TikTok and iHeartRadio take on YouTube, creator M&A rises and MrBeast goes to the Middle East

0:00Jasmine Enberg: Hi, everyone. This is Scalable, a weekly show about the business of the creator economy. I'm Kaya Yurieff. And I'm Jasmine Enberg. Every Thursday, we take you beyond the headlines to tell you what's happening, what it means, and why it matters. Here are the top three headlines from the creator economy this week. TikTok is getting into podcasting. Its new partnership with iHeartRadio could be a win-win for both companies as they take on YouTube. Instagram has a new layout. Reels and DMs are next to each other in the navigation bar at the bottom. People are already complaining, but they will get over it soon.

0:31Mr. Beast is taking on the Middle East. He is opening a temporary theme park in Saudi Arabia called Beastland.

0:42Jasmine Enberg: Hi, Jasmine. Hey, Kaya. We are back from New York in our respective homes with our remote setup, which will be more of the norm moving forward. Although hopefully we will be in the same cities as we go to conferences and other things. So you'll see us back in a studio again, but this is going to be kind of the week to week. We've had a little bit of hiccups with setting up our remote setups. Jasmine's waiting for her writing kit. My mic made it to me, but not the cover that says scalable because that is stuck in a different pickup facility five hours away from me. So I'm waiting for them. Challenges of the nomadic life, Kaya.

1:19Jasmine Enberg: I know. Apparently this company has had some issues shipping within Europe. So that's my fault, I guess, for being based here. But we are excited to get things rolling. Yeah. And I mean, I have my mic, but I don't have my full setup yet. So right now I am sitting in the den off of my kitchen, which I think looks pretty good. But you all may be getting an inadvertent house tour by the end of the year as I'm trying to figure out where I'll be recording going forward. But super excited to, you know, get all this started, get our home studio set up. And Kaya, I hope your mic arrives. I know. I feel like it would look so much better if we both had the mics, but this is part of the process.

2:00Jasmine Enberg: We ordered them so long ago, it's here. It really is. And we have definitely been looking for inspo on Instagram Reels and TikTok as we look at kind of podcast clips and how people do their setup. So more to come on that front. So there has been a ton of news this week, especially in the creator podcasting world. And some of the biggest news that we heard was from TikTok and iHeartRadio. So we wanted to start today's episode there. Kaia, why don't you walk us through the news? TikTok announced a partnership with iHeartRadio. So it is creating a podcast network, which will include up to 25 shows with TikTok creators.

2:40Jasmine Enberg: What I thought was so interesting about this announcement is they talked about digital radio distribution, broadcast, live events. They alluded to TikTok Live as well. iHeartRadio and TikTok had done a live event earlier that was exclusive to TikTok Live earlier this year. but they really didn't spend a lot of time actually in the press release talking about how podcasts will show up on TikTok, which I thought was interesting. I mean, on one hand, podcast clubs are all over TikTok anyway, but I think, I suspect we'll probably see more highlights, you know, and dedicated spaces on the app for podcasts in the future, but that's kind of stuck out to me.

3:13Jasmine Enberg: But it was very interesting to see TikTok throw its hat in the ring because they were one of the few social platforms that didn't have anything in podcasting. They had tried a few years ago also, so there's been a lot of stops and starts here on the podcasting social side. Yeah, and we wrote about this in our newsletter on Tuesday. And one of the things that we said is that, you know, the partnership really could be a win-win for both TikTok and for iHeartRadio. Obviously, both of them are competing now with YouTube, which says it has a billion people watching podcasts on its platform. And there's so many hosts that are already posting their short clips onto TikTok, as well as Instagram Reels and YouTube Shorts, really in the hope of driving people to the longer form episodes.

3:53I do think it's still an open question if that is happening. I know I really consume most of my podcasts through those clips and rarely actually go and click through. But still, it makes so much sense for TikTok. And there was also some new data from Acast and Differentology, which we cited, that shows that while YouTube is the number one platform for actually listening to those podcasts, more people ages 18 to 34 are interacting with or following podcast creators on TikTok and Instagram. than they are on YouTube. So clearly this behavior is already there.

4:26Jasmine Enberg: So it makes a lot of sense for TikTok to lean into it. And there's a ton for iHeartRadio to gain too. Like we said, it's competing with YouTube, but it's also competing with Spotify and so many other podcast players. And what we heard in its third quarter earnings is that podcasting has become a much more important part of its business. Its revenue from podcasts grew by about 23%. So clearly there's a lot of momentum here. I think the other really interesting part is that iHeartRadio is primarily audio at this point. And I think this partnership with TikTok could also help it shift more into video, which we know is, you know, really happening across the board right now with podcasting.

5:05Jasmine Enberg: And part of that, too, is iHeart is going to be creating co-branded studios in L.A., New York and Atlanta. So that's it's interesting which markets they chose, but also obviously they are leaning into video. And that's something that execs talked about on the call. That video is a huge opportunity for them. I think also like the urgency is high. Like it feels like we're, you know, every headline, it's like, okay, are we at peak podcast? But then like TikTok comes in. And I think the urgency is so high. Just I think coming off of the election, obviously, that was a big moment for podcasts. But also the ad revenue is really growing.

5:37Jasmine Enberg: I mean, it's expected to surpass$3 billion for the first time this year, according to data from IAB. So I think everyone's seeing the dollars, but also, you know, its cultural relevance is super important. And I think it's a huge sign of legitimacy, too, for podcasting, seeing some of these big players like really lean into it from the social world. I know we put together a chart about all of the different types of podcasting tools, as well as different approaches that the social platforms have rolled out. Obviously, we've already talked about TikTok, but Threads also kind of threw its hat into the ring to some degree on the same day, not wanting to be left out with some tools of its own.

6:14Jasmine Enberg: Yeah, it was so funny. Jasmine and I were about to publish our newsletter. And luckily, Jasmine saw the threads news. And we were like, so Jasmine went into Canva, updated the chart.

6:26But we were like, okay, obviously, this is good that we chose to write about this topic today, because there's a lot happening.

6:30Jasmine Enberg: But I think what's interesting is we see these cycles in social media, right? We've seen it with stories. We saw it with the rise of Clubhouse and social audio. And suddenly, every platform is chasing each other. So it's sort of interesting to see the different approaches. I mean, if you look at TikTok, right, they're going with this ad network. It's not really heavy on the in-app features, whereas an announcement like Threads is trying to make podcasts more prominent on the app. What we've also seen on X, before it was X, it was Twitter, and Twitter had integrated podcasts into Spaces. So they're still available there primarily for premium subscribers.

7:06Jasmine Enberg: So that's one way. Facebook actually tried to do this. They launched a way for podcasters to be able to upload podcasts directly to the Facebook app so you could directly listen within Facebook. And then they shut that down along with other audio features. So these things kind of ebb and flow. And then LinkedIn also experimented with a podcast network as well. Obviously, YouTube has rolled out tons of features, podcast page, top charts, all this stuff. So you see a variety of kind of different approaches here from features to like actually kind of working more directly with the talent. Yeah. And when we were sort of collecting all of this information and putting this chart together, the one thing that kept popping into my head is that it reminds me so much of the hype around social commerce back in like 2020, 2021, when all of these platforms, especially Meta, were rolling out these new in-app social commerce tools, whether that was, you know, Meta checkout, live shopping, an affiliate marketing program for creators.

7:59And then in 2022, they shut most of those down actually around the same time that they were shutting down a lot of their audio services. And if you think about the impetus for why they were rolling out these social commerce tools, a lot of it had to do with the e-commerce boom within the pandemic. You know, they wanted to capture a piece of that spending. But it also had to do with the fact that it was, you know, in preparation for those iOS changes, which really impacted their ability to target ads. For a little context, in case you don't remember, what happened was basically is all Apple devices had a pop-up notification telling people that they were able to opt in or opt out.

8:37I don't remember which way it went from tracking and targeting on third party apps. And a lot of these platforms correctly assumed that a lot of people wouldn't want their personal information shared. And so they were leaning really heavily into social commerce because they wanted to be able to make up for the loss of data with some of this purchase data that you could get from in-app tools. Obviously, it didn't really work because people weren't really using MetaCheckout. They weren't really using live shopping. And then the ad slump hit in 2022. And Meta backtracked on a lot of these in-app tools because they were quite resource heavy.

9:14Also, just weren't really bringing in a lot of revenue. And so, you know, while I don't necessarily see exactly the same thing happening with these podcasting tools, a lot of them are a lot more basic, like threads is really just, you know, a link in a user profile that helps you find a podcast more easily. It's worth remembering that even as platforms are rolling back certain tools, if that does happen in the podcasting world, it doesn't mean this behavior isn't happening on the platforms anyway. I mean, people were still shopping, even if they weren't shopping through MetaCheckout. And we know that people are listening to podcasts even before there were podcasting tools available.

9:51Yeah.

9:51Jasmine Enberg: And I think to that end, sometimes platforms see a behavior that's happening on their platform that they're not earning money from, right? Like influencer marketing has been happening on Instagram. They tried to like start brokering these deals directly to try to take a slice of it. And then they retreat when it just doesn't work. So I think, you know, these platforms are very cyclical. they kind of chase these trends. There's a lot of FOMO. I mean, if you remember, LinkedIn jumped on the stories train and then shut that down because even though stories, yeah, exactly. Yes. So just because the behavior is happening doesn't mean it's happening on that platform, but they have to try.

10:28Jasmine Enberg: Right. And I'm sure they feel so much pressure of like, oh, well, our competitors doing this and we should do it too. So sometimes it really works. I mean, stories is such a great example. Meta copied it from Snapchat and really ultimately made it bigger and into a better business. And so it's really dependent. And I think as a business or a creator, it's worth paying attention to what the platforms are prioritizing. But then that second part being just because they may no longer prioritize a certain activity doesn't mean people aren't doing it and that you should then necessarily walk away from it.

11:00Jasmine Enberg: And I love putting together these charts and data because it's one, it's a really helpful. I hope it's helpful for the audience and viewers and readers, but it's really helpful for us, I think, to lay things out. It helps us compare things. And then it also kind of sparked something in us where we're like, oh, Instagram is one of the few that hasn't done anything formally with podcasting. So that is our prediction is that Instagram is not going to want to sit this out in some capacity. I mean, they obviously already have a lot of podcast clips in reels, but that especially with threads now testing the waters with some podcast features, I would not be surprised if Instagram comes next with some sort of play into the space.

11:37Jasmine Enberg: One area that we have been following really closely for the past few years is tracking funding and M &A in the creator economy. And I think to our kind of previous point of, you know, just because features are shut down doesn't mean that the user behavior isn't there or that the format isn't popular. Like I remember when all the creator funds shut down, everyone's like, oh, the platforms don't care about creators anymore. Oh, the creator economy is over. I think there's a very similar narrative with funding and M &A. And I think two things can be true, right? Like there is really healthy M &A and big deals that are getting done.

12:08Jasmine Enberg: And then there's a lot of fire sales and kind of save face acquisitions happening. So we got some new M &A data that we are excited to dive into this week. Jasmine, why don't you kind of give us the high level? Yeah. So the high-level takeaway from the report that we got was that influencer marketing acquisitions are on the rise again this year after a very sharp decline in the number of transactions in 2024. And this came from our friend James Creech at QuarterMask Advisors, which is a boutique M &A advisory firm. And so what it said is that so far this year, there have been at least 15 publicly announced influencer marketing M &A deals, which is roughly the same number, if not exactly the same number, that there were in the full year of 2024, which, of course, has a couple of extra months.

12:53But to Kaya's point about two things being true, last year was still a pretty big year for influencer marketing M &A. The report also said that two of the top five biggest transactions ever recorded actually took place in 2024. And that, of course, included Publicis' acquisition of Influential, which just was this enormous moment of validation for creators and for influencer marketing.

13:19Jasmine Enberg: Kaya, what do you make of all of this? And why do you think last year we saw fewer but bigger bets on the creator economy? I think it's just part of the maturation of the market. If you think back to 2021, like it was just this gold rush, right? There was so much excitement. We were, you know, holed up at home still. Investors, founders saw huge opportunity really to build in the space. So basically, if you had, I'm being a little hyperbolic, but like if you had an idea, you could get a$10 million seed round, no problem. So if we look at kind of what's happened since then, and part of my job at The Information was we built this database and tracked funding and M &A deals.

13:54Jasmine Enberg: And what we saw earlier this year is that, you know, well, first funding really fell as interest rates changed. And we saw that across the board for startups, but creator economy startups were hit really hard by that. But then things bounced back. And, you know, they obviously have not returned to the same level, but they didn't fall off a complete cliff. Are there certain categories that are doing better than others within creator economy right now, do you think? Obviously, AI. I think music has been an interesting one. I mean, always kind of creator services has done well. I think the biggest shift that we've seen is that basically less deals are getting done, but often they're bigger deals.

14:32Jasmine Enberg: So if you look to Q1 of this year, we really saw like music, AI, shopping have a big moment. But like, are those the biggest categories or were those just the biggest deals, right? So if you look at Q1, four deals accounted for 70 % of the global funding total. So like those categories are sort of skewed where like, I don't know that you can take away like, oh, I mean, obviously AI is huge, but I don't, shopping was just big because whatnot, the live shopping startup raised a lot of money. But that's pretty staggering. And I think if you look at the companies that raised, like YouScreen, for example, is one that raised this year.

15:05Jasmine Enberg: 10-year-old company was bootstrapped and then decided to raise and they raised$150 million from a private equity firm. And if you're not familiar with that company, they help creators make mobile apps and kind of run membership programs. So we're just seeing investors kind of look at companies that have been in the market for a while that seem to be emerging and have kind of the scale and growth that they want to see. And they're just being choosier with their bets. And I do think companies that have a strong AI case obviously have a better chance with investors in this environment. And one of the other things that the report talked about was we are going to continue to see these bigger ticket transactions, but we're also seeing more transactions in the creator economy overall, not just in influencer marketing.

15:47So we talked to James and he told us that he expects this year to be the biggest ever for creator economy M &A, and we could potentially even see over 100 transactions for the very first time. For context, the previous record is 72, and that was from 2023. And we are already at that point as of November. And a lot of the reasons that he gave for this continued growth or this new growth in creator M &A are very similar to what you were talking about, Kaya. So one of the things he talked about was that buyers are getting a lot more strategic. And these deals really are spanning multiple geographies.

16:26They're also spanning multiple categories, like things like social commerce and affiliate marketing. And to me, that really reflects, again, the maturation and the expansion of the creator economy overall. What was really interesting is that he also noted that Europe could be a hotspot for creator M &A going forward.

16:44Jasmine Enberg: But I think that - Yeah, obviously. And but that tracks really well with, you know, the valuation that we saw from Stephen.com, Stephen Bartlett's company. So obviously there's a lot of activity happening in the US, But clearly there are, you know, other regions where there's also a ton of activity going on. So our final top story for today is about newsletters because Beehive, which is also where we host our newsletter, made a bunch of new announcements on Thursday. And you can check out our newsletter for the full details there. But I think the tagline of the event really sums up the newsletter industry and kind of where we are right now.

17:23Jasmine Enberg: It's email was just the beginning. And I think we're seeing that from both newsletter writers and platforms who recognize that newsletters can be limiting. I think they're a great way to reach audiences. Email is much more consistent than reaching people through social algorithms, right? I think it's one of the most underrated forms of marketing and communications, actually. Everybody has email. Yes. Yes. And obviously there are issues, right? Like it can go into spam and all this stuff, right? But I think generally it's pretty consistent. And I think, look, I'm biased. I've written a newsletter for a long time.

17:53Jasmine Enberg: I read a lot of newsletters, but I think there obviously are more monetization opportunities and just like you want more creative outlets beyond just one product. What we're seeing across the newsletter space is that platforms are expanding their offerings. So if you look at Kit, for example, for the past two years, they've offered commerce offerings. So creators can sell digital tools. Substack has been expanding to offer live streaming tools, video. They're going after podcasters. So I think it's this recognition of no one's in a box anymore. And I think we sort of feel this way for creators who are social media focused.

18:28Jasmine Enberg: Like, no one's just a YouTuber anymore or a TikToker. And I think that's happening to newsletter writers as well, where, like, we have a podcast and a newsletter. So we're seeing that, you know, even this week, right? Emily Sundberg, who's, you know, writes a very popular newsletter called Feed Me launched a podcast this week. And we've seen other examples, too, of people launching Tara Palmieri. She was at ABC News and Politico. So she launched with a newsletter as well as a YouTube channel. Same thing with Oliver Darcy. He started with a newsletter and then added a podcast. Others have been at this for a while.

18:57Jasmine Enberg: I think Eric Newcomer, you know, is a great example. He's integrated live events from very early on, and that's a huge part of his business. And I think that's, you know, from our personal experience, like that's how we wanted to launch Scalable 2 is we didn't want to just write a newsletter. A big part of it, too, is that we understood that people consume information in many different ways, right? Some people want to read. Other people want to watch. Others want to listen. Some people want charts. Some people don't want charts. I mean, we got some feedback on our newsletter from Tuesday about the chart placement, and some people loved it at the very top.

19:29Some people wanted us to move it further down. So clearly, you know, there's a lot of different ways that people are, you know, again, consuming news and information. And I think we wanted to make sure that we were reaching everybody. And so that's why we took this multi-platform or omni-channel approach, which right now is obviously a podcast and newsletter. But there will be more down the line, too.

19:51Jasmine Enberg: And I think, too, for us, like it's from feedback that we've gotten in our previous roles, right? Like I wrote a newsletter for a long time, and I think it's great for building a community. It's great for reaching people. I would, you know, when I would meet people at conferences or in person, they would say, oh, my God, I feel like I know you. You know, your name is in my inbox all the time. But they would also say, oh, my God, I've never heard your voice before. Or, you know, it would be great for you to be able to expand on some of these topics. And so I think it just gives us a little bit more kind of creative freedom and to talk about different things.

20:19Jasmine Enberg: And we love newsletters. Don't get us wrong. But I think it's part of a bigger strategy now for writers, especially now as people are launching new publications. They're just approaching it differently. And I think it also helps when we're thinking about bringing on guests. I mean, most of our show will be just the two of us, but we're certainly going to bring in other people too, to share their point of view and their expertise on different parts of the creator economy. And we did so many interviews in our previous roles, and so many of them would have been amazing on video or on audio, but we just didn't have the ability to do that.

20:50And so I think having a video podcast as well as a newsletter will help bring more voices to life.

20:58Jasmine Enberg: All right, here is what else is going on in the world of the creator economy. First, Mr. Beast is taking on the Middle East. He is opening a temporary Beastland theme park in Saudi Arabia, and that'll run from November 13th to December 27th. But that isn't the only thing he is doing in the region. He is also partnering with the Dubai-based Billion Followers Summit on a new kindness campaign that will select 10 creators to help build a new village in Ghana. This is a huge get for the conference as well as for Dubai, which we know has been trying to establish itself as a global hub for influencers.

21:35In January of last year, the government actually announced a$40 billion fund to support and attract content creators from around the world. Part of that includes this physical campus and community called Creators HQ, which I did not get to go to last year when I was at the Billion Follower Summit, but hopefully we'll be able to visit soon. But I did have a great time there. It was really fantastic to be at a conference with creators and creator economy business people from all over the world. It's Dubai, so everything is big. There was a lot of show. The crown princess of Dubai actually came to my speech, which was just fantastic.

22:15But it also just shows how involved the government is and how supportive they are of the content creator community. I mean, the U.S. is overall the biggest and most established and advanced part of the creator economy there is. But Dubai and the Middle East really do have a thriving creator economy as well.

22:35Jasmine Enberg: I was very excited to see this news because I am a huge fan of Alex Warren's music. If you don't know him, I'm sure you've heard his song Ordinary, which was clipped and all over Instagram Reels and TikTok. So he received a Grammy nomination in the Best New Artist category. And I think a lot of people don't realize that he was actually part of the Hype House, the TikTok collective, if you remember from the pandemic. And he's a really interesting example of kind of being one of the few social media creators to really successfully break into the music industry. Obviously, Addison Rae has done that.

23:07Jasmine Enberg: And if you think about other examples, right, like Justin Bieber was discovered on YouTube. Same thing with Dua Lipa. Shawn Mendes was a Vine star. But like, we don't think of them like they've just transcended into a level of fame. And I think in this more recent era of creators, we haven't seen people cross over in the same way. And I think his story is so incredible. I mean, he was homeless for a period of time when he was 18. He was living, you know, in his car. Wow, I didn't know that. I know. He lost both his parents. Like he has just had such a incredible story. And I think he's definitely someone to watch.

23:40Jasmine Enberg: And I think what's really smart about what he does is he isn't abandoning his roots as a creator. He is so savvy on social media and the way that he incorporates music, the way he posts reels. Like he very much has the creator hat on while also making really incredible music. So good luck to him. Although I will say his hit So Ordinary was snubbed. It did not receive any nominations, but it did spend 10 weeks on the Billboard Hot 100. So it did really well from kind of a traditional music industry standpoint. I mean, that's pretty amazing. But what is not amazing is our final story, which is about Meta's scam ad problem.

24:20So internal documents reviewed by Reuters showed that Meta estimated that it serves about 15 billion high-risk scam ads, meaning things like fraudulent e-commerce sites or illegal casinos, to its users across its apps every single day. And so for context, Meta has about 3.5 billion users on Facebook, Instagram, and WhatsApp as of September. It released this number in its Q3 earnings report. And that means that there are about four scam ads per Meta user. Meta also makes a ton of money from those ads. In the documents, Meta had estimated that 10 % of its 2024 ad revenue would come from scam ads.

25:03That's about$16 billion, which is actually more than TikTok made in ad revenue in the U.S. that year, according to eMarketer estimates. Now, scam ads obviously are not a problem that is unique or new to Meta. They're all over the place. But the scale of the issue on Meta is really alarming. It raises a lot of questions about the credibility of its ad platform and tools, which are touted as being best in class by the platform as well as a lot of advertisers. It also raises a lot of issues around user safety. I mean, a lot of those ads were live for quite a long time before Meta was taking them down.

25:45And who knows how many people were clicked on them. And it also just distorts the size of Meta's ad business as well as the overall digital ad market because Meta, of course, accounts for about a quarter of digital ad spending.

25:59Jasmine Enberg: Thank you so much for tuning in. Do not forget to subscribe to Scalable for free so you can get our newsletter in your inbox. And we will see you back here next Thursday.