Inside Podcasting’s Fight Over Netflix, YouTube, and Creator Control

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2:13Peter Kafka:From the Vox Media Podcast Network, this is Channels with Peter Kofkin. That is me. I'm also Chief Correspondent at Business Insider. Hello to everyone with a deep interest in the operations of the New York Times and everyone else who listened to last week's chat with Times editor Joe Kahn. Welcome. Today we have another nuts and bolts discussion, which is also about video, a bit. I'm talking to Chris Balfe, who is CEO of Red Seat Ventures. Or as I like to call him, he's the guy helping people like Tucker Carlson and Megyn Kelly make money with their podcasts, which are, of course, talk shows you watch on YouTube and TikTok and Instagram.

2:52Peter Kafka:I talked to Belf on this show right after the 2024 election when lots of us were trying to figure out what a podcast meant and how they worked. Since then, Fox bought Belf's company and he's been busy expanding his empire, which is something we talk about, including the fact that two of his biggest stars in his portfolio had messy breakups with his current owner. Got all that? What I really wanted to talk to Balfe about is the current podcast landscape. I'm particularly interested in Netflix's venture into podcasting, whether his talent is interested in those deals and whether Netflix really makes sense as an exclusive home for podcasts.

3:27Peter Kafka:I also wanted to talk to Balfe about clipping, which is an old idea with a new name. Because, as you'll hear us discuss, clipping is really about giving giant platforms like Instagram and TikTok your content and getting zero dollars in return. That may be unsustainable or it just may be the way of the world. Okay, that is a long intro. Here's me and Chris Belf. I'm here with Chris Belf. He is the CEO of Red Seed Ventures. Hi, Chris. Hey, Peter. How are you doing? Good. I just had a long rambling introduction, which I'm now deleted out of this podcast, but it was explaining who you are and what you do.

4:01Peter Kafka:But why don't you just tell listeners what Red Seed Ventures is and who owns Red Seed Ventures these days? Sure. So Red Seed is a podcast and creator media company that I founded about 11 years ago with my brother Kevin and a couple of others. And over the years as the podcasting and creator business sort of grew and consolidated, we became really focused on big creators and helping them to create our services farm across all aspects of growth and monetization. about a year and a half ago. We were acquired by the 2B Media Group, which is part of Fox. So the shorter version I say is this is the guy who helps Megyn Kelly and Tucker Carlson and a bunch of folks on the conservative slash right wing part of the spectrum, not exclusively, make and sell their podcast.

4:55Peter Kafka:You guys also do true crime. I think you're best known for the stuff you're doing with political commentators. Yeah, I think that's fair. And particularly when we started, right, in pre-Fox, the pre-Fox era of Red Sea Ventures. You know, we started in News Talk. That's where my sort of history was. And so we found our way to a lot of interesting clients in that space and had been very successful in that space. And now we're taking the opportunity post-Fox, I'm sure we'll talk more about it, but to really expand into all genres. And we've done that with some of the biggest shows in the country.

5:29Peter Kafka:Yeah, so if you want Chris's full origin story, I did talk with him in the fall of 2024 after the election. So I'm not going to go through all of that now. And Chris is someone I call up when I have a question about the podcasting business. I want to know how something works. And sort of that's what I want to do here is there's some new developments over the last couple years I wanted to ask you about. But I do want to talk to you about what life is like at Fox. This podcast that I'm talking to you on right now is produced by the Vox Media Podcast Network, which now in retrospect seems quite similar to what Red Seed Ventures was and is doing.

6:06Peter Kafka:And this, instead of being owned by Lachlan Murdoch, Vox Media Podcast Network is now owned by James Murdoch. So there's that. What is life like for you as part of Fox as opposed to working on your own? What can you do now that you couldn't do before? Yeah. I mean, I think it's been – I think when we were going through the sales process, a lot of the conversation was around how it was going to work and how we were going to be able to kind of manage the team and grow the business. And I think Kevin and I were rightfully skeptical. right and listening to that conversation everybody who's buying a company says other founders are going to be able to keep a control and then we don't want to change anything we want you to stay just the way you are yeah exactly and then the opposite happens i think what's so interesting about this and and you know i'm now a year and a half into it is it it really is a great fit like they have lachlan and my boss paul chinesborough have a vision for how fox should play in the creator economy and it's exactly my vision and so we're really aligned they've given us the resources to go big.

7:14We've grown by, oh, I don't know, almost 100 people since we were acquired. And we've got many more openings, particularly in sales, that we're filling. And most importantly, we're building out, I think, all of the different components that creators need in a way bigger way than we were before. But also, we're able to play with the biggest talent in the space. I mean, Crime Junkie and Audio Chuck with Kill Tony and with lots of others that will be announced soon.

7:42Peter Kafka:When I talked to you, your biggest clients were people who had publicly broken with Fox, Tucker Carlson and Megyn Kelly. And I think there was some question of like, oh, how will Tucker Carlson and Megyn Kelly feel about working with a company that is owned by Fox? They're still working with you. So I'm assuming that has been resolved. Was it an issue when you guys were initially purchased? Initially, there was definitely like a group of articles that came out about, you know, Megyn Kelly's back or whatever. And I think obviously she was sensitive to that as she should, because it just wasn't true.

8:16You know, I just, it's not a situation where it's not like being on Fox News channel. We're a creator services firm. We work for them. We, Megyn maintains her independence, you know, now as before. And I think you don't have to take it from me. Just listen to what she says on the show about, you know, everything and see whether or not we have any editorial control over that. I can tell you for sure that we do not.

8:38Peter Kafka:Did you have to talk to – I mean, what was your trepidation about those two talents in particular? Did you have to spend time with them saying, look, here's what's going to happen, here's what's not going to happen. Are you okay with this? Was there a question that they might not be okay with it and if so, might not stick around? Yeah, I mean, of course, it was their choice. And so, of course, we felt that I did go to them both and had that conversation with them. And, you know, to both their credit, they were like, great, great for you. Great for Red Sea. And for me, let's see, like, if what you're telling me is true, that nothing's going to change and that we're going to continue to be able to be fully independent.

9:18And, you know, then, Chris, we support you and we support Red Sea and let's go. But I think the devil's in the details. And I think we've I think we've more than lived up to that bargain.

9:28Peter Kafka:And so, again, back to being inside Fox. So they gave you and your brother money. That's great for you. They give you more resources. But in terms of what you said, there's a vision for the creator economy and how Fox plays in that. What does that actually amount to? Because obviously they had this giant platform being Fox News and Fox Broadcast in general. What are you giving them that they didn't have prior to this? Well, I think that we did have a pretty unique vantage point into how podcasting in the creator economy works for creators. And it's a different spin, right? I think when you're running networks, networks work in a much more top-down way.

10:10There's ownership, there's control, there's all these things. Really podcasting in the creator economy up till now, something I'm sure we'll talk about when we talk about Netflix, but up till now, it's been much more about creator ownership. I do what I want and you help me. And that's the way we run Red Sea. You do what you want and we help you. We help you grow the show, monetize the show, even produce the show in some cases, not all. But, you know, that's that's a very different way of working than I think a lot of media companies go into the sort of plan with. And I think that's one of the reasons that sometimes there's a conflict between how do major media companies become creator friendly.

10:52Peter Kafka:so so on the one hand you're telling your talent that you work with whether they work at fox or they're just have their own llc or whatever it is um we're gonna service you we're gonna sell ads for you you're gonna help produce your show um i'm just trying to understand sort of how fox thinks about this you guys are a nice business a decent sized business um but you're not going to move the needle in terms of your P &L for Fox in the near term. Is this something where they're looking and saying, we imagine a world where there's lots of important voices that are not on Fox and Fox News and we want to work with them?

11:32Peter Kafka:Is this a hedge? Like maybe this doesn't amount to much, but we can sort of dip our toe into it. How do you think, what's the best way of describing how they have described it to you? Yeah. I mean, I think that really we do intend to have an impact on Fox's P &L in the medium to long term. I think that the creator economy is at a size, whether you believe it's 10 billion or 50 billion or whatever the number is, that we can take a big bite out of it and have a meaningful impact. And I think that inside the company, we look at Tubi and the success that they've had at Tubi growing the business from whatever, three or 400 million than it was when Fox acquired it to what it is now, which is well over, I don't know what number is out there, but well over a billion dollars.

12:23I think they put a billion around it, yeah. Yeah. So we have a growth trajectory because the resources were being provided that I think could put us on the map. With that said, that's going to take some time. And in the meantime, we do bring sort of creator DNA to the other businesses as well and allow the other businesses to say, you know, how do we accelerate our own creator strategies across all of the internal, you know, Fox businesses, which is something we've done.

12:49Peter Kafka:So I'll just try asking it maybe a third way. Is the part of the idea that you have someone who is on contract, who's working for Fox, Jesse Waters or whomever, I don't, I assume Jesse has his own show. I don't know. I should have known. And you say, oh, in addition to being on television, and we'd also like you to podcast. Here's a business that will help you create a podcast for you. Is it, if Jesse Waters wants to have a podcast, he could work with you? Does he have to work with you? Does he get to shop that deal around? I'm just trying to think how Fox thinks about this. Yeah, I mean, I'll tell you very specifically, you know, one way they're thinking about it because my boss, Paul Cheeseborough, has said this before, which is that he thinks about Red Seed as on-ramps and off-ramps.

13:37So on ramps for talent that are maybe coming to the network, whether that's Fox Sports, Fox News, Fox Entertainment, whatever it may be. Brett Cooper is a great example of that, who joined as a Red Sea creator and then ultimately also became a Fox News contributor. And then off ramps, maybe you were, you know, you're ready to go independent and Fox can continue to play a role in you sort of leaving whatever network you might have been on and playing a role still through Red Sea. So I think that's one that I think that's one way to look at at additional value to Fox. I think that ultimately we're going to be judged as being our own business.

14:13And because we're building something, you know, big and unique. But that's a good it's a good bonus for sure.

14:20Peter Kafka:And last on the Fox side, are there are you precluded either contractually or just more sort of business wise from working with a well-known liberal? If the Pod Save America guys didn't have their own network, would you be able to work with them? Would you want to work with them? Does it make sense for you to sort of stay ideologically consistent? I think it does make sense. And I think that you will see us do a deal like that at some point. With someone who is ideologically different than the rest of your stable. Yeah, for sure. For sure. I mean, I think ultimately the Red Seat Ventures, the Red Seat is named after the Red Seat at Fenway Park.

14:55It's not named after any ideological, you know. I think that our current clients certainly understand that we're not, you know, we're a service provider for everyone. And I think it's a common, I want to say misconception, but people aren't wrong in thinking that. We do have a lot of right of center news talk clients. But I think that as we expand into all genres, it's only natural for us to have clients on the liberal side. There are a few that have approached us and, you know, we could definitely do a deal there.

15:24Peter Kafka:Okay, let's zoom out and talk about the podcast business more generally. Two big things that have happened in the last year and a half since I talked to you. First, Spotify made a big push to get into podcasts and was offering their own monetization strategies. They were already in podcasting, but they made a big push. And then Netflix has gone out and said, we'd just like to buy shows. We want to have exclusive rights to big popular podcasts. We want them to come off of YouTube and everywhere else and basically exist exclusively on Netflix. So let's start on the Netflix and this experience. Do we call it an experiment or do we think Netflix is fully committed to the podcasting idea?

16:05Peter Kafka:I think it's an experiment. Why do you say that? I think that they've publicly said we're still testing things. We're trying to see what stuff works, what stuff doesn't. And I think they've done some short-term deals. I think they've made offers that have been really high for some things, really low for other things. I think they're figuring it out still. And and what is your sense of how that experiment is working? Do we know if people are watching these shows on Netflix? And if so, is the Netflix podcast consumer different than a podcast consumer somewhere else? let me preface this by saying these guys built a 300 billion dollar business and i didn't so they're pretty smart um i hate it i hate it for creators and i hate it for netflix i think it's it really for creators the the whole appeal of the creator economy is controlling your own destiny and distribution in the way that you want to and i think that by a you know asking people to come off of youtube which there's there's no reason to believe if you have 10 million youtube channel subscribers and you come off when you go back on that channel will still be active like i think that you're taking a huge risk there so you're saying on the creator side you you should not view this as an experiment this is you fully fully committing to netflix whether you whether you think you are or not yeah and and you no longer own the distribution you know the whole the whole beauty of this is um if i'm doing a show on december 31st and then i do a show on january 1st, I own that distribution, or at least I have access to this RSS feed or this channel.

17:37With Netflix, if my deal's up and I don't like the renewal terms, they're going to take away my audience on January 1st. I mean, that's absolutely antithetical to everything that we have been building in the creator economy. It's going back to a TV model in all of the ways that are bad in having gatekeepers and all of those things. But I also think it's bad for Netflix because ultimately I know they're a little bit in a race with YouTube or they think they are, but I just don't see how taking something that was free on YouTube yesterday and making it paid on Netflix today creates any value for subscribers.

18:15Peter Kafka:I think the argument would be, one, if you were a big Barstool fan, for instance, and those guys have done a Netflix deal, you very likely have Netflix and it's not a big deal for you to move over from watching on YouTube to watching on Netflix. And then presumably the other part of the equation is there's many more people in the world who are not Barstool fans or who have not encountered Barstool and they are Netflix subscribers and we are going to increase your audience. So do we know if that is playing out? If the people who are watching these shows on YouTube, on Spotify, wherever else have switched over?

18:51Peter Kafka:And do we know if they're finding new audience? What kind of data, anecdotal or otherwise, is there about how this is going? Yeah, I don't think there's a lot. I mean, I think anecdotally in reports that have been kind of circulating behind the scenes or whatever are that it's not – the engagement isn't that high or whatever. But I think it's too early to tell. And I don't know. Netflix famously doesn't give data to movie studios and stars that are asking for data. They're certainly not going to give it to us. They've gotten a little better about that. everyone who goes into these deals understands the dynamic, right?

19:26Peter Kafka:We're taking on risk because we're going to leave YouTube in our audience. And so we're going to Netflix. Netflix is going to have to basically overpay us to compensate for that risk, which is something Netflix is used to, right? That's how they got into originals was paying people a lot more than the market rate because they knew that this was a gamble. And also there were other parts of the economics where they needed to take the back end out and give you the money up front. Have you heard about anyone saying, oh, I regret this deal now? I wish that we had either asked for more or the money we're making is not going to make us whole for the audience we've lost.

20:04I don't think so, because I think to your point, you know, everybody went in eyes wide open enough. I think there was from what I heard, there was a first round of deals that came out and the agents were like, this isn't even close. And then they kind of get back to reality and came in with deals that were more mind-blowing. And the companies that took them knew what they were getting into. Like, obviously, Barstool is a great example. I don't think that they had this massive YouTube business for those shows that they were leaving behind. And so, great, go for it. But know what you're – I think that's why it's trickier for creators that do have, you know, big substantial YouTube businesses for the long term to take that risk.

20:41Peter Kafka:Are there people that you know of either because you work with them or are in that orbit where you know they have turned down a Netflix deal? Oh, for sure. Yeah. I mean, what kind of numbers are people walking away from? Big numbers. You know, I think the feeling of it's more for top talent. They honestly have a lot of places that will give them a lot of money, right? Including me and including Netflix and including Spotify and including Sirius XM. And so, you know, if you're sitting there with a big show that has a lot of competitive bidders, Netflix is just another competitive bidder in that scenario.

21:16And thinking about what you're giving up in the short, medium and long term to go there is a big consideration. I think that everybody realizes, you know, Netflix is not a small platform. So it's not like you're going to this, you know, I wouldn't compare it, let's say, to Howard Stern going to SiriusXM where you have this small, you know, audience and you're kind of helping, you know, build it. Like I get that Netflix is a mass platform, but the other trade-offs that we've talked about around creator independence, around not controlling your own destiny, around potentially killing your YouTube channel are serious.

21:48Peter Kafka:When you have talked to the talent you're working with and they say they're interested in a Netflix deal, I assume your pitch to them is the one you just made to me. You're going to lose independence. You're going to lose your ability to sort of like nurture this audience you have already built. Is that sort of the gist of it? Pretty much. I mean, we're always on the side of talent. So I would start with what's the offer, right? Like, let's look at this together and decide if I'll very clearly tell, you know, you whether I think you should do it. And there are cases where, you know, we've always historically been against Spotify video, but we're doing more Spotify video, like because there's a time and a place for every deal.

22:26Peter Kafka:So let's talk about Spotify video. Spotify made a big push into saying, hey, we very much aimed at YouTube. We think this is a big business. We'd like to participate in it. we want you to do video deals with us. You just said we have been opposed to that. Why were you guys opposed to your talent doing Spotify deals? Yeah. In general, we were opposed to Spotify video because the way that they monetize the video is different, right? So in YouTube land, we upload the video. AdSense sells against it. We have host read ads that are in it. So we've got these dual revenue streams and we make net additional dollars when we start a podcast that starts on YouTube.

23:06With Spotify, they're basically saying, if you move to video, we are taking away programmatic audio inventory for all Spotify video premium subscribers. They're no longer going to hear your programmatic audio ads. And instead, we're going to give you a percentage of subscription revenue that we, in our sole discretion, determine is the right amount of money to give you. And so just like creator independence concerns on the Netflix side, and anytime platforms are doing these types of things, look, we know they're looking out for themselves, not for us. And so that gives me some pause.

23:39Peter Kafka:Is your concern that the creators make less money ultimately when they go to Spotify and do that deal, or just they don't know what they're missing out on because of the black box and Spotify's in charge of doling out the money? It's both. I think, and again, I'm giving you a sort of historical view. I think that that's changing and we can talk more about that. But I think historically we felt that there was less, that they were making less money, and that they were also, you know, sort of subjecting themselves to the whim of what if Spotify wakes up tomorrow and changes the payout rate. We'll be right back with Chris Balfe, but first word from a sponsor.

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