Reels $50 Billion Run Rate and the Netflix Podcast Play | Creator Upload

0:00Josh, can you believe we have been doing this podcast for almost six years? Lauren, seriously, it only feels like, what, 20, 30? More like 50, am I right? Definitely 50, definitely 50. Well, in anticipation of our sixth anniversary happening this February, we actually want to hear from you, our audience. That is right. We're officially plugging and pushing the Creator Upload Survey. It's here. It's happening. For the first time ever, we are interested in something other than ourselves. helps in partnership with Deepwater Strategies, who put this together for us. Thank you very much. We want to learn about you.

0:35It's truly historic. Please head to bit.ly slash creator upload survey. That's bit.ly slash creator upload survey and tell us all the things. What you want more of me, what you want less of Josh and everything in between. We'll be talking a lot about it. So So just go to bit.ly slash creator upload survey and make our lives way easier. Exactly. Thanks for being with us all these years. Now go fill out the survey. Bit.ly slash creator upload survey. That's B-I-T dot L-Y slash creator upload survey. Welcome to Creator Upload, your Creator Economy podcast. I'm Lauren Schnipper. And I'm Joshua Cohen.

1:14Lauren. Josh, this has been a very prolific fall for the two of us. I'm just going to say for the creator upload duo over here. Like leaving the house like it ain't no thing. It's crazy. You were out yesterday in New York. What were you doing, Joshua? It has been, Lauren. The ratio of being inside to being outside is just way off for me. Yeah, we're going to go deep hibernation like in a little bit because this has been a lot. But yeah, no, it's crazy. You didn't like answer the phone several times yesterday. And I was like, is he dead? And it was like you were like out. It was really it was troubling.

1:53Lauren will call me, by the way, audience listeners, dear listeners, and she'll say things like, she'll call me and she'll be like, I'll be in the car. Can you edit this document for me real quick? And then she wonders why I don't pick up sometimes. And? And? I feel like that's totally appropriate. Yeah, it's the basis of our relationship, sure. Yeah, 100%. Lauren, I was out at the light. And then he says, I'm not your Simpson. And then he edits the document. So, like, we just took the flow. Yeah. I complain about not being her assistant and I end up editing the document and then everybody wins.

2:28So Lauren, I was out in Brooklyn. And let me tell you, the trek from New Jersey to Brooklyn ain't a small one. Not easy. So this is a big feat. This is a big one. Why was I in Brooklyn? I was at 58 Kent Street for Whaler's The Lighthouse opening party. Lauren, you know this, but Whaler is an influencer marketing agency with headquarters in London, Los Angeles, and now New York. and as part of one of the hubs or the spokes of this influencer marketing agency is the lighthouse which is a physical location they have one in venice it's an old post office it is it's like it's it's the location is i mean it's the farthest like point in los angeles from everything else in the world like basically on the beach in venice so it's like a nightmare to get there basically from anywhere but it's the coolest location i mean it's the coolest building i should say like it's it is an old post office that they repurposed for things except if you're more creatively inclined it seems like everybody lives within a five ten minute drive nobody lives in the five okay lots of people the parking in and of itself could take you 25 minutes minimum so but i'm just saying i know tons of people that walk there like literally you know one person that i know several people that walk there like there's maybe two go on in any case the lighthouse is a physical location that's meant to be a hub of creativity and people creators can pay for memberships where they get access to the facility.

3:50And then as part of their membership, they also get a certain amount of production credits and other resources that come with that. Like we filmed one of our podcast episodes there last year. We sure did. We did. We did. There was, it was lovely. It was, it was, I think we were like, if not the first one of the first, because they had just opened. Totally. And then Colin and Samir use it as a production facility and film a bunch of their productions out of that location as well. And for Whaler, it's one could be a thriving business in and of itself, but also meant to be an upsell for different brands and advertisers that they work with because like Shopify or Canon or whomever can come in and sponsor sessions and activities at the Lighthouse.

4:29It can be a hub for different events for people within the industry. And it can also be this like top of funnel for Whaler to get more creators into their ecosystem so they can one, potentially represent them as part of their management arm. and then two, use them in a bunch of influencer marketing campaigns that they have. So what was the event yesterday? So the event yesterday was the debut, the opening of their Brooklyn location, which is at a very cool facility. Maybe not as cool as the Venice post office, but still incredibly cool. It's at 58 Kent Street. And this is a former pencil factory from the late 1800s.

5:15And the building's super cool because it almost looks like an old Italian kind of courtyard house where there's this green space in the middle and the building's wrapped around it. And I was super curious about like why did they construct this facility like that? And then it's obvious they didn't have electric light when they first had this facility. So they needed to get light into the building somehow so they can make these pencils. In any case, Kickstarter then bought it in 2011, turned it into its headquarters. during the pandemic nobody from kickstarter was working there no more and now the lighthouse is in there and they've done a lot of work on the infrastructure to make it safe sound aesthetically pleasing and be able to house a bunch of different types of programming some of the programming included lauren there was amber tamblin and snl star anna gastire they had a conversation moderated by Cindy Leave.

6:10I love Anna Gassir. She, first of all, real quick, I've seen her, I saw her on Once Upon a Mattress, which was from Broadway and then came to LA. And then she, I think, was the shining star of the 50th anniversary of SNL. Every sketch she was in brought back was amazing. She is phenomenal. I'm all about that. She's fantastic. And since Amy Poehler's launched Good Hang, I am such a fan of the 80s, 90s, sml female cast members you know what's crazy josh women are funny i didn't know i don't know i know i i know i think that um josh is one of those people he just he just literally just it's not that he was like women are funny he's like no now he knows okay go on rachel drach my new favorite person oh my god that i i beyond she's fantastic she's she's the greatest person ever go on speaking of women two wonderful women in our industry had their business coming out party at the Lighthouse 2.

7:07That's Kaya Urieff and Jasmine Enberg. Both of who have been on this podcast many times. Totally. They announced their, officially publicly announced for the first time in person, the launch of their new media company, Scalable. So that was cool to see them at the event. And then what kicked it off though, one of my favorite conversations was about the business of creativity with Sir John Haggerty and David Droga. Lauren, I know you're well aware with Sir John Haggerty and David Droga's work. So just for everybody else, I'll tell everyone else who they are. So John Haggerty is the founder of Barthol Boggle Haggerty, BBH, one of the most influential figures in modern advertising.

7:45He helped to find the creative revolution of the 80s with campaigns for Levi's and Audi, championing the power of bold, idea-driven storytelling. He was knighted for his work in the advertising industry too. He's a sir. Meanwhile, David Droga is the founder of Droga 5 and now CEO of Accenture Song. He's widely regarded as one of the most awarded creatives in his generation. Droga built his reputation by merging creativity with business impact, producing work that consistently reshapes how brands connect with culture. Two just like monolithic figures in the advertising industry were on stage basically talking about whatever they wanted.

8:19They started off the conversation with what's the meaning of life, which I think is a great way to start off any fireside chat. Did you get an answer? Like, what are we dealing with? We got an okay answer. David Droga responded with happiness and then Sir John Haggerty said I think it's three things I think it's like being creative being happy and telling clients to fuck off and then David Droga said isn't telling clients to fuck off and happiness the same thing and so they had a little little bit of an agreement they had a chuckle there just two guys sounds like they had a giggle on that one two behemoths of their industries just have them laugh on stage did they talk about creators at all or anything or no?

8:58It was mostly about how making bold, creative, big decisions is important for the future of the world, really. And I feel like they believe this, that the world needs big, bold individuals to take big, bold actions. And from a just artistic standpoint, it really can push just humankind forward. And what I love too is how heady people in the advertising world get about themselves. It's so fascinating. But like I have worked with some people on the branding side and like which is obviously adjacent to advertising if not the same. And it's crazy how heady they get. But like also I feel like that's what they have to do to get to the creative output.

9:54And so you have to just trust the process. But you're like, guys, we're not curing cancer. We're like selling genes. Like everybody calm down. But to their credit, it's like engaging with the human spirit, just psychology, commerce, and more. A hundred percent. Like I, the output ultimately in my experience when I've seen those kind of processes absolutely is worth the journey. But during the journey, I am 1000 % being like these people need to calm the fuck down. This is one of my favorite stories. On this topic, I once went to a big fancy advertising award show, not Ken Lion. It was by 4As. They give out these pencils for that are really covered in the advertising world.

10:38and walked into Cipriani downtown in Manhattan. And there was this like - I think it's Cipriani, but go on. Tomato, tomato. It's Cipriani. Maybe we're talking about a different spot. We're definitely not. Go on. And there were this huge, like 60 foot kind of like tapestries of Galileo, Einstein, Copernicus, and then David Ogilvie. Like, okay. Yeah. David Ogilvie, one of another, like fathers of modern advertising. Advertising. Yes, of course. And so just putting those types of individuals up on the same level was very enlightening to how people in the advertising world think about themselves. Right.

11:17And this was not like ironic or funny. No. Like legit. Like he's like Galileo of our time. Okay. I'm really stoked for the opening of the lighthouse. I think if I was living anywhere within a 20, 30 minute commute to that location, I would definitely want to be a member. It's like 45 for you. So it ain't going to happen. No, it's like an hour. hour and 45 um yeah you gotta go all the way across manhattan i know he sees the west and it's on me i know i'm on you gotta go down it's a lot but i really think that new york could use a creative hub where a bunch of people in this industry can go together and have serendipitous interactions with each other that are leading to more creativity casey neistat tried to do this with this 368 facility i was gonna say this has been tried sort of before like obviously case i I was going to say Casey Neistat in New York and then obviously the YouTube spaces, which were like sort of a version of this that were that they all closed kind of during the pandemic.

12:15I have theories as to why those kind of didn't work. Do you have any thoughts on like why this didn't work, why this might work? Well, I think that this might work because it's not the core business model. Like Casey Neistat's 368, the core business model seemed to be let's bring all these creative types together. Let's get brands to sponsor this. And then maybe let's do some campaigns outside of that. Where Whaler has these other business verticals. it's management company it's influencer marketing agency and more that can sustain hopefully also this type of membership yeah this type of physical location with a membership fee i think that also a piece of it is that people actually wanted kind of are craving what they call third spaces you know what i mean like it's like what you could argue this is i like love this i have a friend who actually just launched a vc that's all about investing in third spaces like you know the idea like a church is a traditional third space like you know you've got work, you've got school, and then you've got these like third spaces that people used to like commune in.

13:09And like, because of like online, people aren't really doing that anymore. And I think people are actually really craving it. And so this kind of combines, obviously, the digital and the third space. But I also think that, you know, I think a lot about the YouTube space, which was, you know, these huge spaces that YouTube built going on like at least a decade ago that were meant to kind of, you know, inspire this creative collaboration. And, you know, I think we're, I think it was ahead of its time a little bit, I think, number one, and I remember like when it opened it was like you know they had all these like control rooms it looked like the day show with like major cameras and like the like the creator economy was just not there yet at that time at all like i think it was just a little bit early and they ended up just using it with like you know and not not that way and they were trying to teach people things and brands came in and blah blah blah but like um it was just big they were big and i think these aren't as big right and so um i'm excited i think they're cool spaces i mean if you ever run into ben relis um our friend of the podcast who lives in LA, the first thing he says to you is like, hey, you want to come work at the White Lighthouse?

14:10Like, you want to hang out? You want to come to Lighthouse? I can see his member anywhere saying, come to Lighthouse? Thank you. Yeah, so it's working. In some capacity, it's working. It's a thing. This wonderful installment of Creator Upload is brought to you by Viral Nation. Viral Nation is a leading global social media marketing and creator agency with a social-first approach powered by its brand-safe technology. Viral Nation powers global growth for brands like Elf Cosmetics, Audible, A24, MGM Resorts International, Microsoft Meta, Tencent, Zillow and Walmart. Redefining how brands engage and thrive in an ever evolving digital world.

14:46Take your content to new heights with Viral Nation. All right, let's move on. I want to talk about earnings. We had earnings this week. meta earnings. Let's start with that. I think the big headline coming out of meta earnings is that Zuckerberg claiming that Reels has an annual run rate of over$50 billion, which is fairly significant considering it was like zero not that long ago. And I think it's important to note that run rate for business refers to a yearly revenue total that is extrapolated from a shorter time period. So it doesn't mean that it's necessarily hauling in 50 billion a year, but that could become valid based on like a smaller time period.

15:26But just I think, and we'll get to YouTube earnings, but to compare it, you know, recently, you know, YouTube recorded Q3 as 41.4 billion, 0.04 billion. And so that's pretty significant if the annual run rate is over 50 billion. So top line quarterly revenue for all of Meta was 51.24 billion, which was nearly$2 billion higher than analysts' estimates. So that's huge. But of course, the bad news is around Meta's investment in AI and how it's falling short of projections. And apparently there's a massive, there's like a$16 billion tax charge related to the Trump administration's, you know, big, beautiful bill.

16:08So like that is, you know, affecting the stock price of Meta right now. So, but I think it's very significant how much money, you know, is bringing in, I think there's a lot of creators being like, cool, when am I making some of that money? So there's that question happening right now. Josh, what do you think about this? Okay, Lauren, let's just put that$50 billion annual run rate for Reels number in a little bit more perspective. So in 2022, the annual run rate for Reels was reported by Facebook to be $3 billion. Remember, Reels started in 2020. And then 2022, the annual run rate was up to$3 billion dollars.

16:442023, the annual run rate was up to$10 billion. Now it's up to$50 billion. So it's quintupled in two years, which I think shows a couple of things. One, Meta's ability to monetize this short form vertical video format in much more efficient ways. Two, an increased quantity of programming. So I'm guessing more and more creators are uploading more and more to create a bunch more inventory. And then the incredible amount of consumption on that increased number of programming that's generating these revenue figures, it's wild. It's really wild to see that trajectory. Like you said, if you compare this to YouTube's annual run rate for advertising revenue on the entire platform, that would be a$41 billion ARR.

17:30Meanwhile, YouTube's giving away 55 % of that revenue, give or take, to creators on the platform that are making content for that platform, that give that platform the ability to generate that kind of advertising revenue. And Meta is giving creators minuscule amounts, small percentages of whatever that$50 billion is through a variety of incentive programs or something else. But no sustained kind of revenue sharing facility is on the platform. On reels. Well, on reels. On long form there is. But yeah. Yeah. So I think as that number continues to increase, it's cool for Zuckerberg to boast about it.

18:09And I think it is incredibly impressive. but as these numbers continue to increase to Facebook I'm wondering if there's going to be at some point some kind of uprising from creators being like yo we need to make some more of this revenue here yes and no but like it's not happening on TikTok I mean you're not making money you know like it's like if this is working for the and like listen people have to remember like YouTube sort of started this like 55 you know split thing and like all the platforms the other platforms took a while to sort of you know follow suit because 55 cents on the dollar is a lot of money to give away and if they're seeing success and not do it until they have to do it i don't know that they're gonna do it like i just feel like they're probably looking at tiktok and i'm like well tiktok's not doing it and we're growing at like a rapid pace and as long as they can provide discovery and distribution right and there are other ways in which you can make money on Facebook.

19:01Like, you know, I think YouTube's always going to win in terms of creators being favorable to creators because it's where you can sort of more reliably make money. But I don't know that I like it, but I'm also like from a business standpoint, I get it. You know, I do get it. I also think, though, YouTube, it seems like if you just extrapolate this out for the next several years, YouTube has more of a chance of just continuing to dominate and win and get more and more market share because fundamentally it's sharing this revenue with creators. So creators are truly partners with them on the platform.

19:35And so every decision they make has to incentivize those creators in some capacity. And they have to think about how creators are going to react to this in a much different way than platforms who aren't sharing their revenue with those creators are. So I think that leads to much more informed decision-making processes, which is going to lead to better tools for those creators, which is going to lead to more content creation, which is why I think YouTube is such a behemoth that it is and will continue to be and dominate these other platforms long term. Yeah, but as we both know, YouTube has had a problem with discovering new talent.

20:06And they're obviously doing a lot of things to sort of circumvent that. But like, TikTok is where people are going to be discovered, and then they move to other platforms. And it feels like with this, how well Reels is doing, like, I feel like Reels is going to become that too. So until YouTube has figured out that, you know, not top of funnel, beginning of funnel, I guess is what I would say. Bottom of funnel was like, you know, which they used to own, They don't own it anymore. These other platforms are going to still be necessary and people will go there. So I don't know. It seems like they're figuring out a little bit, though, because shifting over to YouTube's earnings calls.

20:38Yes. The company said it made$10.26 billion on advertising revenue in Q3. Sundar Pichai said, quote, it was a terrific quarter with double digit growth across every major part of our business. He attributed much of the growth, which was 16 % year-over-year jump on overall earnings, a 15 % year-over-year jump on YouTube's ad revenue, and a 33 % year-over-year increase for net income of$34.98 billion. So he attributed all that to Google's dogged pursuit of braiding some sort of gender they have eye into absolutely everything it offers, whether or not creators like it. But he said, quote, we are seeing AI now driving real business results across the company, end quote.

21:15And what's more though is now per hour of watch time, YouTube is seeing more revenue generated from shorts advertising than it is from long form advertising. probably because there's more opportunities for more ad spots because there's more content that's being sifted through like if you watch an hour long form video and more and more people are increasingly watching more increasingly longer form content on youtube in large part too it's increasing prevalence on television screens um you're not going to get as many ad breaks you watch an hour programming what do you have five six seven eight ad breaks max if you're shifting through shorts for an hour, you're going to get tons more ad breaks.

21:58So there's much more of an opportunity to display advertising to consumers. And that's why I think that number is going up. I think it will continue to go up as well, unless television advertising dollars and the CPMs of those television advertising dollars start to flow into the YouTube ecosystem more and more, which will even that out, which they're desperately trying to do and have always been. But Lauren, in reference to your top of funnel comment. not top of funnel like beginning of funnel bottom of funnel top of funnel is the high how are we defining top of top of funnel okay what i mean is the beginning of your career being discovered top of funnel feels is that what we're talking about let's just picture a funnel okay okay you have one in your mind right so that's the top of the funnel because sometimes i don't know if you turn it around i don't know what i mean which way is the funnel pointing here sometimes okay i like to put the funnel on my head what happens then i don't know So what we're talking about is the biggest part of the funnel where the most people can be discovered.

22:56Okay, it's top of funnel. Go on. Yes, that's top of funnel. So Shorts is providing YouTube with a bigger top of funnel. More and more Shorts content is being consumed on the platform. More and more creators are creating Shorts. YouTube is developing more and more products on its platform to facilitate short form creators making more money. I think we're just going to continue to see this huge behemoth of YouTube get bigger and bigger. Love it. Great. Okay. I want to jump really quickly to Netflix. So Netflix, as we know, we talked about previously, they're doing a deal with Spotify to get some of the Spotify produced podcasts exclusively on Netflix and Spotify, but they're removing them from other platforms like YouTube.

23:41Netflix is talking about licensing video podcasts from iHeartMedia. So iHeartMedia, of course includes things like las culturitas uh jay shetty show stuff you should know so they're looking for exclusivity um which means again that the video podcast that it would license from my heart would no longer be uploaded to youtube right and so um well i think and so in the spotify deal it they are taking some of those podcasts and they are they're allowed to stamp spotify they're allowed they're gonna be on netflix but they're gonna take them off youtube like that's the big It's like no more on YouTube.

24:15I think this is very interesting. I think it's fascinating. Think about Spotify. Spotify several years ago was doing these exclusive deals where only the podcast could only be on Spotify. And what ended up happening is they realized that was like cutting their nose off despite their face because really it's not about necessarily having it exclusively on the platform. It's about being exclusive, exclusive company to sell against the podcast. So what they did was then say, like, scrap the exclusive, you know, distribution plan. We're going to let it distribute everywhere, but we just have to we're exclusively going to sell against it, which proved to be like a much more fruitful kind of kind of strategic plan.

24:53So it's interesting because Spotify now to that end is partnering with the Netflix saying, sure, put this on Netflix. We don't care. And like, obviously, I'm assuming they're going to get paid a lot for it. But I just feel like as far as Netflix plans go, like, I don't know if this is the right move. Like, obviously, there's a cachet to be on Netflix. You've got a specific kind of audience. And I love that they're getting into this space. But I don't. But from a podcast distribution standpoint, is that the smart thing to do to gatekeep just on these two platforms and not put it on YouTube to the point that we were just talking about, like the biggest video platform in the world?

25:25Like from a from a if I'm the podcaster, probably if I'm going to get paid enough, it will make sense. But I from a long term strategic plan, I don't think this is going to be a long term thing. I think it's going to be a short lived thing where it's going to be things are going to only be on Netflix unless they just produce podcasts just for Netflix and nowhere else. But I don't know. I think it's very interesting. I think we've seen this not work. We've seen it not work, but we have seen it work in terms of Netflix's whole business model where Netflix used to license shows from other studios, show them exclusively on VOD on their platform and then get into a studio system where then they were developing their own originals.

26:04So if the end goal, they could be just running that playbook back. And that could be the end goal here where they're licensing podcasts from other companies, putting it on their platform exclusively for a window while they develop their own exclusive podcast that then they can offer to their subscribers. Because Netflix, for all Ted Sarandon says about serious creators are on Netflix and YouTube is just for fun stuff. their actions show that they're increasingly interested in creators and this ecosystem and and their want to have this exclusive content on the platform shows that they don't want it to be shown at any of their competitors because they're a little bit worried about them i also think this announcement is especially interesting because netflix seemingly loves if you look at what they put out in the press just content you put in the background stuff you're watching while you're vacuuming while you're cooking that's just always on i mean yes and no i mean there's and there's content you really need to sit down 100 percent diplomat i mean that's not that's not background content you gotta pay attention to 100 but there was this report last december that stated that netflix told writers to have characters quote announce what they're doing and quote just in case a viewer is busy doing something else whether that's staring at their second screen on their phone that yeah and so this is the example they gave from the number one hit movie, Irish Wish, starring Lindsay Lohan.

27:27Here's her dialogue. We spent a day together, Lohan tells her lover, James. I admit it was a beautiful day filled with dramatic vistas and romantic rain, but that doesn't give you the right to question my life choices. Tomorrow I'm marrying Paul Kennedy. Fine, he responds. That will be the last you see of me because after this job is over, I'm off to Bolivia to photograph an endangered tree lizard. An endangered tree what? lizard i'm like i'm like into it now i'm like wait where is it exactly and you weren't even paying attention so you can see how this is a great tactic i didn't watch that i watched the other there was a lindsay lohan christmas movie last year with like kristen chennaway playing like the mean mother-in-law and that was really good she has gotten i gotta tell you lindsay lohan no shade has gotten the best work done she looks phenomenal i am like sign my ass up who is doing her work i'm just saying it's not what we're talking about but like listen so go on Netflix really likes this kind of programming and what better kind of programming than a podcast you can just have on in the background that you're kind of paying attention to that's exclusive to Netflix while you're doing whatever else on your phone.

28:30Netflix is basically trying to in and of itself become effectively like cable. It's got something for everybody. You know what I mean? You've got you've got that kind of content. You've got love is blind. You've got you know what I mean? Your reality shows. You've got your very, you know, prestigious kind of awards shows and movies and things so you know it's all the things so this would make sense that they want to get into this category as well all right josh do you have any uploads or downloads i'll start with one um you know piggybacking on what uh instagram just did with the um oh god what were they called realsies rings rings rings tick tock is doing its own award shows it was just a matter of time i feel like we're entering the era when there was like nine million award shows you remember like the blockbuster video award shows like that was the thing back in the day yeah i think any given platform gets big enough and then they feel like they have the need to honor their own people that they have on the platform yeah i mean so again back to sort of youtube dominating you know youtube has done this thing where they they give out these like really lovely plaques when you reach certain sort of milestones on um you know the platform they don't do their own award show but like and and they're sort of legit you reach a million subscribers going on and on and and it's it's a it's a flex.

29:38And so December 18th at the Hollywood Palladium in Los Angeles, the TikTok award show will have this theme called New Era, New Icons. We'll recognize creator across 13 categories, including creator of the year, video of the year, storyteller of the year, and TikTok for good award, which gives a nod to humanitarian educational efforts. The trophies presented on stage will beam a colorful glow upon the creators, defining this new era of culture encompassing many areas, including fashion, beauty, sports, TV, film, and new forms of entertainment, said TikTok. They're also going to do a shout out to people that are doing really well with TikTok Shop, which will be a flex to that product for them.