TikTok's stormy weekend, Reels is good now and creators protest ICE

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. The new U.S. TikTok is off to a rough start. Today, we're going to talk about what that means for your business, whether you're a brand or a creator.

0:25Hi, Jasmine. Hey, Kaya. We are both just back from Sundance Film Festival. It was the last time that it was held in Park City, Utah, which is so sad. We're going to fill you in on what you may have missed from the famous film festival. But first, we have a ton of news to dive into. Yeah, I mean, we were only gone for a couple of days, and it just feels like so much happened during that time. But let's start with TikTok, because I think that was one of the most anticipated pieces of news. So late last week, a deal was signed to keep TikTok alive here in the U.S. Under the terms of the new deal, a new joint venture was established.

1:05It has what I think is probably the least sexy name I've heard in a while for a company. It's called TikTok USDS Joint Venture LLC. It is a mouthful to say, so I think we're going to probably keep just saying TikTok. But the main investors in the new U.S. TikTok are Oracle, which has handled U.S. data security for a long time through an initiative called Project Texas. There's also a private equity firm called Silver Lake and a United Arab Emirates-based company called MGX. There's another group of investors that altogether brings the app under majority U.S. control. I do think it's worth noting that this deal was announced almost exactly a year to the date from the initial, the very first deadline for TikTok to sell or be banned.

1:54And also that 14 hour shutdown that we all lived through back then. Yeah. So this news broke while I was on the way to Sundance and I was getting onto my layover and I wrote like a quick LinkedIn kind of reaction post. It did really well, though. Oh, thank you. And it's funny you say the name is so clunky because I reported last year that they were going to name it TikTok America, which just seems so on brand for the Trump administration, too. A lot snazzier. Who knows what happened with that, but we're probably going to keep calling it TikTok or TikTok US. But also it's interesting to see kind of who's emerging into leadership roles.

2:32So Adam Presser, who was he's been slowly rising through the ranks.

2:36Jasmine Enberg: He was chief of staff to TikTok CEO Sho Chu. And then he was elevated to be the head of operations and the head of trust and safety as well. So he is now the new CEO of the U.S. entity. Chu will remain in his global position. But because ByteDance, TikTok's parent company, still retains that roughly 20 % stake in the company, there is a lot of questions about whether or not this deal actually satisfies the conditions of the law. We've gotten some inbound from security experts and politicians on this. By the way, I broke the news of this deal outlined back in April of last year. So you can just see how long it's taken to kind of finalize this.

3:17Jasmine Enberg: And at the time, I did report that they would still maintain an under 20 % stake and that they would also license the algorithm to TikTok US. So I think that issue, you know, did not satisfy, I think, a lot of data security experts. But that's a conversation for another time with some legal experts. But since it looks like TikTok is here to stay, we want to focus in this episode on kind of what the new TikTok means for creators, brands, and also TikTok itself. Yeah, I mean, well, first off, I think TikTok's new investors definitely got a great deal. I mean, if you think back to last September, you had Vice President J.D.

3:51Vance, who played a big role in this deal, saying that the app in the U.S. was valued at about$14 billion. That is under 5 % of TikTok's parent company ByteDance's reported valuation, which was around$330 billion the last time we checked. And the U.S. really is TikTok's most lucrative market, of course, outside of China, where TikTok has a sister app called Duyin. And that means that surely it has to be worth more than that. Also,$14 billion is roughly in line with third-party estimates that we found for TikTok's ad revenues and TikTok shop commissions that it generated last year in the U.S. And TikTok is one of the fastest growing tech companies worldwide.

4:37So again, it would make sense that TikTok would be worth more than$14 billion.

4:44Jasmine Enberg: Totally. And of course, it's worth noting that ByteDance has many other businesses. but TikTok US has been like the crown jewel of that portfolio. But I think on the user creator and brand side, you know, I don't know if the deal is looking quite as good as it is for investors. I mean, I think so many people are relieved that it's over, right? Like, I think for a long time, you know, we've talked about kind of the dissonance, right? And how it's sort of faded to the back of people's minds. But there have been so many, you know, scary points for creators and brands during this whole new cycle. And so much uncertainty overall that just makes it really difficult to plan, right?

5:19And for employees as well, right? For TikTok employees, they have been through the ringer, especially those who have been there for the past several years. It wouldn't be over-exaggerating to say that this has been off to a rocky start. I think on the positive side, I think people are relieved and probably TikTok is relieved that they are not having to download a new app

5:42Jasmine Enberg: or create a new app for the U.S. That was something that was, you know, floated and something that was considered and that they were preparing for internally. So that's good, right? Because U.S. users were like, well, what if we're cut off from the rest of the world? And of course you have an engagement and people, you know, whenever you have to download a new app or do something, you see a drop off. But under the terms of the New Deal, the algorithm is going to be retrained on only U.S. data. So there are a lot of questions there about what that means for, you know, creators outside of the U.S.

6:10Jasmine Enberg: and for users in the U.S. as well. Like, is the content going to become more US centric in the press release? You know, they alluded to a global experience, but like the language is all really vague. So the big question is whether TikTok becomes less diverse and if it changes from kind of the current TikTok that people know and love. Yeah. And we already saw some signs that that might be happening over the weekend, right? There are a lot of creators who were reporting that, you know, videos that they were uploading were getting zero views or that they were getting an error message when they tried to upload them to the app.

6:46Then there were reports from other users who said that they were seeing really just generic content or the same videos over and over again, instead of the personalized stream of videos that they're used to and what they love about TikTok. Now, TikTok, of course, said this was due to a power outage that affected one of its data centers that it relies on here in the US. And as of late Tuesday, TikTok said that it was still having some trouble restoring the app, but that it had made, quote, significant progress. But of course, there could still be some technical issues for users, including when they were uploading new content.

7:22I checked again on Wednesday morning and, you know, from there hasn't been an update since then. Yeah.

7:29Jasmine Enberg: And I think you had issues also with your TikTok trying to upload. I mean, I think it would be hard for this to be a seamless transition period, but they had a lot of different factors. But even with those statements, I think users were not convinced. I think once a theory kind of catches on, you know, people kind of lead into that narrative. But I think even before the deal was done, even if you think about when, you know, TikTok went offline and then the push notifications thanking President Trump and people were already kind of responding to that and were worried that a U.S. only TikTok might become more, you know, Trump friendly because he has been the one kind of orchestrating this deal and saying they were maybe looking for signals about that, too.

8:13Right. Yeah.

8:15Jasmine Enberg: And I think more recently now, you know, some users were voicing concerns that they were, you know, they felt like they were being censored after they were struggling to upload videos that were critical of the Trump administration and ICE and the huge immigration crackdown that's happening right now, especially because of several of TikTok's new investors, you know, including Oracle, have ties to President Donald Trump. Oracle's co-founder Larry Ellison is very close with the president. So that coupled with concerns about TikTok's new data and privacy policies as part of this new app, all of that kind of caused its own storm for TikTok over the weekend.

8:51Jasmine Enberg: People were pointing out that after the new version of the app launched, users in the U.S. got a pop-up notification with the new terms. I think in particular, people were concerned about the precise location data. So instead of, you know, just approximate data, it does say it has your precise location. Users had to opt into that. But the language on the pop-up notification was kind of vague and confusing, as terms of conditions, terms and conditions often are. So people were, you know, some people said that they are just throwing in the towel and deleting the app. Of course, we'll see if they come back or what happens.

9:22Jasmine Enberg: But Censor Tower noted a 150 % increase in uninstalls in the five days after the TikTok deal compared to the five days before it. You know, it's worth noting that a lot of apps, you know, collect precise location data, of course, like a Google Maps, right? It kind of has to know where you are. But most people rarely pay attention to kind of terms and conditions unless, of course, there's a reason to and things blow up on social. TikTok did not have any comment about the terms of conditions update when we asked. I mean, I think perception is reality on social media, right? And this reminds me so much of, you know, when Elon Musk took over Twitter and transformed it into X.

9:59It was a really big story that I was covering at the time. And people immediately started calling it a right-wing network. And other people were immediately saying that the app was now dead. And in some ways, of course, it was, you know, after some time, especially after he retired the brand Twitter and renamed it X. And it's also true, of course, that, you know, the content did start shifting to the right. We also saw the rise of, you know, conspiracy theories and other unsavory content when he loosen the content moderation guardrails. And we also saw that a lot of people, especially left leaning users started to leave the platform.

10:37But a lot of those changes didn't happen overnight. It just felt like they did. Right. And if you look to flash forward to today, I mean, X still has somewhere around 400 to 500 million users worldwide. It's also still a place where, you know, news is broken or where people go to share and find information, whether or not it's reputable. But I mean, like, for example, when we were looking to see whether the TikTok outage was over, we were going to TikTok USDS's new Twitter account or X account, right? And that's where we were getting a lot of these updates. And so, you know, this isn't totally unprecedented.

11:16I also think, you know, that a lot of the challenges that we're seeing with TikTok's algorithm, meaning it showing generic content or the same videos over and over again are probably going to settle, right, as it starts to relearn what its users like. And it's also not in the best interests of TikTok's owners to really drive this thing to the ground, right? Or change it into the propaganda machine that a lot of people think that it's going to be. That is going to drive away creators. It's going to drive away brands and advertisers. And that's how the app generates revenue, which is what its buyers want it to do, right?

11:55That said, though, first impressions really are incredibly important. And TikTok's new US app did not have a very good first one. I do imagine that a lot of the people who deleted the app over the weekend will probably return. New users are probably going to join. But the reputational damage could hamper TikTok's longer term growth prospects. I mean, you know, again, if you think back to the X example, it is not exactly the same scenario. Those changes were much more material than what we're seeing now, but it definitely had a ripple effect on how, you know, people were using the app and how much revenue it was able to generate.

12:34Jasmine Enberg: It's always all about the money. It is. Which brings us to the brand side of things. So I think like a lot of users and creators, I'm sure brands were very relieved that they also didn't have to download a new app or use a new app. A lot of brands on TikTok also have global ad and creator strategies, which obviously would be really difficult to splinter and inevitably would lead to various disruptions and spending and so forth. After the deal was announced, TikTok was starting to work really hard behind the scenes to assure, you know, advertisers and brand partners that it's going to be business as usual, not to worry.

13:06Jasmine Enberg: According to a message we saw to brand partners, TikTok was telling them that they didn't have to take any action, that the business products would remain unchanged. Others pointed out, again, back to the data security issue of like, well, how real is this deal if nothing is changing and if everything's still in one app? But they are, you know, obviously trying to communicate behind the scenes personally with brand partners to make sure everything's OK. Yeah, that line about the business products not changing really stood out to me because, again, you know, that's not the only thing that brands and advertisers are worried about.

13:42I mean, even if the products remain the same, if the experience for users changes, that, of course, also has an impact on, you know, whether or not they want to be on the ad. And OK, even if TikTok didn't purposefully change, you know, those products, some of the brands that we spoke to after this said that they weren't exactly working properly. So one example we got was that shoppable tags in videos were broken and people or brands were still getting warnings in their dashboards about disruptions to the service late on Tuesday. What was really interesting is that TikTok was blaming migration issues as well as the big storm that we had over the weekend in most of the U.S.

14:22for the technical issues that were being experienced. This is a huge problem, right? Because performance is the most important thing to brands. And if the ads that they're spending their money on aren't working, they're not going to continue spending money there. That said, though, I do think that as they start to resolve some of these issues, which will happen eventually, we could actually see a surge in ad spending where a lot of brands or advertisers that may have held back on spending on the platform really loosen their purse strings because now at least we have some certainty that TikTok isn't just going to go dark.

14:58It is, you know, here to stay. But the problem is, of course, the longer it takes for TikTok to resolve these issues, the more it's really going to hurt not only its reputation, but also its business.

15:11Jasmine Enberg: Look, and all of these things are hugely important. And like you said, I think, you know, this will be a blip and we'll look back and be like, oh, yeah, that was a rocky time. But people kind of quickly move on and forget. But the biggest risk to TikTok is how much this hurts, like its cultural position, right? Like, I think for so long, TikTok has held on to like, its status as the app. You know, that's where it's driving culture. That's where trends are originating, you know, new creators are coming from there. And that's a big reason to that brands leaned into the app so heavily as well as creators, right.

15:42Jasmine Enberg: But even before, you know, all of this past weekend's drama, it felt like TikTok was kind of starting to lose some of its hold over Americans, right? Like, people, of course, still spend a huge amount of time on the app, it's still hugely, you know, relevant. But you know, new third party estimates released before the deal was signed showed that time spent on the app was either slowing down in growth or even declining. And I think in general, we're hearing kind of more buzz from people in the industry about TikTok not feeling the same, right? Like I've seen some, you know, posts and whisperings of like, is TikTok over?

16:14What's happening? So I think at the same time, you're seeing and part of that reason is

16:19Jasmine Enberg: because its competitors have been really, really strong, right? Like, YouTube has become, you know, the place to be for creators and brands brands for a long time, we're not spending a lot on influencer marketing there. And they're kind of now frantically trying to figure out their strategies on the platform. I mean, if you think about YouTube from its dominance on living room screens to, you know, nabbing the Oscar rights, right? Like all of this momentum is kind of going YouTube's way. And then reels. I mean, it's really good now, right? Like it used to be kind of the butt of the joke. And now it's really, really strong.

16:54And you're seeing creators similar to

16:56Jasmine Enberg: TikTok now having a lot of growth with Instagram reels. So people have choices. It's not just TikTok anymore. I think the other social apps have caught up. And that is probably the most existential threat that TikTok has. Totally. And the other thing I would point to is, you know, the conditions that led to TikTok sort of meteoric rise, like just don't exist anymore. I mean, we were cooped up indoors during the pandemic. And, you know, TikTok kind of burst onto the scene. And we had so much time on our hands and needed to be entertained. Right. And I think also, you know, on the creator side of things, it gave them such an easy entry point, At least relative to the other platforms that existed at the time into the creator economy.

17:37But our social media usage has shifted significantly since then. And you're right. I mean, Reels and YouTube really have emerged as big competitors. And I agree that a lot of the mood and the sentiment among users and brands and creators is really shifting towards YouTube. And YouTube is playing into that, right? I mean, how many times have we heard them say that they are the epicenter of culture over the past couple of months? But anyway, this leads us really nicely into our next story, which we wrote about in today's newsletter. And it's about Instagram Reels, because about five years after it launched, it feels like it is finally part of the zeitgeist.

18:15I mean, people are talking about Reels the way that they, you know, are talking about TikTok videos. And it just feels like it's finally having this moment in culture. Totally. And, you know, I know you and I spend much more time on Reels than we do on TikTok. I mean, I think my personal TikTok usage has like plunged since, you know, the depths of the pandemic. And I think a big reason is because you don't have the network effects on TikTok, right? Like when I see someone I know on TikTok, I'm like, swipe away. Like, I do not want to see that. But like, I think the shareability and sending Reels to friends is like a huge part of it.

18:50And DMs never took off on TikTok in the same way. yesterday actually you and I sent the same reel to each other at the exact same time and like we're always sending each other reels of like oh that's an interesting way that this you know creator did this so um yeah but that was a new one I completely brought that up that is so embarrassing because people people always say that we're the same person and clearly our Instagram algorithm seems to think we are as well so no and the algorithm has gotten so much better I knew that Reels was onto something because Reels figured out I was Polish before TikTok and started serving me Polish language Reels.

19:29I was like, oh, this is a turning point, I think. But obviously zooming out, I think Meta's investments in AI have a lot to do with it. I mean, helping to show Reels to the right people at the right time. But Instagram also put a big emphasis on making it easier for smaller accounts to get discovered

19:45Jasmine Enberg: because that was a big, you know, reason that so many TikTok creators and I remember talking you know, so many, you know, in 2020 and 2021 saying they could never break through on YouTube or Instagram. And then on TikTok, they just, you know, very quickly were able to build a following. So Instagram, you know, made that a lot easier. And TikTok got more crowded, you know, over time. So I actually wrote a profile of one creator related to this because I was hearing creators saying that they were seeing growth through Instagram Reels. So instead of building their audiences through TikTok, they were doing it by posting a lot of Reels.

20:16Jasmine Enberg: And that strategy worked for a lot of them. Yeah. And I think it makes a ton of sense. You're right. I mean, Instagram did so much not only to catch up to TikTok, but really just to improve its service. Right. And one of the products that I hear a lot of creators talking about is trial reels, which basically lets you post a reel and it goes out to non followers before it goes onto your profile and to the people who follow you. And so that lets them know how that content is performing and whether or not they should put it on their profile. Honestly, I think we should probably try that too. Like now as we're trying to build up our Instagram account, because it is not easy, you know, even coming up with ideas for Reels is much harder than it might look.

20:59But I think what I find most interesting about this moment that Reels is having is kind of the surprise, you know, we're hearing among people because like, yes, like you said, I mean, Reels has been the butt of the joke for a really long time. It was considered a place where you would just post your old TikToks, right? And especially for millennials, the joke was always that, you know, you wouldn't watch TikToks, you would see them once they made it over to Reels, right? I think a lot of that, you know, is starting to change. But I do think it also meant that a lot of people thought that this was a bad business.

21:34And that isn't necessarily the case, right?

21:37Jasmine Enberg: No, I mean, it has an annual revenue run rate of over $50 billion. I mean, to be fair, that also includes Facebook Reels. And I know that Facebook Reels are not as relevant as Instagram Reels, but they are obviously widely watched by Facebook users on the demographics. But I mean, like culturally zeitgeisty or not. And I remember, I mean, even in the early days, Instagram was trying to do things to kind of shed that TikTok reputation, right? Like remember, early on, they said that they were going to not, you know, recommend videos with the TikTok watermark. So I think all those moves over time helped creators actually create kind of reels first versus just repurposing.

22:16Jasmine Enberg: But yeah, I mean, I think the$50 billion, you know, annual revenue run rate, that was really a moment of like, wow, okay, this has become a big business driver for Instagram, finally. Yeah. And that really stood out to me in Meta's third quarter earnings last year. And we wrote a quick bit about it in our newsletter back then that basically what it means that is, is that if Reels were to be spun out into a separate app, which of course Meta was considering reportedly doing that by you, reportedly by Kaya Yurif during its antitrust trial, that means it would actually be bigger than both TikTok and YouTube in ad revenue.

22:54That's, of course, assuming that it would continue on the same trajectory, but that just goes to show you how big of a business it really has become. Yeah. And I think a lot of people were comparing

23:04Jasmine Enberg: reels to stories, which took off pretty much immediately after Instagram copied it from, you know, Snapchat. And it's still hugely popular for users, creators and brands. But I think the difference is that meta obviously was just so much bigger and Snapchat didn't have the same cultural cachet as TikTok. I mean, look, it has a lot of loyal users. It's still, you know, the primary way that a lot of teens and young people text. But it also didn't immediately take off as a business. So it just shows you like it takes time for a new product to ramp up. Advertisers have to shift over. I mean, if you think about even the shift to vertical content for advertisers right on social, like none of these things are really overnight successes in the way that they seem like from a user adoption standpoint.

23:48Jasmine Enberg: Yes, stories took off immediately and reels just took longer. You know, advertisers just have to learn to adapt to new formats and they're not, you know, as nimble as creators are who could, you know, pivot more quickly. To illustrate that point, I mean, when Snap CEO and co-founder Evan Spiegel joined LinkedIn, remember he made his title VP of product at Meta, a little cheeky moment there. Yeah, I mean, that was so brilliant. Honestly, I think I laughed out loud. And honestly, I mean, it just shows that he has a really good sense of humor. I was kind of frustrated, though, that more people didn't quite get it.

24:22And I think to me, that really showed that stories really has just become such an integral part of the Instagram experience. And I'm not sure that, you know, everyone outside of this industry, at least, associates it with Snapchat anymore, because it just is so core to the Instagram. To follow up on your point about, you know, how advertisers really do have to adapt to a new ad format, I'm thinking back to when Meta launched ads in WhatsApp, you know, about six months ago. And part of the reason that it decided to do that in WhatsApp Stories was because it is a familiar ad format now for advertisers.

25:00I mean, they're used to advertising in Instagram Stories. They're also used to advertising in Facebook Stories. So they didn't have to learn something new. Of course, there's other reasons for it too. I mean, WhatsApp Stories is removed from the main chat tab. So it might feel like less of an invasion of privacy to do it there. But again, you know, that just illustrates the point of, you know, it does take some time, especially for a new product to really ramp up in revenues.

25:28Jasmine Enberg: Definitely. And I think, too, like every app has the same features now. I mean, right. And I think they cycle in and out. Like, remember, after stories, right, LinkedIn had stories, and then there were disappearing tweets and all this stuff. And then LinkedIn was like, okay, never mind. They were called, right? And then LinkedIn was like, okay, never mind. We're sunsetting stories, because it turns out no one on LinkedIn wants to post stories. So as you can see, I mean, And all these, I did this chart back in 2021 about like all social platforms look the same now because sometimes I'm on Instagram versus TikTok versus like Facebook and just the experience just all looks the same now.

26:06But that doesn't mean every feature translates, but they certainly try at least when they see something's working. Yeah, definitely. But back to Reels for a second, because I think what all of this goes to show is that clearly behind the scenes, Meta really was building Reels into an ad powerhouse. That part really isn't surprising to me, having covered Meta's ad business for so many years. It is the second largest digital ad seller in the world. It isn't the most innovative, as I think we've clearly established, but it knows how to execute. And advertisers really like that. And even before it reached this$50 billion revenue run rate, I mean, Reels was working for advertisers and for creators in other ways.

26:47I was looking back to some older data from influencer marketing platform CreatorIQ, which showed that over half of brands and 77 % of creators said that Reels was the best performing type of Instagram content, beating out posts and stories. And that was all the way back in 2022. Now, I think part of that, of course, is the fact that it was less crowded than, say, on TikTok, right? There just weren't as many people posting Reels at that point. Also, of course, we had Instagram pushing that content, meaning it was much more visible on the platform. But it also means that people were engaging with reels, even when they were saying that they didn't like them or, you know, found them to be cheesy or whatever, you know, insults they wanted to throw at them.

27:34And I think that kind of just speaks to more broadly something that we see in social media all the time, which is that what people say is not always aligned with how they behave.

27:44Jasmine Enberg: Yeah, and I think we should know that there is some evidence now that engagement on Reels has started to decline. I mean, I think that makes sense. And it's kind of true across the board for Instagram content, because we've seen I think a lot of it has to do with the fact that people are just engaging less publicly on feeds and more in DMs. I mean, yes, I'm sending Reels on DMs, but then it's like starting a conversation or whatever. So I think that obviously will help Reels retain its relevancy and time spent because it can look at those signals and kind of serve you more of those Reels. And, you know, like we said, you know, that is a big part that TikTok doesn't have.

28:18Jasmine Enberg: Like DMs really never took off. They age gated them as well. So they made certain decisions that then hampered that growth. Right. It's always a trade off. So, you know, TikTok, obviously, you know, people would send, you know, TikTok videos via WhatsApp or via text. But then they started, you know, making you have to sign up. So then people stopped doing that. Well, that was a big part of its growth strategy, right? I mean, it was back when it first launched and it needed to, you know, get awareness out, right, and get people onto the app. And so they actually encouraged people. And the watermark was a big part of that.

28:49And so they encouraged people to send those videos through WhatsApp. They also let you link to Instagram and Facebook and your other social accounts and displayed that pretty prominently. And that, along with the massive marketing blitz it had elsewhere, I mean, obviously really worked. But now that it has what 170 million accounts in the US, I mean, it doesn't really need to do that anymore. And you know, by the time they launched DMs, I think, you know, people just really hadn't built that muscle on on TikTok. Moving on, let's talk a little bit about Sundance. First, Kaya, how is your jet lag?

29:21Oh, my God. Okay, so I had an eight hour time difference. I also I think I was on the plane potentially longer than I was at Sundance. I got caught up in the snowstorm as well. So I was stuck in Dallas for I think almost five hours because they couldn't find our pilot and the terminal was freezing. But anyway, it was totally worth it because I had never been to Sundance before. We were so excited to do our live podcast. And of course, it was special to be at Sundance at the last one in Park City. And we were super excited to get to talk to Ocean Spray.

29:52Jasmine Enberg: For those of you who missed it and were not at Sundance, We published a special newsletter edition this week about how the 100-year-old brand is reinventing itself and leading into trends and conversations happening online from UTIs to high-fiber diets known as fiber maxing. So it was a very fun conversation. Of course, Ocean Spray famously was thrust into TikTok early with that viral video of the man on the skateboard with Fleetwood Mac playing. So that kind of forced, you know, Ocean Spray, which is a heritage, you know, longtime old school brand to kind of get on TikTok early. So it was a really fun conversation.

30:29So check that out in our newsletter at scalablepod.com. I have to say that talking about UTIs on stage in front of a crowd was definitely a first for me. No, I did not think. I also think it's really fun when brands get innovative like that. Like a lot of like, you know, if you think about cranberries, right, what do you think of cranberries? cranberry vodka and UTIs, right? And they're leaning into that instead of trying. Yeah, true. True. Other things too, but like those are the, you know, those are top cases for sure. UTI is definitely the first thing that comes to mind and cranberry vodka.

31:02I think you're right. And those aren't necessarily, I mean, those generally aren't considered brand safe, right? So it is really cool to see a legacy brand and especially really kind of leaning into those conversations and making it a part of their brand story. But another first for me at Sundance was that I got to ski. I've never done that before on a business trip. And so many people were complaining that there wasn't enough snow there. I think, Kaya, you got most of it when you flew to Dallas. But for me, it was great. I mean, they make a lot of snow too. And I hadn't gotten to ski since really, I think the last time I was out in the slopes was in 2024.

31:36So that was a real treat. Of course, you know, the podcast and conversation with Ocean Spray was as well. But OK, a couple of takeaways. I think one overall, the impact of AI on the film industry was definitely on display at Sundance this year. We had Google, for example, premiering a new short film that was entirely AI generated called Dear Upstairs Neighbor. That follows a$2 million investment that Google.org, which is Google's philanthropic arm, made in the Sundance Institute to really help filmmakers and creators get more resources and education and training around AI. Obviously, there has been a huge amount of upheaval around AI in the film industry, including in Hollywood and including at Sundance in 2024, when there was a walkout from one of the films that was being screened after a couple of audience members had a big argument about AI.

32:35There were also a lot of creators at Sundance this year. TikTok brought 10 film-focused creators to the festival. Amelia de Goldenberg, who hosts Chicken Shop Date, which is a really fun series. She was also there. Taylor Swift's mom was there with Travis Kelsey's mom, which was a huge highlight for me. I am so bummed. I did not get to see them. We were on Main Street. We could have seen them. But on Main Street, I did see Christopher Melody. He plays Elliot Stabler in Law & Order SVU. And this is great because I'm probably one of the only New Yorkers who never saw Law & Order being filmed on the street when I lived there.

33:14I don't know, Kaya, did you? No, I lived there for 10 years. And also, I did not see him because I was like busy buying something in a store. You were buying a hat. Yes, I was buying a hat, a Sundance hat. But it was also interesting kind of walking up and down Main Street to kind of see who was and wasn't there. I mean, TikTok obviously had a presence. It also announced some ad products that were aimed at entertainment companies. But none of the big social platforms had big activations on Main Street. Instead, it was companies like Adobe, Dropbox, Canon, right? All these companies that, of course, intersect with the film industry and creative industries.

33:49And Acura, the car company, had like a huge, huge activation. UTA also had UTA House, which it's had for a long time, and they had celebrities do panels.

34:01Jasmine Enberg: There weren't any AI-related protests this year, but a lot of the big movie stars who were there used the moment to voice their support for anti-ice protesters. News of Alex Preddy's killing broke during the festival. We got the push alert while we were there. There was a protest organized for last Sunday called Sundancers Melt Ice, and Natalie Portman wore an anti-ice pin and told Deadline in an interview from Sundance, quote, What's going on in this country right now is absolutely horrific. What the federal government, Trump's government, Kristi Noem Ice, what they're doing is really the worst of the worst of humanity.

34:40Jasmine Enberg: Olivia Wilde, Elijah Wood were some of the other celebrities that spoke out against ice during the festival. Yeah. And I think this shows just how much what's happening in Minnesota with ICE really just has lit up the entire country and creators, too. Right. We saw both Alex Cooper and Alex Earl post about it on social media this week. Earl reposted a post about Pretty, which said that he died defending a fellow citizen from ICE aggression. Alex Cooper was even more blunt. She wrote F word ICE. And neither of these creators typically post about politics. I mean, Cooper did have vice or former vice president Kamala Harris on her podcast, but engaging in politics is not common for either of them.

35:24Jasmine Enberg: And even with that Harris podcast, like she stopped short of endorsing her. Right. And she just had Michelle Obama on as well. So maybe she is like slowly dabbling kind of more with politics. But when I saw the Alex Earl post, I kind of stopped in my tracks for a moment because, you know, I think so many of these big creators for a long time have debated, you know, how much to share about politics. There's so many concerns, right, about the ramifications of that alienating followers, getting shadow banned, having brands not want to work with you. And I think what's so interesting about this moment is that, you know, yes, some of these big names, but also really apolitical, totally nonpolitical accounts and creators are speaking out to The Verge, you know, did some very in-depth mining of the internet and found, you know, an account, a duck account on TikTok, right?

36:14Jasmine Enberg: Another account dedicated to gravestones in New England, right? Like all of these creators are pausing, you know, their existing content to write, you know, at like the gravestones in New England post was very long saying, you know, this is not normally what we post about, but like, this is why we want to say something. It was also interesting to kind of see some backlash on social media against people, you know, people were criticized for, you know, posting about the assassination of right wing influencer Charlie Kirk, but not about Freddie. Taylor Frankie Paul, who is a TikTok creator and who also will star in ABC's The Bachelorette this year, may have seen those posts because she posted something alluding to that saying, quote, feeling very heavy from the video I saw today.

36:54Jasmine Enberg: My heart goes out to Alex Freddie's family. It's been weighing on me just like the day I watched Charlie Kirk's video. Both were devastating to watch. Both are not OK. So I think a lot of creators have been rethinking the role politics and current events play in their work. And we've seen this time and time again, right, with Israel, Gaza, the Ukraine war, the pandemic. Right. And I think since the pandemic, more of them have felt comfortable using their big followings and platforms to promote vaccines, to throw their support behind BLM or even back presidential candidates. But still, many of them have been holdouts and are worried to go too far.

37:30Yeah, and it makes a lot of sense, right? I mean, I think a lot of the hesitancy that creators have felt around engaging in politics or speaking out on social issues is that they're worried about maybe alienating or losing their followers, also potentially losing reach on platforms. I mean, I know anecdotally, there have been a lot of creators who have said that their stories, for example, on Instagram have been blocked. Right. And then, you know, also losing brand deals. Right. I mean, not brands have not been always so welcoming of political creators for a variety of different reasons. But I do think, you know, this was just such a big and horrific moment that a lot of creators felt like they needed to speak out because either staying silent or being neutral on the topic could be seen really as tone deaf or as a political stance on its own.

38:22Jasmine Enberg: I totally agree with that. I also think a lot of it is coming from the audience. Like they are increasingly calling on and expecting creators to respond to current events and use their platforms for advocacy. You know, social media and creators have become such important news sources and people want to know, you know, what creators think about these topics and to help them make sense of it all and also feel like they're, you know, being seen and heard. So the demand is also coming from audiences as well as creators own, you know, volition to do this. I mean, I remember talking to creators about this during the Biden Trump presidential campaigning.

38:58Jasmine Enberg: and you know one creator said to me you know I don't care if I lose thousands of followers like what a waste if I'm not using my voice to talk about issues that are important to me like if I'm just telling people what to buy like that's a waste so I think you know a lot of creators have have pivoted a little bit and are more comfortable using their voices and I think that's forced brands to be more comfortable with it too right I mean politics has just seeped into everything And to your point, I mean, social media is now one of our biggest news sources. And so it's unavoidable. I mean, every time I sign on to any social platform, there is political news.

39:34A lot of times it's couched among other posts that have nothing to do with politics, which can be a bit of a jarring experience. But it is certainly there. And I think brands have kind of understood the same thing about audiences that creators have is that they're really expecting, you know, creators to take a stand, have a point of view. That's one of the big reasons, you know, why they follow them. I mean, they relate to them on a personal level, and they want to understand how they feel about these issues, and also to kind of know that they're not alone, right? And what's really interesting here to me is that this sort of higher level of comfort with creators speaking out about politics among brands is coming at the same time that they've maybe pulled back a little bit in, you know, political messaging in their own advertisements.

40:21I mean, there was a time when you saw brands really having these massive, splashy campaigns around things like Black Lives Matter. And you certainly still have some brands that are doing that. I mean, Gap is a good example. Dove has always, you know, had campaigns that promote diversity and, you know, sort of other social topics. But we have seen them kind of walk a little bit back on some of those types of activations.

40:46Jasmine Enberg: I would just add, too, it'll be interesting to look back and see if this was a turning point. Like, you and I sort of had this debate a little bit, like, is this a turning point or is this just such a horrific event that creators just had to say something? So it will be interesting to see if, you know, some of these creators who spoke out about Alex Preddy's killing will, you know, be more vocal in the coming weeks, days, years, right, on these issues. And it'll be interesting, too, around the midterm elections to see, you know, how things have shifted and how both Republicans and Democrats activate creators.

41:18Yeah, I mean, I've been thinking about that since we had our little debate a couple of days ago about this. And I think maybe, you know, on the left, it may be the beginning of a turning point in the sense that, you know, we now have so much momentum from other parts of the industry too. I mean, we talked on this podcast about And Media, which is a new fund to support left leaning creators. And I think, you know, one of the ways in which this might work for the left is finally having, you know, big voices that are willing to take a stand, have a point of view and aren't afraid to express it, which we really haven't seen before.

41:52And, you know, Alex Cooper. Which the right is very good at doing. Which the right is very good at doing. And Alex Cooper and Alex Earl are two very, very big names that could potentially push this over the edge. On the other hand, it really just is such a horrific moment that, again, it makes sense. And, you know, I feel like a lot of people just felt like they had to speak out. And it's hard to know right now how long this will last.

42:16Jasmine Enberg: Moving on from politics, here is what else is going on in the creator economy. Tech earnings season has officially kicked off with Netflix reporting earnings last week and meta reporting yesterday. We will do a full wrap of our earnings takeaways once we have all the numbers. but here's what we found interesting from Netflix. On a call with analysts, Netflix co-CEO Ted Sarandos again acknowledged the competition it faces with YouTube. We all compete with them in every dimension for talent, for ad dollars, for subscription ad dollars, and for attention. Of course, that is not a new refrain. They have been name dropping YouTube over the past few quarters, but they didn't end there.

42:55Jasmine Enberg: In its letter to shareholders, Netflix also directly called out Instagram, which recently brought Reels to TVs as a competitor. So Netflix has long stressed the competition it faces from YouTube and social media in general for attention, but name dropping Instagram has been relatively rare to hear from the company. So that was super interesting this quarter. Yeah, definitely. And I think what made it even more interesting is that one day after earnings and those comments by Ted Sarandos, Netflix also announced a new reality show with social media eight girl Alex Earl. And that series will premiere this year and it's going to follow her as she navigates her life and business after college.

43:35In case you had missed it one week before that, Earl also launched a new interview series on YouTube called Get Real With Me. That show plays off of the Get Ready With Me videos that really made her famous on TikTok and Instagram. Her first guest is actually Jake Shane, who hosts a podcast called Therapist. And he actually now also has a Netflix deal that was announced around the same time. So you can, again, just see how much competition there really is there for creators who are active across all of these different platforms. And for the creators, they're like, great, I'll be on Netflix, I'll be on YouTube.

44:13Like, this is great for them. They're on every surface while the tech platforms are duking it out. The comments also came after some really interesting remarks from Matt Damon went semi viral. He said that Netflix executives tell filmmakers that quote, it wouldn't be terrible if you reiterated the plot three or four times in the dialogue, because people are on their phones while they're watching. So he made this comment while he was promoting his new Netflix movie with Ben Affleck on the Joe Rogan show. So it seems like Netflix is trying to bet that Earl and a slew of these new creator podcast deals could help change that.

44:51Although maybe people will still be watching Alex Earl's show while on TikTok. That's probably more realistic what will happen. So it's so funny because I actually watched Matt Damon and Ben Affleck's new movie, The Rip. It was great. I really enjoyed it and highly recommend that you go watch it on Netflix. But the whole time I was watching it, I was listening so intently to see if they were actually repeating the plot over and over again. And I was like, I feel like I'm like, yes and no it wasn't as sort of like overt and bad as i thought it would be but it is something that i've been paying a lot more attention to on other shows now too including the morning show which i'm finally catching up on the final season of i like i don't want to infect you with this because it does change the experience of watching tv shows but it is really interesting i think you know my big question though with all of these big deals that have been announced over the past couple of weeks, like how long can this really last?

45:43Because right now it just seems like almost every big creator that makes content that's actually suitable for TV has a deal with a streamer or a studio now. I mean, even Darman announced a deal with Fox Entertainment for 40 new microdramas just a couple of days ago. So who's left, right? I mean, just off the top of my head, I can think of Michelle Carey, Good Good Golf. I mean, there really aren't all that many left. And also, one thing I'll add is they're double dipping. Dharman has the Samsung TV deal. Now he has Fox Entertainment.

46:15Jasmine Enberg: So maybe it's just that creators will expand the number of... These top creators will just keep expanding the number of deals they're doing with different entertainment properties. Totally. And speaking of TV, Substack is actually the latest company that has launched a TV app. I have to say that we did not see this one coming. No. But the app is available on Apple TV and Google TV for Substack subscribers, and they can view content that they've already subscribed to, including things like live streams and videos from newsletter writers. Yeah. And Substack, of course, joins other social networks like Instagram and Pinterest, which have recently followed YouTube onto TV screens with their own apps or shows.

46:55But actually, stepping back, Substack's move makes quite a lot of sense.

47:00Jasmine Enberg: It's, you know, we've written about this before that newsletters aren't just newsletters anymore, right? When we launched Scalable, we knew we didn't want it to just be a newsletter. You know, one format, I think, is always limiting. So even though newsletters are a key format for us, we love newsletters. We've seen this kind of across the board, right? Where as journalists and kind of others are going independent, the playbook is changing, right? Like you're not just launching a Substack newsletter or, you know, a newsletter on another platform. Many people are now embracing video formats from podcasts to live streams.

47:30Jasmine Enberg: It's hard to kind of just be, you know, one platform or one format focused. So as many of Substack's writers are leaning into video, Substack has also been ramping up its video efforts over the past few years, you know, improving and incorporating more and more video tools. As Substack's CEO put it to The Hollywood Reporter, he said, quote, despite what you might hear, people still read. We would know. But they watch video, too. And sometimes that video is best on a TV. Beehive, which is the newsletter provider we use, has also been adding video podcasting features, including the ability to watch podcasts directly within Beehive.

48:05Jasmine Enberg: So if you go to our website where we embed our podcasts, you can actually watch them there directly now without going to another platform like YouTube. The other difference, though, is that Substack has been focusing also on building its own mobile app, which is looking kind of more and more like a social network. So it's interesting to see kind of the splintering in the newsletter space where you have a Beehive, which is a SaaS model, which I don't think they have an app. But, you know, Substack is really focusing kind of on this mobile app, social connections, network effects. And, you know, as the social networks are chasing each other, it makes sense that Substack would try to throw its hat in the ring, too.

48:42Yeah, I mean, I think the comparison to Beehive is such a good one, because I think a big part of this, too, is that Substack finally has, you know, real competition within the newsletter space, right? I mean, there was a report out by Reuters not too long ago that I was actually quoted in that said that Beehive expects to nearly double its annual revenue to$50 million this year, and that the platform has over 40 ,000 monthly active users and nearly 15 ,000 paid subscribers. So that is really massive growth and shows that it is a formidable competitor to Substack, which really has been number one in the newsletter space now.

49:15Like you said, Beehive does operate very differently from Substack. It offers a monthly subscription fee to use the service. It also has an ad network, which helps creators fill their newsletters with ads that are bought programmatically. Substack really is focused on the paid subscription model, and it takes about a 10 % cut from writer's subscription earnings. although of course we did hear that it is now going to start to dabble in advertising as well I think another key difference and something that you know was really important to us when we were launching scalable is that Beehive is a lot more customizable than Substack is I think you know all Substacks look alike they look very similar and that is fantastic they look the same I'm sorry they look the same yeah they do they do I mean but that is really good for Substack's brand right I mean when you think about newsletters you think about Substack that's the number one It's like Uber, right?

50:08And it's the first thing that pops into your head. But I think for us, because we weren't just launching a newsletter, we really are launching a media company. We wanted our brand to be front and center. We wanted to have the same look and feel across all the different properties, whether that's our newsletter, our website, our podcast, and whatever else we might have coming up in the future. But BeHive, of course, is not Substack's only competitor. There's also Kit, formerly known as ConvertKit. That has also expanded beyond email marketing and newsletters, and it allows creators now to sell things like digital products.

50:43I don't necessarily think that Beehive and Kit are going to get into the TV app space anytime soon. I mean, they really are just very different services than Substack. I'm also not convinced that Substack's TV app is going to be a success. I would like to see, you know, real figures on how many people are actually watching live streams and how many people are watching, you know, videos from newsletter writers, you know, to kind of support this. And if they would want to watch that on a TV screen, or if they just want to watch it, you know, on their phones or on their desktops where they're already doing that.

51:16We are, however, waiting on TikTok's new TV app, and maybe that'll come sooner rather than later now that its future is secure.

51:24Jasmine Enberg: A major lawsuit to keep an eye on a 20 year old girl from Chico, California claims her social media addiction led to depression and suicidal thoughts. The case which went to trial this week is against Meta and YouTube. Snap recently agreed to a settlement in the case, and just hours before jury selection was going to begin, TikTok also settled. So Meta and YouTube are left. This case is important to pay attention to because it's the first in a series of cases expected to go to trial this year, which for the first time will test whether social apps can be held liable for harming young people's mental health through their product design, which critics say is designed to be addictive.

52:04Jasmine Enberg: There are many other similar cases to these, including from families, schools, and attorneys general. Of course, not all will go to trial, but the decision in this case is likely to have a ripple effect. Yeah, it just feels like we're kind of finally in this moment now where the impact of social media on young people is really just having a moment. I mean, I think it has been building for a while, starting with the Surgeon General's warning back in 2024 about the negative effects that social media has on the mental health of young people. But the law moves really slowly, and it just finally feels like it's really got that momentum.

52:41I mean, back in December, Australia passed its social media ban for users under 16. And at the time, we said that that would be a test case for how this might play out in other countries around the world. Now you have France voting to ban social media usage for those under 15 years old, for example. Separately, there's also a group of parents, British parents, who are currently suing TikTok in the US. They're claiming that their children died while attempting a blackout challenge on the app. TikTok, of course, has pushed back on that. And then you have the YouTube CEO, Neil Mohan, who outlined in his annual letter how youth safety online is going to be a key priority for this year.

53:24I mean, his annual letter is a big moment for the creator economy and social media every year and really helps define how the year might shape out. Where all of this is going to me, though, is kind of an open question, right? But it is certainly positive just to see so much momentum around protecting young people online. My other big question is, though, what about AI and youth safety, right? I mean, I think we're starting to see signs of it becoming more of a theme. Some of the proposed social media bans, like the one in Denmark, for example, include AI chatbots. We also saw the FTC launch an inquiry into how these AI chatbots kind of impact teens and kids.

54:06but if you know what's going on in terms of social media and and youth safety is any indication it's going to be a while before we start to see any sort of real regulation or or laws around that too

54:20Jasmine Enberg: totally and so far we've seen you know character ai and meta start limiting chatbot use for for teens so we're starting to see some movement there but agree i mean it's taken a long long time to get here. I mean, decades since social media really started. Well, that is all the news we have for you this week. So we will see you back here next Thursday.