compared to ATP. I would be losing my mind if members weren't here helping keep us afloat. And I mean us in both contexts. I mean ATP and I mean the four of us in the family, five if you include Penny. Genuinely, I know this sounds like I'm just sucking up and maybe I am, but I also really mean it. If it weren't for members and the amount of members that we have, I think the list, I won't speak for you guys, but the list family would be in a real tough spot right now.

2:05:15Like to the point that I would probably be starting to think about applying for jobs, if not actively applying for jobs at this point. And part of that, by the way, for people who don't haven't dealt with advertisers is that membership pays monthly, essentially for the monthly members or annually for the annual members. Advertising does not work like that. Advertising pays whenever you feel like you can get the money from them. And yes, they're supposed to, you know, they're supposed to pay after X number of days or Y. But I can tell you that one part of the business kind of like shrinkage. And if you know the retail business, you know what the term shrinkage means.

2:05:50I believe that's the Seinfeld term. I think they call it just shrink, I think. I think shrinkage is what it is. I've heard both. For people who don't know, that's a term of like, if you run like a clothing store, some percentage of your stuff is going to get stolen. And you have to factor that into your business. And one of the things you have to factor into your business, if you have a podcast where you have advertisers, especially in the tech world, is that some of the people who buy ads on your show will never pay you. That's just a thing that happens. The ad will run and you won't get paid.

2:06:17Then the company will go out of business, right? And if it's like a startup and they paid for an ad for their startup, they may go out of business before they pay for your ad. And believe me, when it comes time for the creditors of that VC funded startup, podcast advertisements are really low on the list of getting that money. So that's just something we have to factor in. But second thing is when people do ad buys, they buy them in a big chunk very often and you get that big chunk after they have all run much later. So Casey's family would be flipping out because he'd be going literal months with no income, waiting for that big ball of advertising money that is not a sure thing to hopefully land.

2:06:51And that is a potential cash flow problem. But membership, on the other hand, is nice, regular income that comes on a monthly or annual basis that is way more predictable than getting money for advertisers. Yep, this is exactly it. And not only that, but on top of everything, this is what Marco was talking about. it used to be that you would wait for all your ads to run and they would pay you in one big lump and it was like Christmas even if it was in February or whatever. But that was when we had a direct relationship with advertisers. Now we have these agencies and so the agencies are potentially getting a tremendous lump sum of money from the advertiser and then the agencies wait for the advertisers to pay them and then of course because it's an agency they have to make everything difficult, and then it takes literally months for the money that is owed to us to eventually arrive at our doorstep, it's more difficult than you would imagine.

2:07:46And yeah, again, I say this because I want members to know how incredibly valuable you are to all three of us, because hand to God, I would be in a bad spot right now if it wasn't for membership. Obviously, we have savings. I'm not saying I would be like destitute or anything like that, but, but I would be dramatically changing my life and thus my family's lives. If it wasn't for members, I, I don't know how to stress how serious I'm being. I am being extraordinarily serious and that's how much we appreciate the members. And, and I can speak for myself when we've floated some of these ideas, again, we're not changing anything right now.

2:08:27When we floated some of these ideas about like taking the after show and pulling that behind the paywall or what have you. I am devoutly against it. And we haven't gotten serious enough about it to get into a proper fight about it, but there may be a fight brewing between the three of us if it gets to that point. But that being said, at some point, my kids got to eat. And although there are a trillion things I would rather do than pull the after show behind the paywall, that is something that is on the table if we really get that desperate. And gosh, I hope not to. I really hope not to. And again, we're saying all this in front of you because we don't want this to seem like a, oh, they had one bad week.

2:09:09Now they're pulling everything. Like that's not at all what this is, but it would be a bad idea not to think about it, like Marco was saying. And because we respect and value all of you, member or not, so much, we want you to know kind of where our heads are because we don't want this to be a surprise if in six months or a year or maybe five years in the best case scenario, something changes. And in all of you are like, wait, what? We don't want that. Wait, what? That's why we're here with you right now. Again, you're not in the room, but you're in the room having this conversation with us. And we've got some stuff that we want to try.

2:09:46We have some member specials that we have ideas queued up. We don't have any specials queued up, but we are recording one this week. We don't know when it'll be out, but we're recording one this week. which we think you'll like. So we're trying to do what we can, again, to be additive and not take away something that previously existed. But eventually everyone's got a price. And if things get bad enough, you know, even I, who is devoutly against, and I'm picking on the after show just because it's an obvious example, I am devoutly against taking the after show behind the paywall, but there will come a time that if ads continue to stink, if membership goes down a lot, or, if we need more membership in order to keep the three of us going, even I will have a price at some point.

2:10:32Yeah. And also, we have other options on the table. We just would rather not take them. One thing we could do is drop our ad rates down and drop our standards down so that we can get more ads. That, I think, is not the direction we want to go. I don't want to be reading crappy ads for things I don't really believe in. i don't want to stick our name on something that that we would rather not stick our name on um and and there are certain price floors below which like it's not really worth doing the ad and taking the risk and everything i mean that's why i think like i see us leaning more into membership in the future in all likelihood um i mean again we're not announcing any changes yet because we haven't made any changes and we haven't decided any changes yet and heck i mean ads take so long to pay us that we could stop taking ads today and we would still have ad income for the next year or more or more things go yeah like we have we i mean the amount of money that we are owed and the other thing to consider is the ad market does fluctuate this is the biggest downturn we have ever seen by far and it could just be continuing to crater which is why we're thinking about this but it could also turn back up again and that's another reason why we shouldn't suddenly start taking ads for like garbage fake nutritional supplements that we don't believe in or like you know whatever all sorts of the terrible ads that you care about uh you know that that uh on other on other programs you hear these ads you're like i can't believe that they're actually smart like that would destroy the value it would i think it would destroy our reputation but also it wouldn't be recognizing the value of our listeners because we don't our listeners are not just a random subset of the population they are attentive listeners who care about our program who buy who are interested in products related to technology they're not probably interested in products that have nothing to do with it or like like that's why when we pick our advertisers we try to pick advertisers that are a good fit for our audience and that who are willing to recognize the value of our audience and not treat them like an undifferentiated sea of people that are the same as the average customer for all podcasts across the entire world that's the problem is where the market is headed with all these big agencies and now big exchanges and big DAI platforms and everything, you're not really buying the show as much as you used to.

2:12:52And so our extra value of how good our listeners have been to direct advertisers and direct response advertisers, you hear Squarespace a lot. That's not a coincidence. They are a direct response advertiser. We work with them directly and they see a ton of value in our ads. And they They have been our longest running and biggest sponsor by far. We should mention Linode here, by the way. This is a thing that particularly hurt ATP. Linode has been a past sponsor. This is a company that Marco was using before they were a sponsor, a company that he liked that was a perfect fit for our show, technology-related, product we believe in.

2:13:29And like Squarespace, the reason they're willing to pay for ads on our show is because they know our audience is potentially in the market for hosting on Linode, right? and because once they get a customer that's recurring revenue because once you start hosting something you pay that hosting bill every month just like with squarespace so it's absolutely worth it to them to pay what it costs to run an ad on our show to acquire those customers knowing full well that our show is full of people who might want to host something on linode uh and they were a great sponsor for us we loved having them as a sponsor they were a great fit for our our listeners and we liked them we liked the business and then akamai acquired them and they stopped advertising on podcasts and that hurt us a lot above and beyond like it's like yeah so that market is down which you know marco sees in a general way and across overcast advertising but atp in particular linode was such a good sponsor for us and why did they buy so many of our ads because they were such a good fit for our audience but akamai doesn't want to run podcast ads so yeah that was uh you know adding insult to injury yeah like if you look at how many of our episodes last year were sponsored by squarespace and linode it's it's very frequent it was like i they probably bought a similar number of ads like between the two companies each um and and so to lose linode really did hurt that that was a huge amount of our inventory that is now just that used to be sold now is gone if you think about next year squarespace says yeah we're not doing podcast advertising anymore like that would be massively destructive to the entire podcast industry but also particularly atp because again squarespace i mean you hear squarespace ads in everything right but squarespace for atp listeners that is much better than squarespace on a comedy podcast who on a comedy podcast is running a website at all i know squarespace is going to pitch it but people listen to atp they should have a website and they should buy a domain from one of our sponsors and they should host it on one of our like it's a perfect fit for us so i really hope uh they don't go the way that linode did oh yeah if we if squarespace ever pulls out of our of our show as as an advertiser i think that kills our ad program like i i that's when we go member only i think because i don't i don't think the ad program i don't think our ads could survive that losing lenobe was bad enough losing squarespace also would would be devastating and that's also that's part of the reason why i'd like to push us more in the direction of member only because i don't like having to rely on one source of income like that like that's not good for diversification and security.

2:15:50So, yeah. But yeah, in general, that kind of relationship where we're dealing directly with the sponsor and they're selling a tech-based subscription income product where it makes sense for them to pay the high acquisition cost of podcast advertising. And one that we actually like and believe in and think is good. Yeah, exactly. Like Squarespace and Linode, I'm able to talk about those constantly because I use them both. Whereas any other random podcast... Can you believe Squarespace and Linode didn't sponsor this episode i know right like any other random random podcast ad you hear is you know not nearly it's not nearly as easy for us to to say oh my god this is perfect for our audience you know and and and have it be worth it to them as well so anyway all this is to say like as the industry moves towards everything in podcast advertising being just commodities where you're just you're just buying a certain number of impressions on a certain demographic our show loses that because no one is buying high quality listeners specifically on a marketplace what you're buying is numbers and demographics and we we can't give you that yeah they just want warm bodies and and they need to know the demographics they want to know you know where you live and they want to know your ip address so they can find out everything that you can find out from an ip address which is a frightening amount of information they need that information to target their ads and once they have targeted their ads they don't care where they run and what shows they run they just want to target those things no matter where they are and it's just an undifferentiated sea of warm bodies and that is value destructive to our podcast which has a particular kind of listener that has a particular kind of value to a particular kind of advertiser by the way it's worse it's worse than than that than that targeting they also want quote attribution this is this is like possibly the most invasive form of ad tracking usually because what attribution means in the ad world is they want to track who the ad has been served to and that way if later on that person makes a purchase they're able to associate this purchase was made what after this person saw or heard or whatever this ad and that ad might have been a week ago or it might have been on a different device so that's why they have all these like all these different tracking mechanisms try to fingerprint people and try to track you between different apps and services and different devices in different times because if an ad platform can tell advertisers this purchase was directly attributable to somebody who clicked on or listened to or whatever this particular ad you ran that's a pretty strong feature for an ad platform and they don't they don't want you to have to remember to use code atp because code atp doesn't identify you there's no identifying information to that they want to know which specific person bought and they do not want to rely on you remembering to go to the landing page or clicking a link in the show notes or entering a promo code they'll do it all behind the scenes and they won't just know this person came from adp they will know literally you know who you are based on your ip address yeah and and they don't have to do it themselves because there's lots of podcast tracking and hosting and ad serving services that do this for you you know i i made this feature in overcast a while ago where i i added this privacy button on every podcast's page in overcast you can tap that and you can see what domains and services those episodes are served through and if you look at the privacy page of any major podcast any any podcast that that like has like a big name and a staff look at click that privacy tab and you'll see the same handful of services on many of them and those and many of those are inter podcast tracking services that will take this data that you know they'll know who they served each dai copy to they'll be able to track it to certain demographics they'll be able to attribute purchases to them later which means a lot more tracking so that's that's the world of podcast advertising largely there are still exceptions like our show but we're dwindling and the world is becoming more hostile to us and more difficult for us to sell our ads in and so this is the direction it's going and this is the direction it has already gone like that this this fight is largely over like shows like ours lost like that's this is not the way things are mostly done anymore and it's only moving more in that direction we are very lucky that we have the membership program and that we established it relatively early so that that way we have we've been building an alternative and we could run the show entirely on that theoretically you know with some growth and and but it's not again i don't think it's out of the question i think we could actually get there all this is to say the future the specifics of the future are uncertain but but i think the future of this show is very is very solid and i think we have lots of solid ground to to rely on here to to keep building on our members are great and we thank you so much and uh and hopefully we will continue to try to figure out ways to get more members because when the ad market does finally crater for this show whenever that happens hopefully it never happens But if that happens, and that's not out of the question, we now have something else we can move to, and that's pretty great.

2:20:51Truly and genuinely, thank you to all the members. I cannot overstate how much we appreciate you. I think I'm pretty sure I speak for all three of us, but certainly all four of us in the List family, that's what we appreciate about you. Yeah, it's incredible that we have such a strong backstop to fall back on as our ad sales are tanking. And part of that is because we panicked when COVID was coming. Like, yeah, not panicked, but like, but in general, again, forethought, we are all very good about, you know, sensing danger. But we sense danger and we sense danger at COVID because no one knew how anything was going to happen when COVID is like everything was up in the air.

2:21:30Who knows what's going to happen? And so we need to have a backup plan. And we started membership. And in hindsight, that was in hindsight, we didn't need it to save us through COVID because actually advertising, yes, it went down, but it kind of picked back up again. but boy are we glad that that back then um it's like oh we love our our you know members and stuff like that here's the thing it's also a more comfortable business relationship for us because we feel like you're paying for a thing directly that you want from us and we give it to you and that makes so much sense and it's so straightforward advertising in the midst it's not impossible and there are you know we but it complicates it because there's three parties here there's the listeners there's the advertisers and there's us don't forget the agencies and the marketplaces and the sales people yeah and obviously they're over complicated but like conceptually like again we can we can navigate that we can try to find good advertisers for our customers and have a good fit and all that or whatever but it's so much simpler to just say you listen to the show and you like the show and we want to give you the show and we want to give you the show that you like and then you pay us for it it's just so straightforward right it's just it's it's uh It is mentally a relief to the degree that we can make more of our customers be like that than like advertising.

2:22:42But we're just not entirely sure how to make that happen to the degree that we don't need advertising at all anymore. Yeah, but when we first started doing this, the idea that it would ever be in possible reach distance of replacing ads, we would never have guessed that. We specifically didn't. Like when we were talking about doing this, like we never thought it would even be a chance that it might replace our eye at income. Advertising going down the toilet really helps it. Yes, it definitely has closed the gap quite a bit. Suddenly it's looking a lot better. Can you match zero? Because I think, yeah.

2:23:24Oh my. It's funny, but it's not funny.