Record Labels Sue AI Music Makers & McDonald's $5 Value Meal

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0:29Good Morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howe. Today, we ponder the age-old question, when a piece of space junk crashes through your home, who is liable? That Netflix has updated its famous corporate culture memo to make it a little shorter and a little less intense. It's Tuesday, June 25th. Happy half Christmas, and let's ride.

0:53All right, I have an early candidate for dog of the week. Want to hear it? Let's hear it. NVIDIA. Yeah, it's been pretty ugly since overtaking Microsoft as the world's most valuable company last week. NVIDIA shares have fallen 13 % over three trading days, wiping$430 billion off of its market cap. Now investors are wondering where the bottom could be. Some say this is a classic example of taking profits off the board, like when you're on a heater at the craps table, realize how many chips you have in front of you and put a bunch in your pocket. but it's still a surprise to see the golden child of the stock market take a beating like this.

1:31I think I have an explanation for it. Jim Cramer, the Mad Money host, tweeted out on June 18th, NVIDIA, own it, don't trade it. And the Cramer curse is so alive and well. I'm convinced you could say, folks, I'm feeling good about the sun rising tomorrow, and he would still end up wrong. But we should cut the man some slack. A lot of AI companies are down across the board right now. You're right. It's a little bit of profit-taking, but also maybe the industry got a little out ahead of its skis. But NVIDIA seems like it got out a little more than most. Now let's hear a word from our sponsor, Yahoo Finance.

2:04So I have an embarrassing investing story I need to get off my chest. Is it about that time you lost a thumb drive with$1 million of Bitcoin on it? No, it's not quite that bad. This one goes back to my senior year of college. I was reading this Yahoo Finance article. I remember specifically it was Yahoo Finance because of the purple. It was wintertime but about to turn into spring. And this article was talking about five companies to look at that tend to do well in springtime. Go on. So at the top of the list is Sherwin-Williams, the paint company. People renovate and such as the weather turns.

2:34So I say, sure, why not? The Yahoo Finance article made some good points. So I buy some, then go about my day. Until I get an alert from my brokerage account a little bit later, I hadn't just bought some Sherwin-Williams stock. I bought$42 ,000 worth of Sherwin-Williams stock on margin. I had like a thousand bucks in my account and I fat fingered bought my way to way more shares than I wanted to. Oh no, you got margin called. I got margin called. I panic sold pretty much all of it. But here's a real kicker. Sherwin Williams is up 100 % in the last five years. I accidentally made a fantastic investment.

3:10Yahoo Finance was sending you a sign. It was trying to help you, but you didn't listen. Yeah, so I guess the moral of the story is always double check the amount and never turn down what is clearly a sign from Yahoo Finance. If you want to check it out yourself, head to yahoofinance.com or download the mobile app to get it directly on your phone. That is such a great story. I know. It's true. Race the rudders. Raise the sails. Raise the sails. Captain, an unidentified ship is approaching. Over. Roger. Wait. Is that an enterprise sales solution? Reach sales professionals, not professional sailors.

3:41With LinkedIn ads, you can target the right people by industry, job title, and more. Start converting your B2B audience today. Spend$250 on your first campaign and get a free$250 credit for the next one. Get started today at linkedin.com slash campaign. Terms and conditions apply. The epic brawl between publishers and AI companies over the future of art has expanded into a new arena, music. Yesterday, the world's biggest record labels, including Universal Music Group, Warner, and Sony, dropped a mega lawsuit against the two most prominent AI music startups, Suno and Udio. The labels allege that these two companies are illegally training their AI models on massive amounts of copyrighted song recordings.

4:24They're seeking damages of as much to$150 ,000 per work infringed. And given the amount of music out there, this could amount to potentially billions of dollars. Suno and Udio have become very popular over the past year for using generative AI to create songs from a text prompt. I could say, make a reggae song about Toby's bleached hair, and it would do it, and we'd all be rolling on the floor laughing. Problem is, these AI models have to be trained on real music to know how to make robot music, and the record labels are saying this training is being done on songs they own but haven't licensed out.

5:00Toby, we've seen these kind of copyright lawsuits filed against AI companies producing text and images, and music is the next battlefront. Yeah, right now we're seeing a very similar story play out to those text companies as well, because right now, Suno and Udi are being a little bit evasive at what exactly they did train their models on. They've been accused of using copyright. It works, but the company says that their training data is confidential business information. So they really haven't been forthcoming with what they used for training, which mirrors the pattern we've seen from OpenAI.

5:31I remember when they released Sora, their text to video generating. They're like, did you train this on YouTube videos? And their CTO was like, we're not going to really say one way or another on that. So this is definitely something that we're going to see continue to play out in different arenas. And you're right, music is the latest one. I mean, so how do you know if you're the record labels, whether these companies are training it on particular songs that are copyrighted? Well, they had researchers come in and do experiments and try to replicate existing artists and existing songs, and they could do so really well.

6:04They asked these AI generators to music generators to create All I Want for Christmas is You through text prompts, and they did one that sounded exactly like Mariah Carey. They repeated that for a bunch of different artists like Lin-Manuel Miranda and Bruce Springsteen, and they could ultimately arrive at almost carbon copies of these songs. So they say there's no other way that you could generate these songs that sound exactly like these artists without actually training your models on these specific songs, which we own and you definitely didn't pay us for. The example that I thought was very funny that's included in the suit is that they were able to, using a prompt that was 70s pop, they were able to create a song called Prancing Queen that contained lyrics to, obviously, Dancing Queen from ABBA and sounded remarkably like the brand.

6:49So yeah, they've literally been going in and finding specific examples where they can get it to generate songs that sound exactly like existing artists out there. But also one thing that makes this suit especially notable right now is that we have seen a song from Udio just kind of take over the culture for a little bit here in the last few weeks. The Drake Kendrick Lamar beef had a song that it's called BBL Drizzy, and that was originally AI generated using Udio. And that was a song I didn't know was AI generated originally. It was made by a comedian who just thought it'd be funny to put together this very catchy beat, honestly, to weigh in on the Drake Kendrick Lamar beef.

7:30but it really just goes to show how powerful that these tools are, tools are that a literal comedian can create something that enters into one of the bigger rap beefs of the last, you know, 20 years. I mean, these, if we're talking about ways that people are actually using generative AI in their actual life, I feel like this music generation is one of the ways that I've actually seen people use it. You know, we were in a car one time and somebody just made a song about somebody in the car and it was hilarious. We laughed at it. I've gotten invites to parties that use the AI-generated music to invite someone to a party and sort of explain what's going on.

8:09So I've seen these in real life. I mean, Suno raised$125 million in May. It's integrated into Microsoft Co-Pilot. So if we're looking at all the ways that AI is actually being used in daily life, this AI music is definitely a big part of it. And let it be known, our little sting at the beginning of Morning View Daily, not AI-generated. That is from a human. Most people know Netflix for its never-ending stream of Adam Sandler rom-coms, Viking period pieces, and Glenn Powell doing his best Tom Cruise impression. But if you're the type of person who loves corporate strategy, Netflix is on your radar for having one of the more interesting corporate cultures in the Fortune 500.

8:46For years, Netflix has championed what it calls freedom and responsibility. You want to go on vacation? Do it. You want to see sensitive internal documents? Come jump in the Google Doc. It doesn't fear leaks. But now a shift is underway at the company, codified in a new corporate memo that came out this week. Freedom and responsibility, which used to be the subheading of the document, has now given way to people over process. The general vibe of the new memo is that it softens some of the famous aspects of Netflix's culture, namely the keeper test, which tells managers to dismiss employees if the answer to, if X wanted to leave, would I fight to keep them, is no.

9:25and that's been dialed back just a bit. Also, the updated memo is just a little bit shorter, 2 ,264 words down from more than 3 ,800 in the previous version. Neil, Netflix co-founder Reed Hastings introduced the original 125-page Netflix culture slide deck in August 2009. And these memos have been a very big deal at Netflix ever since. So this change is notable. They've been a big deal at Netflix, but they've also been very influential across the HR industry. Sheryl Sandberg, the former Facebook CEO, said this original slide deck in 2009 was one of the most important documents to ever come out of Silicon Valley.

10:02And things that I think a lot of tech employees take for granted now, which is things like unlimited PTO and the creativity to pursue side projects and have more autonomy than the more traditional hierarchical type of working, which also is very imbued at Hollywood, which Netflix kind of zigged where everyone else is zagging. It's been very influential across the HR industry and how people generally think about corporate culture. I'll tell you why. One reason why everyone looks at this Netflix document is because when Reed Hastings originally released it in 2009, Netflix's market cap was$3 billion, and now its market cap is$290 billion.

10:43So something's going right over there in how they do their work culture. Right. It's clearly worked. Some of the things that stand out from this culture document too that you probably have heard of is that the company's vacation policy is two words, which is take vacation. Also their expense policy is just five words, act in Netflix's best interest. And over time, Hastings has said like, of course, some people have taken advantage of it. There was one employee that expensed$30 ,000 worth of things in one year. So obviously there's going to be some bad actors here, but Netflix in general has run their company almost like a sports team in the sense that if you're not performing, then they release you.

11:19And again, this new document softens that language a little bit because it's very scary to enter a work environment like that. But a lot of people do say that this is not just PR fluff here. When you go to work at Netflix, about 80, 90 % of this document does reflect the actual working conditions there. So it is very much imbued in their very DNA. Yeah. I mean, so you would probably think, hey, I go to Netflix. This is not for me. Is there a lot of turnover. I would say there is a decent amount of turnover to 2.1 to 3.1 percent leave on their own accord every single year and about nine percent are asked to leave annually.

11:54And again, that goes back to that keeper test, which they they're still having, which is that if somebody asked to leave, would you fight for them? And if a manager says no, then you're supposed to dismiss them, which I would say this is pretty hardcore. Doesn't reach the level of radical transparency that you see at Ray Dalio's Bridgewater Associates, which is truly like you go in there and it is kind of a cult. Netflix does, I mean, when you read this document, it does kind of verge on culty vibes, but it definitely has worked out for them. I mean, the best thing you can do to keep employees, though, is to hire only A players for them to work with, and Netflix has just tried to do that over the years.

12:31Its official hot discount summer begins today. McDonald's is rolling out its new$5 value meal at U.S. restaurants as fast food chains try to lure back customers who are balking at high prices. With its value meal, McDonald's joins Burger King, Wendy's, Shake Shack, KFC, even Starbucks in an all-out discount war to reverse falling foot traffic. But McDonald's is the biggie because it has become the face of food inflation over the past couple years. Ever since an$18 Big Mac meal went viral, the company has been facing accusations that it lost one of its main selling points, that it was cheap. Back in April, CEO Chris Kamzinski admitted as much, saying it was imperative that we continue to keep affordability at the forefront of our customers.

13:14He made those remarks after the company posted disappointing sales for Q1 and said that traffic was flat to declining pretty much all of its major markets. So can the$5 value meal bring customers back to the golden arches and make McDonald's cheap again? You tell me if this excites you. A McDouble or McChicken sandwich, small fries, four-piece chicken nuggets, and a small soft drink. It certainly excites me. That seems like a great deal right there. And I do think McDonald's is fighting two battles here. One, they're fighting actual missed sales expectations in the first quarter of the year, but they're also battling a public perception battle right now.

13:52We've talked ad nauseum about this viral Big Mac meal that went very viral,$19, and now they're trying to regain their aura of being this very cheap, very approachable fast food brand. And yeah, remember, it got so bad that the presidents of McDonald's USA put out a press release charting the price rises of the Big Mac through the years. He says it's not 100%. It's nothing crazy like that. The average price of Big Mac in 2019 was$4.39. Now it's$5.29. It's an increase of 21%. So it's not nothing, but he wanted to just set the record straight that this is what has been the reality of operating a fast food company in the current climate.

14:33And I just want to stress how much of a U-turn this is for all of these companies. They haven't done any of these discounts or value deals since pre-pandemic. Over the past few years, they have been raising prices consistently. And they've been saying, yeah, customers are willing to pay. There was a lot of pandemic savings. But now it does seem like consumers are pulling back, especially on the low income spectrum. And these fast food chains really have to cut prices in order to maintain their market share. But we really haven't seen any of these kind of discounts since 2018, 2019. So it's a striking reversal.

15:08I do just want to give a shout out to Coca-Cola here because they're actually the real MVP of this$5 value meal. Because last week, McDonald's was trying to bring this proposal forth to its franchisees. And the franchisees actually turned it down and said the economics just don't work. But then Coca-Cola came in and say, hey, we'll eat some of the costs. We'll do some of the co-marketing. We'll subsidize the promotion with a couple million dollars. And now the calculus added up for franchisees. So without Coca-Cola pitching in to do that co-marketing, I don't think we get this$5 value meal. The most surprising entry into this discount war has to be Starbucks, though.

15:42Starbucks just does not discount at all. And now you can go in and maybe get a half price coffee, a half price frappuccino. There are these drink and meal deals for$5 as well. And Starbucks forever, for years, has just said, we're not doing discount because we want to keep our brand. We want to keep our aura. And now they are feeling the pinch. I mean, traffic fell 7%. Starbucks is absolutely struggling right now. So they are just very surprising to see Starbucks doing discounts. And that just speaks to the world we're in right now. It's sounding like we need to order all these value meals and do a little social media video, taste testing and ranking each one of them.

16:17Up next, I get to talk about socks with you all. eczema isn't always obvious but it's real and so is the relief from ebglyss after an initial dosing phase about four in ten people taking ebglyss achieved itch relief and clear or almost clear skin at 16 weeks and most of those people maintain skin that's still more clear at one year with monthly dosing ebglyss libra kizumab lbkz a 250 milligram per two milliliter injection is a prescription medicine used to treat adults and children 12 years of age and older who weigh at least 88 pounds or 40 kilograms with moderate to severe eczema. Also called atopic dermatitis that is not well controlled with prescription therapies used on the skin or topicals or who cannot use topical therapies.

16:59EPCLIS can be used with or without topical corticosteroids. Don't use if you're allergic to EPCLIS. Allergic reactions can occur that can be severe. Eye problems can occur. Tell your doctor if you have new or worsening eye problems. You should not receive a live vaccine when treated with EPCLIS. Before starting EPCLIS, tell your doctor if you have a parasitic infection. Searching for real relief? Ask your doctor about EPCLIS and visit ePCLIS.lily.com or call Call 1-800-LILLYRX or 1-800-545-5979. Tuesday on NBC, Jimmy Fallon and Bozema St. John host a highly anticipated new competition show. I hired 10 creatives from all walks of life.

17:33They will be battling it out to see who can impress the world's biggest brands. This is a huge opportunity. This is the battle for the next big idea. This is not Play Play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you. Make the best idea win! On brand with Jimmy Fallon. Series premiere Tuesday on NBC. If you're not a professional athlete or a very niche tattoo artist, you might not think much about your ankles or the ankles of people around you, but there is actually a sock war raging around you right now, centering around how much ankle you are showing, and it's what I want to talk about on today's edition of Toby's Trends, where I take a deep dive into the internet to surface with a trend you should have your eye on.

18:17So in the sock war, there are two factions, Gen Z, which supports the crew sock movement for its generous coverage of the ankle area up to your mid-shin, and millennials who have been rocking the no-show variety of socks for years now with their ankles out and about in the breeze for the world to see. This conversation first started rumbling all the way back in October when a podcaster, Phoebe Parsons, said in a viral video that sock height was an easy way to tell how old someone is. And it's evolved even further from there. If people can see your ankles, you're probably uncool, at least according to the youths.

18:52It sounds toxic, and it probably is, but tracing a youth culture's relationship to socks throughout history, one thing is clear, they always want to be cooler than older generations. And in the process, they usually end up recycling something that has already been in fashion years ago. Neil, what kind of socks are you wearing right now? I actually was very self-conscious about what socks I was going to wear this morning. I'm wearing kind of ankle socks, so I guess I'm fulfilling the millennial trend. But no, generally, I do crew socks, and that's because of one person, Roger Federer. And when I was in high school, you had to have ankle socks because I was a millennial, and we were in high school and ankle socks were in as per the trend.

19:33But I watched Roger Federer and I was playing on the tennis team and I wanted to look really good and exactly like Roger Federer. So I would put on those longer crew white Nikes to look exactly like Roger Federer and I think it made me play so much better. So I've been on the Gen Z crew sock train for a while now. You do have a young Gen Z era about you. I think what it does, though, is it really gives you just another point of chance to individualize your fashion again. Because if you're wearing no-show socks, you can't see them, so there's no ability to customize them in any way. But if you have those crew socks on, then it gives you another point.

20:10Like, you see the cool socks. You see the Nike dry fits. I actually do remember growing up with some of my Gen Z friends who are even younger than me. They used to collect and dye and sell Nike Elite dry fit socks. And it was big business at the time. Like that was the richest kid I know. He was trading socks. And it's always just been a very big part of youth culture. And right now I'm sure the pendulum will swing back to a different direction as a new generation goes up. Because you never want to be like the generation above you or your parents. But right now the sock war, clearly the lines are drawn.

20:45And this is just not social media bickering. I mean, companies that sell socks are actually seeing differences in sales. Bombas, which is the sock company, started in 2013. Ankle socks were its top sellers, but it's now seen that taller sock styles are booming, which now account for 5 % of its total sales. Lululemon ran this marketing campaign, said crew socks are in. And then Under Armour said its mid-length sock sales have increased from about a third of total stock sales in 2019 to half in 2023 in international markets and in North America. So we're actually seeing change afoot in these various stock companies.

21:23Everyone listening to the show is right now looking down at their ankles and going, what the heck are these people talking about? All right. Say you're chilling on your couch and a piece of space debris from the International Space Station comes screaming through the atmosphere, crashes through your roof, and lands in your home. Who should pay for that? Well, that's not a hypothetical for one family in Naples, Florida, which is seeking damages from NASA after a chunk of space debris falling back to Earth tore a hole in their roof back in March. No one was hurt, even though the teenage son was home when it happened.

21:55But the family is asking NASA for more than$80 ,000 for property damage loss, business interruption damages and emotional anguish. No one is sure exactly how this works because it hasn't happened before. Space legal experts said it was truly the first legal claim being submitted for damages related to space debris. And with it being the first of its kind, how NASA responds to this will set an important precedent. Because with space being more crowded than ever with satellite and space junk, it may not be the last time an alien material makes an unexpected house visit. Yeah, it is very interesting because who is liable for space debris?

22:34There actually is language around what to do if a space debris from a foreign country were to impact your property or yourself, say if a Chinese or Russian rocket were to fall apart and strike a family United States. They would be entitled to compensation under this space liability convention, which was agreed to by the big space powers almost half a century ago at this point. But interestingly enough, there's nothing tied to what NASA or any other U.S. government agency would have to do if U.S. space debris impacted someone inside the United States. So it's a very interesting legal case. The lawyer representing the family said we intentionally kept it.

23:15The damage is relatively low. $80 ,000 is not nothing, but it's not in the millions of dollars because they wanted to bring this to court so there could be a precedent established. Yeah, I mean, it's also very fascinating to see what this hunk of metal was. It came from a 5 ,800-pound cargo pallet of old nickel hydride batteries. What they were doing was they had these old batteries on the space station. They wanted to replace them with newer batteries, so they had to do something with this old pallet, which was carrying all of these batteries that formerly powered the space station. And this is basically the problem that is going to come up.

23:50You have all these old parts where here on Earth, I guess you can put them in the, you know, go take them to the town dump and throw them there. But you have these all of these former materials that are just too old orbiting space. Eventually, they have to make a descent back into the Earth. You hope that they burn up in the atmosphere. But sometimes like this, it was a one point six pound metal alloy stanchion about the size of a soda can that somehow did not burn up in the atmosphere. And it came crashing down into a populated area, which really hasn't happened before. They tried to get it over the Gulf of Mexico.