Constine's Newsletter: Recent Episodes
Josh Constine
Journalists, experts, and founders discuss tech's top themes with your host Josh Constine
constine.substack.com
Learn how creators are excluded from the traditional banking system and how a new wave of startups are filling the gap on this week’s PressClub podcast. I interview 5X Canadian chess champion and Twitch star Alexandra Botez plus the credit card for creators Karat’s founders Eric Wei and Will Kim about why creators deserve fintech. Listen on Apple, Spotify, or your favorite podcast app
The music industry is the direct ancestor of the creator economy. They both revolve around artists, often under-paid for their work, who must expand beyond their primary medium to build an audience.
Being a virtuosic musician ceased to be sufficient in the 1960s, when The Beatles proved the power to build fandom by becoming actors and on-screen personalities through films and The Ed Sullivan Show.
Similarly, a YouTuber, TikToker, or Instagrammer can’t stay put on their original medium if they want to keep growing and diversifying to reduce platform risk. They need to expand across text, image, audio, and video formats, and become or hire community managers, data scientists, ecommerce aces, and licensing sages to extend their presence.
Yet too often, both are left without fair tools to finance their teams and content production. Musicians get stuck in exploitative record deals while being expected to make exclusive digital content for free. Creators lack the working capital to pay for video shoots and editors while they wait for much-delayed ad revenue payouts and brand deal money to arrive.
Today we’ll explore two of our fund SignalFire’s investments solving these problems. Karat’s financial services for creators, and Flymachine’s concert streaming from the shows artists already play.
Bridging URL & IRL concerts via video chat with Flymachine
Music lovers deserve more than sitting by themselves watching single-camera streams from an artist’s basement. The livestreamed music experience should evoke the same excitement of arriving with friends or serendipitously running into them, and the kinetic immersion of a great concert venue’s sound system and stage lights -- all while letting you see the best artists anywhere from the comfort of your home.
Musicians tried their best this past year with the limited tools they had, but concert streams felt more like Zoom calls than culture. Bands like Sofi Tukker who streamed every single day did society a great service, but too often, the level of added work didn’t match the compensation.
To give fans a worthy concert-going experience while supporting the music industry, you need to help:
Artists earn money streaming shows without piling more work upon their already busy schedules
Venues bring fans the intimate close-ups and entrancing light shows they’d get in-person while paying their staffs
Fans feel the camaraderie of attending concerts with friends, even when they’re apart
Flymachine’s concert streaming destination brings these elements into harmony. By equipping the world’s iconic venues with top-notch cameras, visual effects, and social streaming technology, Flymachine is pioneering the digital future of live events.
Fans get front-row seats right beside their friends thanks to picture-in-picture video chat overlaid on the best views of the stage. You can start a private room where you can mix the show’s sound with spatial audio from your pals to bounce between focused listening and commentary from your crew. Or, you can explore the rest of the crowd to run into friends or meet fellow fans. All the while, you get to support independent venues while enjoying jaw-dropping special effects and crowd visualizations. You’re in the center of the action awash in superb sound without anyone stepping on your shoes.
Attending events through Flymachine, you’re not limited to the tours coming to your town, or the artists willing to stream for free. Flymachine taps into the endless supply of in-real-life performances coming to iconic concert halls including some of Rolling Stone’s Top 10 Venues In The Country like NYC’s Bowery Ballroom and The Crocodile in Seattle. Artists gain an additional revenue stream by opting in to broadcast via Flymachine, allowing them to play to stadium-sized crowds from the intimate stages they prefer.
We spent the past year exploring the concert streaming space. Too many startups either forced artists to design and play shows just for streaming with no live audience to react to, cut venues out completely leaving performances looking drab and amateur, or ditched fans in asocial isolation. That's why concert streaming hasn't reached its full potential until now.
Building a company like Flymachine takes a special team with the experience to balance all the stakeholders in the notoriously complex music industry. You need someone like CEO Andrew Dreskin, the man who pioneered modern concert ticketing. He built TicketWeb, which was acquired by TicketMaster, and then TicketFly which was bought by Pandora. Andrew has spent 30 years in the business, from running the Beserkley Records store to managing the Virgin Mobile Festival to leading music at EventBrite and founding startups. That’s given him the empathy for artists, managers, labels, venues, and promoters that’s necessary to build a streaming destination where everyone wins.
Minutes into watching my first Flymachine show, I fell in love with a new band and ran into an old friend. I laughed with buddies about how much we missed live music, then dragged my little video window away to zone into a beautiful song. Soon I was wishing I could watch ballet or stand-up comedy with a similar experience. Luckily, Andrew and his amazing team have a vision to bring mediums beyond music to Flymachine.
Immersive. Social. Built so artists can expand access to their performances while growing their audience and business. That’s why SignalFire could not be more amped to support Flymachine on this audacious endeavor by leading the startup’s Series A financing that brings it to $21 million in funding (read more on TechCrunch). Other music industry legends joining the round include Redlight Management founder Coren Capshaw who manages Dave Matthews Band and Phish, concert promoter Another Planet Entertainment, and musicians like Mumford & Sons’ Ben Lovett.
Go check out Flymachine’s calendar of upcoming events. Regardless of where you are, we look forward to bumping into you at the next show.
We’re moving towards an experiential culture. People don’t end up on their deathbed lamenting “all those things I could have owned.” It’s “all those things I could have done!” Flymachine lets you do more. When you can experience culture surrounded by friends, you make memories, and URL becomes just as good as IRL.
The Comprehensible Wedge and Karat's credit card for creators
Flymachine’s genius go-to-market strategy comes from equipping venues with cameras so artists can stream the shows they already play. Bands don’t need to record extra shows, change their stage set up, or even know much about streaming. They just promote the Flymachine broadcast and get paid extra. Now venues and artists are rapidly signing up. That’s what I call a comprehensible wedge.
The most impactful companies typically solve for multiple problems or customer demographics, but that's not how they launch. Instead, they unfold like a good book, hooking you with an eye-catching cover and then drawing you in with an enthralling opening. Products that overwhelm us with too much functionality or confuse us with the wrong wedge appear complicated, inscrutable, and exhausting. Karat CEO Eric Wei discovered that while building a suite of fintech services for creators
"We made the classic mistake many startup founders do" says Wei. His team started with the wrong wedge. "Let's go build taxes for creators. Let's go build QuickBooks for creators. Let's go do business capital for them . . . crickets" The problem was that most creators didn't know what business capital was, what QuickBooks actually does, or that taxes don't have to be scary.
Karat took off when instead, the team built a comprehensible wedge in the form of a credit card. It looks at a creator’s following and engagement rate to give them a credit score. Then they can pay for their content production and staff with Karat’s credit card, and pay off the balance when their ad revenue, subscription money, or brand dollars arrive. Now that Karat’s growing 50% month-over-month, it can layer on services around taxes, loans, mortgages, business incorporation, and other crucial but less seductive products.
Your comprehensible wedge is like the first level of a well-designed video game. It’s immediately fun or enticing, but step-by-step, it educates you about how everything else works. Only once you’re initially satisfied does it layer on more complicated mechanics. A good go-to-market strategy works the same way.
Alexandra Botez, the 5X Candian chess champion and Stanford grad couldn’t even get a bank account because old-school financial institutions didn’t understand how her Twitch streaming business worked. Karat equipped her with a credit card, and now it’s helping her invest in the startups whose tools power her creativity.
To learn more about BotezLive’s story and the rise of creator fintech, grab our podcast on Apple, Spotify, or your favorite podcast app
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit constine.substack.com
Download the PressClub podcast with Substack’s founders here or listen above while you check out this week’s essay:
Long ago, at a national newspaper far, far away, you’re a star writer. Readers open the Sunday issue and race to your section for your weekly analysis of current events. But you don’t feel you’re fairly compensated for the subscribers you attract and inform. A competing publication offers you a slightly better deal, but you’re scared of losing the fanbase you’ve built up. How would readers even know where to find you? You always dreamed of launching your own magazine, but you’re a writer at heart. You don’t have the initial capital, logistics experience, or distribution channel to print and ship your own publication. Plus, there’s no way you could pay your bills while waiting for the first subscribers to roll in.
So you stay put and stagnate. Your voice is diluted and homogenized to match the publication. You’re constrained by your specific beat, overbearing assignments, word limits, and the news cycle. The weird and wonderful ideas for articles die inside your head.
Fast-forward to today, and your options are much improved. Journalists, and many other types of creators, now have what I call “audience portability”. They can bring their fans with them when they switch employers…and many are discovering the best employer is themselves.
Starting over in the era of audience portability
You’re a star writer at a national newspaper. Readers open Twitter and race to see your key takeaways and behind-the-scenes commentary before reading your article. They reshare with friends and your follower count grows. Sure, the publication drives a lot of spontaneous page views, but your core fans connect with you directly. They care about your beat and your perspective but don’t have time for the dozens of other daily stories spread thin across topics. You’re a lot easier to identify with than the editors behind the scenes. A few botched reports and questionable opinion pieces have shaken their faith in the publication, but they trust you.
Perhaps instead of negotiating for a salary bump or bonus, you lobby to be able to put a signup link for your email newsletter at the end of the online articles. Your weekly blast to subscribers includes your latest stories for the publication, commentary on others related to your beat, and a little about what’s going on in your life. Your personality is your brand. It’s more relatable and human than some publisher’s logo that haphazardly bundles a range of voices. People feel like they know you. That means that no matter where you go, they’ll follow.
As Substack co-founder Hamish McKenzie explained on my show PressClub last week (get the podcast here):
“I think it's always going to be true that you can have that one writer, or a small handful of writers (and some people, maybe many more writers) you just really relate to so strongly that you're willing to go with them anywhere they go. And you respect what they have to say, and you kind of want to see their filter on — you want to see the world through their eyes.”
Then this week in Casey Newton’s Discord “Sidechannel”, Mark Zuckerberg reiterated a similar perspective on the shift towards individuals and audience portability: "
“A big part of the creative economy is that it's enabling individuals, and shifting power from some traditional institutions to individuals to exercise their own creativity . . . I think one of the powerful things that Substack has done is making it so that … if someone signs up with them, [and] decides to pick up and go to another place, your subscriber list is yours.”
Check out PressClub’s recent Q&A with Mark Zuckerberg and podcast with him plus the CEOs of Spotify and Shopify
Stay an artist while you start a business
So you go solo and launch a premium Substack newsletter. You’re comfortable building your membership there because it supports audience portability, and you could always leave. The announcement blows up on Twitter and a few hundred of your followers pay to subscribe. So do a subset of the free subscribers you’ve been steadily collecting. You were anxious they wouldn’t, though. Luckily, the crisis of poor monetization for creators has sparked a renaissance of new startups building tools and revenue models to help. Maybe your name was big enough that Substack paid you an advance to go independent, giving you cash in exchange for the majority of your first-year subscriber revenue. Or you got one of Karat’s credit cards for creators, with a spending limit based on your strong Twitter following and engagement.
The solopreneur model doesn’t work for every style of creation. Investigative journalists who spend months working on a big story are likely better served by publishers with fact-checking teams and that can bundle their work with daily news hits. Independent creators aren’t replacing all of the old formats, but instead augmenting them with more niche, intimate, and traditional content.
Your favorite part is you just get to write. Like how AWS made it easier to launch a startup because you didn’t have to spin up servers manually, Substack handles the engineering infrastructure and payments so you can stick to your art. Substack might even connect you with health insurance and legal assistance if someone tries to sue. You ally with some other writers on a Telegram group chat like Type House or your own Discord server like Sidechannel to replace your old editors with peers who can help you workshop stories. They’ll even take over a week of publishing duties for your newsletter if you’re feeling burned out and need a vacation.
Refreshed and empowered, you embrace your weird and wonderful ideas. You write for your niche audience who love your eccentricity, instead of making one-size-fits-none content for the lowest common denominator. You define your own rules around objectivity, and readers respect when you make predictions or judgment calls. Because you only publish a few times per week, you can push newsletters to readers’ inboxes instead of praying they’ll navigate to your site. The community grows, and grows more tight-knit.
Soon enough you’re earning as much as you did at the publisher. It’s undoubtedly high-pressure. Some who go this path and fail to find creator-market fit or become a confident self-promoter will wither away and slide back to the publishers. You feel under the gun to deliver for your subscribers to prevent churn. But at the same time, it’s invigorating to see a big scoop or insightful essay you put your heart into directly translate to higher pay. You’re not subsidizing the overhead of bureaucracy, a big office, or unpopular beats.
And for the first time in your career, you feel anti-fragile. You’re no longer vulnerable to a publisher’s budget cuts, pivot to video, staff redundancy after a merger, or ‘new editorial direction’. No one can say that what you believe isn’t fit to print. You can experiment with new formats or revenue streams like exclusive chat rooms, paid podcasts, ticketed events, merchandise, job boards, speaking gigs, or sponsorships. And you’re free to tell your subscribers about them because they’re yours. You are your own gatekeeper.
A fair marketplace for talent
The shift in power from publishers to personalities will manifest across mediums. Incumbent organizations will continue to hemorrhage talent until they properly compensate their top performers, offer long-term incentives for building the publisher’s brand, allow co-ownership of persona-driven properties like newsletters and podcasts, and lift up individuality rather than sterilize it. Media should take cues from sports teams, which intimately understand how spotlighting and retaining stars is crucial to building a popular franchise.
This is all happening now. Charlie Warzel and Zeynep Tufekci of the New York Times, Eric Newcomer of Bloomberg, Casey Newton of The Verge, Alex Kantrowitz of BuzzFeed, and many more have moved their primary writing from big publications to Substack in just the past year. I considered the path myself before I left TechCrunch to become an investor at SignalFire, which lets me continue to write while monetizing through equity instead of subscriptions.
In an age when creators can bring their following with them, a more rational marketplace for their talent will emerge. Traditional publishers and social networks will have to compete with self-serve platforms to offer creators the best growth, monetization, and infrastructure. That’s a win for audiences who get more diverse content, as well as creators who get a more stable career path. And hopefully, for digital publishers too if it forces them to cast off the constraints of the old print and broadcast mediums they emulate. Let talent go deep, get weird, and geek out. As Stratechery’s Ben Thompson said on PressClub’s Future Of Newsletters episode, “A lot of this is people following people."
PressClub podcast: Substack’s founders
On the PressClub podcast, the Substack founders joined me to dig deeper into why writers are going solo, how the shift from web to mobile sparked the rise of newsletters, how and how Substack can justify its 10% fee. Download it here!
We also brought on some surprise writers from Substack, including Insight’s Zeynep Tufekci, Sinocism’s Bill Bishop, and Ask Polly’s Heather Havrilesky to give us a first-hand creator perspective.
A few quick highlights:
Will Substack launch video? “Yeah, I think we would love to do that at some point”.
On the tension between Facebook’s hands-on moderation policy and engagement-bait algorithm, in contrast to Substack’s hands-off policy:
“As a reader, you’re kind of delegating to Facebook, saying, ‘Hey, Facebook, you tell me what I should see.’ And Facebook is working kind of for you and kind of against you, in that they kind of want to show you the stuff that is the most compelling, that's the most engaging, that's going to keep you there the longest. And inevitably, that almost pulls you towards things that are going to be deranging or polarizing or dangerous. On the one hand, they have these rules that say you can't go there. On the other hand, they have this algorithm that kind of pulls you in that direction . . .
. . . I'm not sure that modeling what we do on what they do would make a lot of sense, because on Substack, it's really up to the reader to decide what to read. And while that doesn't make it trivial — it doesn't like, erase all of these problems or mean that we don't have to do anything — I do think it makes it a much more solvable problem and not directly comparable to when you think of Facebook or Twitter, etc.”
Why are newsletters suddenly all the rage? “Email is the last thing that everyone has on their homescreen that you also have push notifications for.”
On whether Substack can justify its 10% revenue share for top writers:
“In the long run, it really comes down to the growth side of the thing, right? . . .What's always true is that the rate at which you're growing has way more of an impact on how much money you're going to make over the next year, two years, three years than what exactly the fee is . . . that's going to totally overwhelm the 10% . . . so we want to make the platform the best possible place to build one of these businesses . . . If you're making any amount of money, if you're making $100 million a year from Substack, and you're paying 10%, and you're like, ‘Oh my god, $10 million a year is too much’, we can go back to you and we can say, ‘hey, you may be paying 10%, but look here. 20% of your readership came because of the benefit you got from being on the Substack platform — were introduced to you through the network of Substack readers and writers. It actually looks like you're paying negative 10%.’”
Thanks a ton for reading! Hit me with your feedback! Building something for the creator economy? We at SignalFire would love to hear your pitch. Otherwise, catch us Thursday April 22nd on Clubhouse for the next PressClub!
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit constine.substack.com
Listen to the full PressClub interview with Patreon CEO Jack Conte above or on your favorite podcast app. And join me live as I interview the Substack founders about the rise of the solopreneur on Clubhouse at 6pm PT Thurs 4/15
I have this theory that “rock stars” are just creators who use the most powerful medium of the moment to deliver their underlying message. That could be The Beatles spreading “All You Need Is Love” through the transistor radio and Ed Sullivan Show, or Mark Zuckerberg’s effort to “make the world more open and connected” via Facebook. I’m not exactly sure what her message is — perhaps unapologetic self-confidence — but you could see Kim Kardashian as having mastered celebrity media like reality television and tabloid press.
What is clear is that the holistic social media ecosystem is today’s dominant medium. But what makes it different than those that came before it is its fragmentation. To become rockstars in the modern age, artists must be more than virtuosos of a single discipline.
To succeed, they have to master an enormous array of distribution channels and formats. “Social media” encompasses your owned accounts on algorithmically intermediated feeds, direct SMS and email blasts, viral amplification by your fans, paid promo, and earned coverage by media. It’s delivered via text status updates, photos, spontaneous Stories, premeditated TikToks, high-production YouTube videos, and increasingly, audio.
But there was one big problem. The social media platforms solved distribution but forgot monetization.
I brought Patreon CEO Jack Conte on my Clubhouse show PressClub to discuss why creators got left behind, but now suddenly every startup and platform is competing for their attention.
The Creator Crisis
Besides ad revenue shares and sponsored content deals that were only meaningful for the most popular YouTubers or available to the most persuasive influencers, most creators in the mid-2010s weren’t earning much money.
Art got roped in with information that was ‘supposed to be free’. It was common for new distribution channels like Instagram, Vine, Snapchat, and TikTok to launch and even scale with no native monetization features. Most creators weren’t selling physical media like CDs or getting cast into broadcast media like TV shows and films, where social was just the loss-leader. The art they were convinced to publish and promote for free WAS the product.
“The early winners of the web invested in the distribution, and they left the financials at the door. Facebook came along, and Google came along, and they solved distribution, but they solved it in isolation of the business model side” Conte explains. “So for awhile, we kind of felt like, “Well, art’s free, that's just how it is now.”
This caused what I call The Creator Crisis: In the mid-to-late 2010s, it became standard for social media platforms to omit creator monetization options because competition wasn’t requiring it. If the major platforms didn’t cave, creators wouldn’t have anywhere to go, so they’d have little choice but to provide the fruits of their labor for free.
But finally, cracks in this united front to suppress creator earning began to appear. Gumroad launched in 2011 and Patreon launched in 2013 specifically to help creators monetize their fan bases. Artists stood up and said “‘Wait a minute, this whole business that I had and this dependence on unit sales as a source of revenue for my arts business is gone. What am I supposed to do?’ And I think this is where the creator economy starts to happen” Conte says.
Vine stars demanded monetization features, its owner Twitter refused, and many fled for YouTube. Platforms got scared. Twitch introduced tipping with Bits. By 2018, YouTube started testing Patreon-style Channel Memberships and Facebook offered Ad Breaks that paid video creators for mid-roll commercials. “It took 15 years of frustration and some early web platforms like Patreon and others to kind of force the hand of the distribution companies to start taking payments seriously as a core part of the infrastructure. So that's why I think the creator economy is happening.”
The platforms were too late, though. A new wave of startups had started to form to take advantage of these stingy distribution channels’ unwillingness to treat creator monetization as more than an experiment or bonus feature. As we detailed in SignalFire’s Creator Economy Market Map, phase 1 of the creator economy was creators joining big social platforms, and phase 2 was growing huge fan bases on these platforms but being limited to ad revenue shares and influencer deals. But phase 3 was already underway, and the fan migration to more lucrative properties had begun.
The Creator Renaissance
The defining trend of the past few years has been creators sending their top fans off-platform and using tools from these new startups to monetize them. Paid subscriptions on Patreon. Tipping on Buy Me A Coffee and Cash App. Content sales on OnlyFans. Merch on Fourthwall. Shout-outs on Cameo. Meet-and-greets on Looped. Events on Luma. Exclusive communities on Discord. Courses on Podia. Clothing rentals on Wardrobe. NFTs on Foundation and Bitski. CRMs like Pico. Analytics like GRIN. Ecommerce dashboards like Tradeswell. Financing options like Karat.
This proliferation of infrastructure is what I call The Creator Renaissance: A Cambrian explosion of creator tools built by startups to solve The Creator Crisis caused social platforms’ failure to offer adequate monetization options.
Now platforms like Instagram, Snapchat, Twitter, and TikTok are trying to play catch-up, desperately racing to hire creator liaisons.
“Unfortunately, I think it's happening because people see the market opportunity . . . they're thinking about, ‘What is the feature set required to acquire and retain video creators?’” Conte explains. “Because YouTube launched channel memberships kind of as a response to Patreon, now, Facebook has to launch channel memberships, and now Twitter's got to launch Super Follows. Now everybody's got to get in, because now it's becoming a table-stakes feature in distribution tools.”
That’s good news for artists. Platforms finally competing for creators’ business will get them better tools, more lucrative deals, and channel optionality that lets them walk away from apps that don’t treat them right.
The Renaissance Creator
So back to creators as the new rockstars of the social medium. In such a fragmented environment of new formats, channels, revenue streams, and infrastructure tools, being a creator has suddenly become quite complicated. Artists must choose to either:
A. Go it alone and be overwhelmed, with only enough time to focus on a very limited set of mediums and monetization options
B. Give up control and a sizable cut of their finances to a manager who will supposedly handle everything but their core discipline
C. Become a renaissance creator — one who can do it all…with the help of a team they recruit and a suite of tools from the new wave of creator economy startups that ideally restore time for output in their medium of choice
It’s option C that’s minting superstar creators like Mr. Beast. Hiring a team and paying for tools can be a daunting upfront cost if a creator isn’t already earning a decent revenue. But the creators growing the fastest and building up real careers will be the ones willing to invest in themselves.
“Creators, to make art today, you have to be the CEO of your own media company”, Conte told me. They must lead their own expansive social media empires, criss-crossing the landscape because there’s no lane to stay in anymore. The goal is ubiquity by every means necessary, to become a jack-of-all-trades AND the king of one.
If creators follow this path, Conte sees two powerful results. “One, creators are going to make more and more money. Trend number two, they're going to spend more time on their art. And these companies are going to take work off of creators’ plates [like hiring, shipping, logistics, post-production, and finances]. I think what we're going to see is . . . more and more companies picking apart those problems one by one and giving creators a way to not have to do every single part of the whole operation from scratch, so that creators can focus on making their art.”
The failure of the creator renaissance would be that artists are so busy managing their newfound tools that it drowns out the moments of inspiration. That’s why usability, instinctive onboarding flows, deep documentation, and reliable customer service will be so critical for startups building these creator tools. Instead of clumsy and inscrutable enterprise software, they should feel like instruments that creators can intuitively play while remaining in artistic flow.
Success looks like a thriving middle-class of creators, not just the most popular 1%, plus the production and growth teams surrounding them building sustainable careers by delighting a niche audience.
Conte sums it up with an exclamation point. “This is a renaissance that we are going through. The amount of funding and celebration for the arts that we're about to see at scale across the entire planet — it literally is going to make the first Renaissance seem like old news. We're about to see tens of millions of creative people empowered and enabled, and part of a movement . . . We're going to recognize the value that artists bring to the world, the impact that artists have on society, and artists will be compensated for that work . . . like any other person who's contributing to society and culture is paid. It's literally the best time in human history to be making art!”
Big thoughts from Patreon’s Jack Conte on the PressClub Podcast
To check out my full chat with the pioneer of the creator economy, listen here on whichever podcast app you prefer. Check it out for more on Patreon’s origin story, opportunities for creator tool startups, the history of patronage, and what the company will spend its new $155 million fundraise on. Here are just a few of Conte’s top quotes.
Art isn’t just content, creators aren’t just influencers
“At some point, we started calling art ‘content’ which I think is a travesty. ‘Content’ fills a hole. Content belongs in a feed. Art should be cherished, because it's beautiful and important. And it's not information, it's not ‘content’, it's art. When you think of it like content, the space that it occupies in your brain is that, ‘this is a commodity’. It commoditizes the output of creators, it makes it all one thing.
It's the same reason I don't like the word ‘influencer’. ‘Influencer’ extracts the one thing from creators that advertisers care about — influence — and then it commoditizes that capability. So if I'm a creator, I don't want to be called an influencer, that's not what I do, I don't wake up in the morning to influence — it’s ridiculous. I wake up in the morning to make art. But what am I to an advertiser? I am a person who can influence others. I think that's BS.”
Request For Startup: Production Talent Marketplace
“Most of the creators I've talked to have said something like, ‘Gosh, I really wish I could just find an editor so I could just make the podcast and have somebody else do post-production’ or ‘I really wish I could just find a video editor so I could just shoot the video and have somebody else edit it.’ Finding a technical collaborator for post-production, that is one of the biggest needs that I've seen.”
Creator burnout? Ask for a vacation
“Creators must find the balance that works for them.” Conte’s own band Pomplamoose that he leads with his wife Nataly Dawn scrapped a year’s worth of plans when she felt burned out. “We said, ‘The only goal this year is making this sustainable for Nataly.’ And we worked on it together, and we did a ton of work to make that happen. We hired a team.
The best examples I've seen of this are when a creator goes to their audience and is like, “Folks, I'm exhausted, I'm wiped, I need a month off, I'm gonna be gone for a month,” and then they come back. I've always seen fans be super supportive of that, always. Because guess what? Your fans take vacations too . . . What doesn't work is to just be on the treadmill and to just resign yourself to feeding the beast and to slowly hate your career and hate life.” He supports Hunter Walk’s idea for algorithmic platforms to provide ‘PTO’ where creators get a few weeks off, still get paid, and don’t lose their reach for going silent. “It would be awesome if the distribution platforms basically gave you a way to not get dinged and to take a break.”
Facebook & Google will succeed with creators for the wrong reasons
“Surprisingly, Conte thinks Facebook and the other platforms’ sudden interest in the creator economy will pay off…because their multi-hundred-billion-dollar businesses depend on it. “I'm an optimist, which I know is my Achilles’ heel, but I think they are going to be successful. If Facebook doesn't figure out monetization, they're not going to win over creators. And they freaking know that! So they better get good at monetization.
[But] I actually don't think they're going to do it in the right ways and I don't think their hearts are in the right places . . . Are they going to legitimately collapse the gap between the creators’ impact in the world and their paychecks? No, I don't think they're going to . . . I don't think it's their priority. Whereas, for this new wave of companies? That's our priority . . . It's coming from a place of values, not from a place of building a market.”
Thanks for reading! Got feedback? Building an amazing creator economy startup our fund SignalFire should know about? Reply or DM me!
PressClub w/ Substack’s founders, 6pm PT Thursday
Join me live on Clubhouse as I interview Substack’s founders and surprise guest writers about the rise of the solopreneur and why personalities are replacing publications. RSVP here
And in case you missed our recent newsletters & PressClub recordings:
Takeaways & Podcast from Facebook CEO Mark Zuckerberg, Shopify CEO Tobi Lutke, & Spotify CEO Daniel Ek on Apple policies and audio apps
Takeaways & Podcast from Slack CEO Stewart Butterfield, WordPress CEO Matt Mullenweg, Salesforce COO Bret Taylor, & PagerDuty CEO Jennifer Tejada on if we'll return to offices or be remote forever
If you’ve made it this far, I owe you one. Thank you for letting me do what I love for a living.
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit constine.substack.com
Sick of Zoom? You’re not alone. And soon you might not be working alone. Top employers and work-from-home experts think we’ll be back in the office part-time sooner than we know it. But how we use them will be very different.
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“Offices will look more like places to meet and convene rather than everyone sitting next to each other and looking at their laptops all day” WordPress CEO Matt Mullenweg said. “On a per square foot basis, by far the biggest use [of office space] is factory farm battery housing for people to sit at a desk by themselves and use a laptop and not talk to anyone” Slack CEO Stewart Butterfield says. “And I think that's the lowest value use.”
On this episode of PressClub with me, Josh Constine, I assembled some of tech’s remote work experts and tool builders to discuss how IRL/at-home hybrid work will actually work. I was joined on Clubhouse by these amazing guests:
WordPress/Automattic CEO Matt Mullenweg
SalesForce COO Bret Taylor
PagerDuty CEO Jenn Tejada
NYT’s Zeynep Tufekci
Raise CEO Justin Bedecarre
Initialized partner Kim-Mai Cutler
Your host: SignalFire's Josh Constine
And surprise guest: Slack CEO Stewart Butterfield
Listen in to hear how Salesforce’s Gen Z employees are 2X more likely to want to go back to IRL work than Boomers, how companies can stop remote workers from feeling second-class, and which asynchronous communication tools can help. Plus, Slack reveals plans to build Clubhouse and Snapchat Stories features.
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Thanks to the anonymous bidder who won the NFT auction for this portrait of Mullenweg, powering our donation to Live In Peace’s emergency rent fund for service worker families of color.
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit constine.substack.com
Today’s PressClub featured Facebook CEO Mark Zuckerberg, Spotify CEO Daniel Ek, and Shopify CEO Tobi Lütke. In our biggest show yet, we dug into why creators are crucial to the economy, how Apple’s policies could hurt developers and small businesses, and why audio apps are blowing up.
You can hear the full show right on this post, listen to the podcast on Spotify or your favorite podcast app, and the full (slightly edited) transcript is below.
If you just want the top themes, quotes, and my analysis of what it all means, here’s my post of takeaways about creators diversifying their monetization, what Apple could do to offer a level playing field, and the remaining startup opportunities in the audio space: PressClub’s Q&A with Mark Zuckerberg on the creator economy
Zuckerberg said: “Apple takes a much bigger cut of that than anything that we take out of the money that these creators are getting . . . I'm still optimistic about the future. I just think it would be a lot better for a lot of folks if there were a little bit less of a tax there.”
Congrats to Amir aka @Mondoir for winning the combined digital artwork and physical painting above for 38.88 ETH. We’re giving 20% of the proceeds to the GiveDirectly US COVID family poverty relief fund. Let us know which artist to collab with next week!
Get a heads-up about our future shows by subscribing at constine.club
Transcript
PressClub on 3/18/21
Josh Constine: [00:00:00] Hi everybody, I’m your host Josh Constine. Welcome to PressClub. Today we’ll be discussing the Creator Economy with some incredible guests. We’re joined by Facebook CEO Mark Zuckerberg, Spotify CEO Daniel Ek, and Shopify CEO Tobi Lütke. We’ll be talking about how people can turn their passion into their profession, why platforms are adding more monetization features, and why creators are important to the economy. Let’s jump right in
[00:00:01]Mark Zuckerberg: [00:00:01] Thanks for doing this, Josh.
[00:00:03]Daniel Ek: [00:00:03] Yeah, this is incredible for having us. Okay.
[00:00:07]Josh Constine: [00:00:07] Have you guys ever actually been in the same room together? Cause I feel like it's special that we can do this on Clubhouse and wrangle everyone's travel and schedules.
[00:00:14] I know Daniel's in Europe and we can bring everybody together here on this platform when it would probably be pretty difficult to get you all on a physical stage somewhere.
[00:00:21]Daniel Ek: [00:00:21] Yeah. Especially right now during the pandemic.
[00:00:24] Tobi Lutke: [00:00:24] I don't think so. Not all three of us. Yeah, totally agreed. Spontaneous mini conferences are awesome!
[00:00:32]Josh Constine: [00:00:32] Yeah. I think the last time I saw Mark and Daniel together was at the Spotify 2011 launch party where it was you guys on stage with Snoop Dogg.
[00:00:40]Mark Zuckerberg: [00:00:40] I think we've gotten together a few times since then. I have had the pleasure of getting to work with both of you and your amazing companies and partner with you on a bunch of different things. So over time, so that's been fun, but this is good. I think there's so much happening in the creator economy right now. And I think it'll be awesome to just get a chance to hear how you're all thinking about it.
[00:01:02]Daniel, I saw your announcement this morning. I thought it was really neat, the $5 billion in payouts to musicians and all the transparency work that you're doing. I think it's really impressive.
[00:01:15] Daniel Ek: [00:01:15] Yeah. Thanks. It was a long time coming, but I think it was the time to unveil this to the world and show the progress and also show the depth of the creator community that exists on Spotify.
[00:01:27]I was super excited to share that and it's been fun to see over the course of the day, all the reactions from the community and everyone else around it.
[00:01:38] Josh Constine: [00:01:38] So one thing I love about the creator economy is remix culture and the fact that everybody can weigh in, they don't need to have all the creativity, they can just add a caption or a new spin on a joke.
[00:01:49] And I feel like you guys have actually been the subject of a fair amount of memes. Maybe you in particular Mark, between your Capitol Hill appearances and e-foiling on that cool surf board of yours. Mark, do you have any sort of response to the memes that you see about you or is there a favorite one of yours?
[00:02:04]Mark Zuckerberg: [00:02:04] I don't know. I don't take it too seriously. I think probably if I had to go with a favorite and I think it's got to be “smoking meats”. I do love grilling and cooking and that was silly and I appreciate that everyone enjoys it.
[00:02:21] Josh Constine: [00:02:21] Yeah, I think that one's adorable.
[00:02:23] And you and your Sweet Baby Ray's hot sauce. I feel like if you ever quit your job as Facebook CEO, you have a great sponsorship deal lined up for them.
[00:02:31] Okay. So one thing that I wanted to bring into the discussion of the creator economy is the NFT culture, which is on the massive rise right now. And for that, we did something a little bit special today.
[00:02:41]I had this idea of that wanting to do live portraits of the speakers that come on our show, PressClub. And so I want to present you guys with a portrait that I've worked on with my incredible friend fnnch, an absolutely amazing painter. And if you click on Fnnch who's on the screen right now, you'll see this portrait that he has made especially for you guys right now featuring you in his iconic honey bear style.
[00:03:03]We'd love to have fnnch to say hi and talk about it for one second.
[00:03:07] fnnch: [00:03:07] Hi there. Thank you so much. So yeah, I'm a street artist in San Francisco and I focus mainly on public art. But I also do fine arts. This collab is the first NFT that I'm gonna do. Josh has invited me to do an artwork for this event and I don't do human portraiture, but I paint a lot of honey bears.
[00:03:23] And so I made a honey bear for Mark, Daniel, and Toby, and you see the digital version in my profile, and then I'm actually gonna live paint an actual canvas that will come with the NFT, throughout the event. I really wanted to thank all three of you for your work. I am a creator, obviously.
[00:03:38]I run my entire business through Shopify, everything from inventory to shipping it's really all centered there. And then I use Instagram really extensively it's where all the visual artists hang out and share their work. And then I love music, like a lot of people. So thank you all so much.
[00:03:54] Mark Zuckerberg: [00:03:54] That's awesome.
[00:03:55] Tobi Lutke: [00:03:55] Ahh so cool.
[00:03:56] Mark Zuckerberg: [00:03:56] Yeah, I've followed your work for a while and I just love the style of what you're doing. Daniel, do you actually play guitar?
[00:04:04] Daniel Ek: [00:04:04] Yeah, I do. So this was pretty fitting. I love the work too, so this is great. I'm going to try to see if I can get get the NFT version of this one, for sure.
[00:04:15] Tobi Lutke: [00:04:15] Yeah. Is this a reference to the Silicon Valley? Honey bear scene.
[00:04:21] Josh Constine: [00:04:21] I actually haven't watched the show. I found that it hit too close to home.
[00:04:28] Tobi Lutke: [00:04:28] I might have wanted to be in Canada. I can look at it from a distance.
[00:04:33] Josh Constine: [00:04:33] Amazing. Thank you so much for doing this work. If you guys are interested in this work, we just put the NFT up for auction on foundation.app.
[00:04:41]The links in my profile and fnnch’s profile, and we're giving 20% to the US COVID relief fund from GiveDirectly, which is one of our favorite charities that really does incredible work on making sure that money makes an impact. So check that out. We'll be talking about it a little bit later at the end of the show, but thanks.
[00:04:55] I want to get into our first real topic: the creator economy. You guys are powering these platforms where so many creators have built their audience and are starting to monetize their audience. I would love to just get like a quick overview, that big picture vision of why you think the creator economy is blowing up right now and what this means for culture.
[00:05:15]Mark Zuckerberg: [00:05:15] Yeah, sure. Yeah I think we all hope that in the future the economy is one where everyone can pursue their interests and their creativity and can have jobs that are more exciting for them. So the question is just how do you build out the economic models to basically support all of that?
[00:05:37] And, I'm really excited to hear what Daniel and Toby have to say too, but, a lot of this is, there are gonna be a lot of tools that need to get built. The creator economy goes across, all of these different types of content, right? So it's not just musicians and people are creating videos and online content.
[00:05:55]I think a lot of journalism and long-form writing fits into this. A lot of gaming I think increasingly fits into this to some extent. There's a lot of physical goods and creativity that people are able to enable and start businesses around.
[00:06:10]One of my favorite little kind of stories from throughout the pandemic is, there's this restaurant that, that I loved in San Francisco, and during COVID they basically transitioned their business model to a dumpling subscription service. And it's like, all right, it's super creative.
[00:06:30] And the tools for being able to supply this were basically being built on top on of the internet by a bunch of these platforms. And I think it's just really exciting. And, Daniel, inyour keynote recently, you talked about this goal.
[00:06:46] To basically be able to get support a million people who are creators as full-time jobs on Spotify. And, I think if we can all do that together, musicians can do that, but you also have small business creators coming up with creative different ideas to create new business models around journalism and long-form writing videos, people doing all kinds of different entertainment.
[00:07:10]I just think that this is so important for having a broad-based and stable economy. That's inspiring over time. And that's a lot of what we've been excited about. I talk a lot about small businesses and Facebook and we have about 200 million businesses that use our products.
[00:07:25] The vast majority of them are small businesses who use our products for free. And we don't have an exact accounting yet of how many creators. In addition to the small businesses that are on the platforms, we think it's probably around a similar amount that's people who are basically using their personality as their brand and they're using these services in order to either grow their influence or monetize their community and as a job.
[00:07:49] And, I think over the coming years it will have to evolve. So that way a large percent of these folks can basically make a full-time living through this. And I think that's just going to be super inspiring.
[00:07:59]Josh Constine: [00:07:59] That's awesome. Yeah. I think the idea of helping people turn their passion into their profession is so critical because there's a lot of people that don't want to have a traditional office job anymore.
[00:08:08] And when you ask, I think it's 30% of elementary school kids, they want to be influencers. It's beaten out being an astronaut or a fireman. And I think that's a really important and pretty sizable shift in not just popular culture, but where we see ourselves in terms of occupations.
[00:08:26]Daniel, I would love to hear your sort of bigger picture thoughts on the creator economy right now.
[00:08:31] Daniel Ek: [00:08:31] Yeah. This is something we talked about just very recently, like Mark spoke about too. And our view just in the space of audio just a few years ago, we had about 3 million creators on our platform.
[00:08:45] And today that number's over 8 million and we've said by 2025, we think of will grow to about 50 million creators. So just the explosion of the people who want to be creative and who are expressing themselves through music, through podcasting, through audio, it's just staggering. And what's fascinating to me as we spoke about, is this notion about making it so that more of these people can live off of their passion and live off of their art that they're creating.
[00:09:17] And what's interesting, I feel is that it's very much of an omni-channel expression by these creators. So it used to be before that, if you were a musician, as an example, you just put out music. That was the thing that you were doing. But almost every successful creator now is omni-talented and in omni-channels.
[00:09:42] That means that they are on YouTube putting up videos. They are on Instagram. They are perhaps putting together brands and putting it on Shopify, but they're also putting out music and merchandise on Shopify and music on Spotify, of course, and touring. And so they're really just doing a multitude of different things and connecting with their fan bases across many different platforms.
[00:10:05] And so I think it's a super, super interesting early stage, but there's a lot of friction still of being a creator and managing your fan base across all of these different platforms that I think will be considerably easier in the coming years. And even this distinction between what a casual fan is and what a super fan is, I think will dramatically change in the coming years.
[00:10:27] Josh Constine: [00:10:27] I think musicians have historically made a lot of their money from those biggest fans, the ones willing to buy those front row ticket packages, those collectors items like signed guitars. We'd love to hear maybe just quickly, how you think about Spotify letting creators and musicians drive that deeper monetization because a fraction of a cent per stream, it adds up at a big volume, but every creator has some super loyal, hardcore fans that would love to get behind them in an even bigger way.
[00:10:54] I know you guys have started to sell merch and concert tickets, but any thoughts on going deeper there around, meet and greets, live events or anything like that?
[00:11:02]Daniel Ek: [00:11:02] Yeah. I think we're still in the early days of creating deeper fan engagement between creators and fans.
[00:11:10] And it's definitely a sort of big theme that we're investing behind. And as you said, I think when I look at streaming, the early innings were all about just access and just having access to the content and moving more and more of these minutes that was being spent in traditional offline radio or broadcast radio on to online on demand.
[00:11:31] And as, as more and more people now have started doing that. And we have hundreds of millions of people around the world that are streaming music every single day. The engagement profile means that we are creating a lot of fans and we're creating a lot of super fans too. So far music has been a one size fits all where we've just monetized it through the streaming revenues in itself.
[00:11:56] And you had to, as a creator, figure out how to monetize that fan base off of other platforms. But I think the future is that we will become a lot better at monetizing your fans and your super fans, even on Spotify. And I like to think and hope that platforms like Shopify and others can then interact with Spotify.
[00:12:18]And likewise, you can have Spotify content beyond Instagram or Facebook in order to drive that 360 experience.
[00:12:27] Josh Constine: [00:12:27] Yeah, I think that mirrors exactly what SignalFire, the venture fund, where I work, we did this big research project on the creator economy. And what we found was that over 50 million people are now starting to make money off of their creations.
[00:12:37] But one of the biggest trends there is people moving their fans off of the biggest social platforms and onto things like Shopify. Tobi, would love to hear your opinion on how that trend is playing out now as creators don't just want likes or clicks, they want actual profits and to be able to support themselves with their passion.
[00:12:58] Tobi Lutke: [00:12:58] Yeah. Yeah. I think the I think it's overstated that people make like a choice or want to move people from one place to another. Look, I think I've been really inspired by Kevin Kelly, who wrote an essay about one thousand true fans maybe 15 years ago or something like that.
[00:13:16] And I find it's really, it's such a wonderful vision for the internet. I tend to think of the internet as the biggest city in the world, right? Now billions of people are on it. And I think what Daniel is doing so successfully and other websites are doing is that they're doing well on Instagram, and then all of a sudden, it allows people to find the thousand fans, and do so directly. And I think that's a very different environment than what it was before. In retail, we've always had a lot of gatekeeping. There were limited chances. Which meant that the kinds of products that were created had to be very sanitized and have very broad appeal for just logistical reasons. And so I think what's been so amazing is now that just a lot more people can participate and much, much more specific products are being created because it's so efficient to find the people who really, really like the things that you have to offer.
[00:14:28] And what's interesting in this way is that almost all the people that I'm talking to you're right there, they are doing this multi-channel. But they, again, they're going direct for each of these channels. They managed to figure out where the people will want the particular thing that they are making.
[00:14:48]And this is such a positive situation. It creates these businesses. It creates employment, especially people who have managed to find more than a thousand true fans. And it's a huge factor for the economy. It's super exciting. And it's a lot more participatory than I think what's come before.
[00:15:07] And I think that's really exciting.
[00:15:10] Mark Zuckerberg: [00:15:10] And one thing that I’d like to add is, I think that people want a lot of different ways that they can monetize and support themselves off of their art or whatever the work is that they're doing. So it's important that people have all of these tools.
[00:15:25]Artists are gonna want to directly monetize their art through things like Spotify. They'll want tools to be able to give fans more specific access. They'll want to sell merchandise and different goods that either that they create or that they curate.
[00:15:41]And that's where all the commerce stuff comes in. And that’s not only on Shopify, but also on the commerce work that we're doing a lot of that we're doing in partnership with Shopify. But you're also seeing stuff like tipping online. We have this product “Stars” that basically just allows people to tip game streamers on Facebook who they like, and that's contributed to Facebook having much more effective monetization for game streamers than I think any of the other leading platforms out there.
[00:16:12]So a lot of game streamers are coming over to our tools for that. And it's just interesting because I think overall it's not like one model is going to work. It's not just like everyone is going to be able to make enough money off of an ads revenue share or something like that. But I think the 360 view of having all of these things really is going to support.
[00:16:31] tens of millions of people in order to be able to do these kinds of creative pursuits and just do amazing stuff. Yeah. I can wrap there.
[00:16:39] Josh Constine: [00:16:39] Mark, I want to rewind. So you guys have been around for 15 years now. if you go back in time 10 years and think about how you were working with creators then, is there anything that you would change?
[00:17:04]Mark Zuckerberg: [00:17:04] I think it's that we have a somewhat different kind of heritage of how we got here, right? If you take a company like Daniel’s, you've been working with artists from the beginning, or, you know, Tobi you've been working with businesses and commerce from the beginning. You know, we started off as a social platform to help people connect and we've helped to build this pretty vast community.
[00:17:28] And now the numbers of people who are small businesses who are using the platform or creators who were using the platform -- even if those were the only people we were serving -- that's more than enough to build a kind of major company by itself, even without all the other social use cases and billions of people doing that.
[00:17:45] So now we just want to make sure that we're doing really good world-class work on this. And to make sure that we're doing our part to support all these different use cases. And a lot of what we're trying to do is work with companies that are 100% dedicated to these things.
[00:18:01]We've had a long-term partnership with Spotify and a number of things around music. And I think that there will be an opportunity to do a lot more there. It was about a year ago, I think Tobi correct me if I'm getting the dates wrong, that we announced our partnership and launched Facebook Shops.
[00:18:16] And and I think the progress on that -- it's still obviously early -- is that we now have more than a million active shops. And more than 250 million people actively interacting with those shops every month. I think the progress in terms of being able to ramp up some of the stuff and just all the different tools that now exist,
[00:18:38]it's really amazing. I think that the next five years are going to be really explosive in terms of the potential across a lot of these verticals. And by the way, the numbers that I shared, I don't actually think I've shared them before. But I'm really proud of the progress that we've made there.
[00:18:52]And I dunno, Tobi, how do you think that's going?
[00:18:56] Tobi Lutke: [00:18:56] It's really great progress. And again, I think that what's important here is the way these business models work and how they shape the work. I think that's the sort of positive summary of what Daniel's doing for artists. This is the big, and quickly over overlooked. Often overlooked, right?
[00:19:14] Because there's a lot more people who will be able to make a living as artists because of what Spotify is doing. There's a lot more people who can start their own businesses, especially very niche businesses, because of the efficiency that now exists to be able to create these businesses and then find the audiences.
[00:19:39]It almost feels like there was a buildup of infrastructure that we've done on the internet for the last 20 years, which is somehow just about good enough, maybe a little bit janky or emphasized, but with COVID happening, so many people are having to look for another way of sustaining themselves like that dumpling business.
[00:20:02]you talked about, had all the infrastructure there that allowed people, even non-technical people, to go and take their businesses into this amazing city that is the internet. And that's really important.
[00:20:19] Josh Constine: [00:20:19] Can you guys talk a little bit more about why this is important to the US economy?
[00:20:22] Why does having a creator set -- people who are making their money independently -- Why is that great for a more robust economy?
[00:20:34] Tobi Lutke: [00:20:34] Just let me speak for the SMB space, just for a second. A lot of people work for smaller businesses. Depending on where you get the numbers from, it's like 50% to sometimes 80% in international cases. Definitely more than half of people, but for small businesses, that's not a stable group.
[00:20:53]Small businesses go out of business a lot for lots of reasons, obviously restaurants are part of it which have famously high turnover rate. But in general, they go out of business a lot, but reasons why it still, the works have or provide so much of employment is because there's a lot of new ones that have been created as well.
[00:21:09] It's generally a leaky bucket that's being refilled hopefully at the same rate or better or faster. It's actually, it hasn't been true in the last while. Like for the last couple of years. Now for the first time, it's picked up again, that new business formation has picked up as a number.
[00:21:29]And again, this is about a lot about friction. It was just very hard. Unless you had a technical background, you were probably not going to be a retailer a decade ago. Like it just didn't work. I could only do it because I'm a programmer.
[00:21:45]And that's an unnecessary restriction and we’re working really hard to build companies that make it more participatory and create better equality of opportunities for people who want to start businesses or want direct connection with their fans and all these things. It took awhile. It took a while to build
[00:22:08] Josh Constine: [00:22:08] What I’m most excited about here is just the idea of better representation for a wider set of creators. Traditionally, when you had to go through these big mainstream media platforms to reach fans, you had to boil everything down to this lowest common denominator and make these one-size-fits all content.
[00:22:24] And it seems like now, because you don't have to make something that's fit for the radio, you can be on Spotify, and you can just make something that's fit for a thousand people who love your very unique, quirky style or a game streamer that streams an old retro game that most people don't play anymore. Or a Shopify seller that sells something that most people don't need.
[00:22:40] But a few people just absolutely love. I feel like that's awesome because it means that every niche gets a star, like every subculture gets somebody that represents it. And then you end up with more people who can look up to that stage and say, “Oh, I see somebody who looks like me, who talks to the things I care about.
[00:22:55] Maybe I could become that kind of person too.”
[00:23:01] Daniel Ek: [00:23:01] Yeah I think that's super important. And also I do want to highlight that this is very much a global phenomenon too. It’s certainly prevalent and it's very large in the US economy. But for me, the exciting part is the fact, if you just talk about music, how if you just take Latin as a great example right now, J Balvin is now one of the largest artists in the world.
[00:23:25]It would have been unthinkable to think about a Colombian artist breaking out on the world stage. It only happened once prior that I'm aware of and that's Shakira, and now you've had a ton of them and you have a music genre called reggaeton that's now global. A global thing that people all over the world care about it.
[00:23:45] And for me that is the ultimate promise of the internet. And I think there's been a lot of great things that have been said before about this isn't about just advertising or just about subscription, but it's actually that the future will be about finding your audience and finding multiple ways of interacting with that audience across all of these different platforms, finding multiple ways of monetizing them from when they are a casual user to all the way up to a super fan.
[00:24:16] And as I think about the future and I think about automation and all of the things that will probably displace a lot of the jobs that we have as well. One of the major trends has been that people are turning towards more creative endeavors. And I like to think that's very positive for society and I like to think that's ultimately very positive too, for the future of the economy that we are able to go towards expression, belonging, and connecting with people on a deeper cultural level.
[00:24:48] Mark Zuckerberg: [00:24:48] Yeah. And Josh, going back to your point before about why this is important for the overall economy. I think that, if you look country by country, you can measure the strength and stability of different countries, economies by the vibrancy and kind of number of small businesses that they have.
[00:25:05]For all the attention that gets paid to the stock market and kind of the biggest companies. I think that this is where the majority of employment is and the majority of the work that's going on in the economy. So I think that whether it's creators or small businesses, I think this is really important for kind of overall health and prosperity around the world.
[00:25:25] And one of the most important trends I think on the internet is that you basically are giving all these individuals the power to do things that historically only larger enterprises would have had. So when Toby was talking about this before, in terms of all right, he couldn't have gotten started with his initial shop unless he was an engineer, and now you don't even need to be able to code to create an awesome online presence doing this.
[00:25:45] And, we see this in things like marketing where it used to be that if you wanted to reach your audience in the way that Daniel's saying, you would've had to have been a big company doing pretty sophisticated analytics and marketing. And, if you were the woman doing the dumpling delivery service that I was talking about before, that just wouldn't have been accessible.
[00:26:04] There's no way that she has an analytics team, that she can figure out who are the people who are likely to want to subscribe to her dumpling service. That just wasn't gonna happen. But now you basically have these platforms that leveled the playing field a bit and make it so that you can grow a more vibrant sector of creators and small businesses.
[00:26:19] And I think that's one of the most important things that's happening on the internet right now.
[00:26:24] Josh Constine: [00:26:24] Yeah, I definitely agree. I think that what we're seeing in SignalFire's creator economy report, we just found that creators are having to become founders. They have to cobble together both tools and teams to be able to support themselves because you can't just be a guitarist anymore.
[00:26:39] You have to be a data scientist, a growth hacker, a merchandise designer, a community manager, and you probably can't actually do that all yourself, nor can you do that all manually. And so you really need the support of these tools. I'm also really excited about the finance element of this. I think we're going to see more around helping creators get off to a good start even before they're maybe self-sustainable with their own creations.
[00:27:01]We funded a company called Karat, which is a credit card for influencers, so they can fund their video production or their content creation before they get that ad revenue share or that sponsorship money. And I think that supporting creators right from the start with financing is really important.
[00:27:15] And Mark, I know that Facebook is building a newsletter product and there's been discussion of whether it's going to take a cut of that newsletter product’s revenue. I would love to hear if you could talk any more about that and both in the sense of if Facebook's going to take a cut but maybe even if Facebook would provide a stipend to help creators get started on Facebook's newsletter platform.
[00:27:35] Mark Zuckerberg: [00:27:35] Yeah. I don't want to get ahead of the team that's working on this and is gonna announce it soon but I think people will be happy with what we're doing here. Our goal is to basically build tools across these different categories where people are doing creative and intellectual work that give very favorable economics.
[00:27:53] And so that's not just on the side of revenue share and things like that, but it's also just having very good monetization tools. So that way, over time, I think we should be able to build a lot of the tools that give people the broadest audience. But even while that's ramping up I think that we should be able to give people the ability to have more monetization per person who's in their audience.
[00:28:13]So that's certainly something that we're looking at. I mentioned it in game streaming before for journalists and long-form writers as well. I just think that there's so much to do there.
[00:28:22] Josh Constine: [00:28:22] Are there any oother Commerce stats or things that you guys are working on now? I just wanted to see if there's anything more you had to share there on that news.
[00:28:32] Mark Zuckerberg: [00:28:32] No, I'm pretty excited about the potential of where this is going. We're I think a little less than a year in and having a million active shops and 250 million people using them actively. I think it's just good progress. I think it's still early compared to where it's going, I think and Tobi, I'm curious to get your view on this, but, compared to the early conversations we had about how people would use this across Facebook and Instagram and our products, I just think that this is well on track to being something that's going to be increasingly important to people.
[00:29:05]And in the last year I've been proud of the impact that we've been able to have because obviously you've had this dynamic where a lot of physical storefronts have been closed. So just making sure that people can continue to sell things on the internet has been very important for the health of these businesses.
[00:29:19] Tobi Lutke: [00:29:19] Yeah. Progress has been really good. And it's an exciting product. Again, it will increase, there'll be more people participating in commerce, but it's going to be more people supporting themselves. It's more people who start new businesses and more people will employ others because of it, which is the positive sum and is extremely important.
[00:29:40] I think it'll do a lot for that. Obviously we're looking at the numbers as well and talking to our customers who are testing it and using it and where they will love it. So that's really great.
[00:29:52] Josh Constine: [00:29:52] Okay, so this sort of brings up this other topic that I've been wanting to talk about, which is the idea of, how the App Store policies and the mobile economy and how different players apply taxes or privacy changes really impacts these kinds of small businesses.
[00:30:07] And the advertising that they rely on or the microtransactions and tipping and subscriptions that could really fund some of these creators. Apple's starting to change a lot of these policies, with the new iOS 14 changes to ad identifier tracking, as well as their ongoing subscription fees, as well as micro transaction fees.
[00:30:25] It seems like those would make it hard for you guys to be able to continue to offer these kinds of services to small businesses. We'd love to just hear you. How do you feel about those changes coming in?
[00:30:40]Mark Zuckerberg: [00:30:40] There's a lot to say about this. But I would separate out. The impact to our businesses as platforms compared to the impact to individuals and small businesses who, before some of these changes, I think, were moving towards having the same kind of tools that previously only bigger companies would have had and this imperils that.
[00:31:02]When it comes to, the iOS 14 changes, for example, and their impact on our business, I think the reality is that I'm confident that we're gonna be able to manage through that situation. And we'll be in a good position. I think it's possible that we may even be in a stronger position.
[00:31:16]If Apple's changes encourage more businesses to conduct commerce on our platforms, by making it harder for them to basically use their data in order to find the customers that would want to use their products outside of our platforms.
[00:31:30]But the thing that I've been mostly focused on is that a lot of these changes are going to make it harder for small businesses and developers. And I think the situation is going to be challenging for them to navigate. And, I just think it's one of the reasons why Facebook has been a bit outspoken on this is, there are certain principles that we care about and empowering individuals is one of them.
[00:31:53] And when I feel like people are pushing too far on one of these things, I just want to make sure that we go in and stand up for the people we serve. So whether it's, a couple of years ago I went and I wrote the speech and delivered it to Georgetown defending free expression, because I felt like that was something that was under attack.
[00:32:10] Now. I feel like the ability for small businesses and creators to have access to the same quality of tools as larger businesses have without having to do all this analytics and stuff themselves. I think that's they're going to just be a lot of issues there that I'm quite worried about for the health of a lot of the businesses that we try to work with.
[00:32:30]But Tobi, this is your zone too. I'm curious, what you're seeing and hearing from a lot of the small businesses that you work with. What are they telling you about the impact that they expect to see to their businesses?
[00:32:42] Tobi Lutke: [00:32:42] Yeah. Yeah. It comes up a lot. And obviously this is mostly about advertising which isn't the only channel, obviously like everything we talked about in multichannel it's also true. But for the small and medium businesses, this adds up in a prominent way. And both will become less precise?
[00:33:05]The general consenses, maybe it's just a “change fatigue”. What does this mean now? They realized that it'll make their ad spend a little bit less effective. The thing I'm worried about the most though, is that I've seen a lot of really great businesses some of our biggest customers start out as extremely niche products.
[00:33:28] When you do the Venn diagram thing, you have to find the intersection in five different vendor programs, it's like, people who like movies in the 80s, 80s culture, and Pokemon, and jewelry and all of these other things. And that's the start but then they branch out from there later.
[00:33:46] And I think that specifically, it's going to be quite a little bit harder to do in the future is a second order effect of what I think Apple is trying to do. And it may not even be something negative. It may be something they haven't fully appreciated initially. But it's certainly something that's on the mind of the small and medium businesses.
[00:34:09] Josh Constine: [00:34:09] Daniel. I know that you guys deal with this too, with the subscription stuff where, Apple doesn't actually let you point people to the web version to subscribe without their fee. So you either have to just give them that subscription with that added fee, which often means you have to increase your own price, which seems pretty harsh for the end consumer, or you have to leave it up to them to figure out that they're not supposed to subscribe in the app and go find it.
[00:34:30] And how have you felt about that? It seems like that just doesn't have transparency in front of mind.
[00:34:38] Daniel Ek: [00:34:38] Yeah. Just to take a step back though I think we've spent the better part of I would say the last 20, 30 years to argue net neutrality and what's interesting is that most of that dialogue I feel we fought long and hard over and now we're in this new kind of platform where these platforms and in particular iOS is now closing down a lot of the things that we associate with the internet.
[00:35:06] And I think that's a very scary development. And we're talking about something where. Yeah. Again, this is now the primary device that people access the internet through and the amount of restrictions that's being put on that in terms of what kind of interactions apps or companies can have with its customers,
[00:35:27] it's pretty massive. So in the case of Spotify, not only is it that they want to incur a 30% tax on our users, which by the way, it happens to be more than what Spotify itself gets because we're paying out 70% of all of our revenues to the artists. But then on top of that they go so far as to try to limit the way we are actually communicating with our consumers, even outside of the app itself by emails and other things.
[00:35:58] So I just think it's a very slippery slope and my, my view is that this is very damaging, not only to Spotify, but the entire kind of broader ecosystem of app developers and creators. And this is also why we filed the formal complaint. About two years ago now in the EU for this particular matter, and that was not lighthearted from my side. This was something that, I spent a lot of time thinking about and I feel the we're at a very important inflection point to decide whether the future on the internet is going to be open or is it going to be closed? And yeah this is, this will be one of the major debates I think, of the coming years
[00:36:43] Mark Zuckerberg: [00:36:43] and the fee for creators that Daniel's mentioning it's not just for for the artists that you serve. We've certainly had this dynamic as well, and we built a subscription product to help news publishers have subscriptions and had to go back and forth for a very long time with Apple before they agreed to not basically put a 30% tax on that long after we basically said that we were going to take no revenue share in that.
[00:37:10]We see dynamics like, I mentioned Stars with game streamers, where Apple takes a much bigger cut of that than anything that we take out of the money that these creators are getting. And we even saw a bunch of examples during the pandemic that, that I thought were especially tough, where we built a bunch of tools around, people being able to make online events and things like that.
[00:37:29] And, we didn't take any revenue share of that just because we were trying to help these creators or small businesses help support themselves. And the 30% tax on that, before Apple finally backed down, I just thought was particularly tough. So I do think that this is a big issue.
[00:37:46] Josh Constine: [00:37:46] Yeah, it seems like those micro-transactions are really impeded by this because there's something that you want to be able to make quickly and not have this sort of extra overhead, or even the thought that”Oh, I'm not just giving to the creator I'm giving to one of the biggest corporations in the world.”
[00:38:00] And to me, especially around the, ad stuff, I feel that the ad-supported services are the lifeblood of the free internet. I love that people around the world can use Google and Facebook's products for free because they're subsidized by your ad views in top markets like the US. I think that's really important to making sure the internet doesn't become a place that's all pay for play, and you have to have money to be able to do something.
[00:38:24]And I would love to hear Mark, what do you think about a better path forward around advertising privacy, where people feel like they've given active consent, but that there we're not necessarily scaring them into rejecting these things could really help small businesses and actually make their experiences better.
[00:38:41]I personally like targeted ads better than completely random ads.
[00:38:47] Mark Zuckerberg: [00:38:47] Yeah. Look, we know that if you ask people. “Would you want your data used to help make your advertising experience more personalized?” The vast majority of people are going to say yes, and we know this because that's what the GDPR in Europe requires and we've implemented this around the world.
[00:39:03] And that was the result that we got. But of course, if you build a prompt that's asking if you want an app to track you around without having any sense of explaining what what value you're going to get from that then obviously that's going to discourage most people from participating in that.
[00:39:23]But look, I think you're basically right. I think if you want to give everyone a voice and give everyone access to content, a lot of people can't afford very premium services. Although people do pay for different things. And, I think the kind of time tested model for that is having free services or free media that is ad supported. And I think people accept that. And a lot of people like that and people get for the most part, that if they're going to see ads, they want them to be relevant to ads. And so you have it from both sides, right? So from the consumer perspective, if people are going to see ads, they want them to be a good experience. For the small business and creator side, people just want to be able to reach the people that are actually going to be interested in what they're doing. There's the old advertising quote that when you advertise, you're wasting half of your money, you just don't know which half. For the first time, the internet made it so that could be a bit more precise and I think without some of this optimization, you just make it not financially viable for a lot of these folks who are upstarts to get into it. So that's what I worry about going forward. But I do think that we'll be able to offer a number of folks that path forward.
[00:40:37] Hopefully we can create enough value so that even if you have someone that's taking a 30% tax on it you're still able to enable millions of creators and folks to create a good livelihood. And I'm still optimistic about the future. I just think it would be a lot better for a lot of folks if there were a little bit less of a tax there.
[00:40:57] Josh Constine: [00:40:57] So I wanted to bring up Eric Migicovsky who was the co-founder and CEO of Pebble, the smartwatch company that had a pretty tough time dealing with some of these policies around hardware, because I know Apple doesn't necessarily give third-party developers the same access to features or integrations with iOS, that native hardware like its AirPods do.
[00:41:15] Eric, can we talk about how you felt dealing with that and what you think needs to happen going forward.
[00:41:22] Eric Migicovsky: [00:41:22] Thanks for inviting me up.
[00:41:23]We dealt with a whole bunch of stuff over the years with respect to getting Pebble, our smartwatch, to work on iPhones. It ranged from issues like we had an App Store for Pebble.
[00:41:35] We want it to be able to invite people to create apps and watch faces and other kind of applets on the watch. And we got a lot of pushback from Apple because they didn't want us to be running an App Store within our iOS app.
[00:41:48] Eventually, it just took what Mark was saying. It takes three to six months to work with Apple and to get through just a lot of back and forth. So that slowed us down a lot.
[00:42:00] I think the biggest difference though between say Android and iOS is just how much more open the platform is for people to create new experiences and new interactions.
[00:42:13] So for example, on Android when we were working on Pebble, we want it to be able to let people reply to messages or reply to SMS or reply to WhatsApp messages. And there's a great API on Android where you can just send responses to incoming notifications. But on iOS, we were just blocked at every turn.
[00:42:31] We had to go through some crazy hoops to get replies, to get iMessage working. And we weren't fully able to create a good experience. And then, Apple comes along and builds the Apple Watch, which of course has native integrations into all of the APIs. And it was tough for us because we really wanted to create a great experience for our users.
[00:42:50] But we just, we're limited by these kind of OS limitations.
[00:42:55] Josh Constine: [00:42:55] Yeah. So across the board, where do you guys think this needs to go? What changes would you like to see made here so that it is a better, more even playing field for creators and developers?
[00:43:05] Mark Zuckerberg: [00:43:05] Yeah. Can I just echo Eric's point on the private APIs?
[00:43:09] I mean I think that there's been a lot of people have focused on the iOS 14 ad changes and whether that's going to be an impact for our business, for example, and, it might make some kind of headwind. The reality is we make changes in our products all the time that, try to prioritize health and wellbeing across the services that reduce our revenue.
[00:43:30] So over the long-term, the iOS 14 business changes are actually not the biggest concern I have with Apple. The thing that I worry about the most is the private APIs like Eric is saying. When you see this, both on the software side and the hardware side, right?
[00:43:48] So for a product like Messenger on Android, people can make that their default SMS client, in addition to sending messages, And on, on iPhone, you just can't have a different SMS client. That's, not a thing that Apple allows. They give their own services access to better and different APIs for doing video chat.
[00:44:10] And for building something like a messaging service where every other app needs to ask for notifications, they start with notifications turned on. So there are all these ways. And that's just one example of one thing that we're doing. But I think the access to private APIs and the differential between Android and iOS is really massive.
[00:44:32] But then you also get on the hardware side where I haven't seen as much written about this, but, our experience is certainly aligned with what Eric said too. In terms of kind of just integrating devices with iOS, it is really difficult. And I think that they do that on purpose and then they have things like AirPods where, you know, basically the main feature that allows them to sell it for, some kind of huge amount of profit is that it pairs well with the phone because they have given themselves an API. For any other headphone provider, basically it's much harder for the headphones to pair and, the AirPods pair in half a second and anything else takes eight seconds and it's just not as good of an experience.
[00:45:15]If you're trying to build a watch, which we're exploring as we talked about the wrist thing and I don't want to call it a watch, but it's the basic neural interfaces work that our Facebook reality labs team demoed some of our research about today. With the neural interface on the wrist, if you want that to integrate with the phone in any way, it's just so much easier on Android than iOS. My guess is that this is an area where there probably should be a lot more focus. And I do think the private APIs are just something that makes it really difficult to have a healthy ecosystem.
[00:45:50] Eric Migicovsky: [00:45:50] I'm going to make quick suggestion for them, if there's any Apple folks on the call: enable sideloading. If we were able to create apps and really move quickly to build new interfaces and new experiences, if there was a means of just inviting users to sideload the app, rather than going through the main app store.
[00:46:07] I think that would eliminate a lot of these issues in the short term.
[00:46:13] Josh Constine: [00:46:13] Yeah, I think that I would love to see Apple come forward with a more collaborative take. It seems like you guys are lobbying policies at each other. And instead of just coming to the table and being able to find something that works for everybody, it seems like there is an opportunity to build something that gives that level playing field for anyone. Mark, any other like final thoughts on what you'd like to see them do there before we move into our last topic of talking a little bit about audio apps.
[00:46:37]Mark Zuckerberg: [00:46:37] I thought that was a lot. I'm curious what Daniel and Tobi think?
[00:46:44] Daniel Ek: [00:46:44] Yeah. From my side, I think the keyword here is just enabling choice. And having more of a level playing field as someone who's competing with Apple, not just them offering a platform that’s prohibited and making it difficult on top of that, they also have music service in Apple Music where it's the default option.
[00:47:04] And Eric spoke about that, and Mark as well. It's a default music player. They are going to change it in upcoming versions, but that's about 10 years after the fact. So obviously a lot of people have gotten used to having that as the default music app on the iOS ecosystem. I personally want to see an internet where every single piece of the stack is open for competition.
[00:47:29]So whether it be payments, whether it's being marketing solution, whether it's creative solutions, whether it's commerce solutions really throughout the stack, you should earn your place. That's the most important piece for me to try to create an environment and that should be everything we spoke about from enabling everyone on your platform to have access to the same API says you do.
[00:47:51] Certainly if you're also creating apps as well that are competing with those providers, it's also allowing free opportunity for those apps to communicate directly with their customers and not have that be intermediated by yourself. And then thirdly in terms of the ability to monetize, we talked about advertising, but it's true in subscription to the 30% tax. We used to have this in Europe, actually. We used to have the telcos that charged something equivalent to 30 to sometimes even 50% of whatever you wanted to offer as a way of monetization. And it obviously didn't lead to very much of mobile payments and it turned out that it was only once we got to smartphones and were able to use credit cards as their underpinning to that that I think we made huge progress of enabling more and more commerce on the internet.
[00:48:47]But imagine if you could have paid with very low fees on text messages where we could have been today.
[00:48:56] Tobi Lutke: [00:48:56] Yeah, totally agree with you. I really think, open is good. Open leads to a lot more experimentation. Again, this is funny. Every time I seemed to be in a Clubhouse room with you, Josh, I give a shout out to the web browser, but it is just such an incredible thing that it exists.
[00:49:15]I think it's both saying that no, the web browser would have to be embedded today. Like it wouldn't make it through any App Store, but I think that's not good. But we have it so luckily it's there. I think more competition on that infrastructure leads to better things for everyone that uses the internet and everything that allows direct relationships leads to this kind of experimentation.
[00:49:38] leads to more businesses leads to more direct relationships leads to more entrepreneurship and anything that helps people get their first sale is something that's very good. Especially if it's on the terms of the entrepreneur.
[00:49:52] Josh Constine: [00:49:52] I love that. So we're doing this, let's talk on clubhouse right now and it seems between the pandemic breaking our sense of acquaintanceship the inability to gather together. And just the fact that people might be a little bit exhausted with video over some over time. Being on camera takes a lot of emotional effort. I think we all get that like zoom fatigue after a long day of meetings.
[00:50:12]And so we'd love to hear you guys talk a little bit about why audio is popping off right now in terms of social audio. Daniel, obviously you've been guys have been propelling more traditional music for a long time, as well as moving more and more into podcasts. Mark, why do you think this audio stuff is blowing up right now?
[00:50:28] And I know that you guys, well reportedly, you guys are building something more specific to the space. We'd love to hear you talk anything about that.
[00:50:37] Mark Zuckerberg: [00:50:37] Sure. I feel a little silly talking about why audio is important when I'm in a room with Daniel. But overall I have this theory of social apps that at the intersection of every medium and audience size, there is an interesting experience to build. So you can think about the kind of videos that are public, right.
[00:51:06]There's something interesting there. If you think about one-on-one, there's something interesting there. If you think about small groups, there's something interesting to do there. The same is true for text, right? Short-form, text long-form text, photos, gaming, all of these different types of mediums.
[00:51:22] And I think that's certainly true for audio too. And it has a bunch of the advantages that you said, right? You don't have to prepare, you don't have to look good before you get on to go do a podcast or a Clubhouse or whatever it is that you're doing.
[00:51:37]You can walk around a lot more easily. You can consume it without having to look at the screen and kind of do that in the background while doing something else and multitask better. So there were a whole lot of advantages for it, but I think ultimately.
[00:51:52] I think what Clubhouse is doing and has pioneered is really impressive and is going to end up being one of the modalities around audio live audio broadcast. You're going to obviously also have long-form kind of consumption of prerecorded, right? Whether that's music or podcasts, that's an important thing.
[00:52:12]And I'd love to do more around integrating that content and partner with Spotify on that to create a good experience across the apps there. But I think Spotify builds great tools for that today. But then I think that there's a shorter form component to this too. With most of these mediums, what you're seeing is through longer-form video, shorter-form video, longer-form text, shorter-form text.
[00:52:33]And I think that's going to be true in audio too. The question is what are the equivalents of that in audio? Overall, I think that this is going to be a pretty big space. The work that we're doing in this is trying to basically build out a bunch of the tools across the spectrum of how people would want to use audio.
[00:52:53]And I'm really excited about this. This is something that our team has been working on for a while, since I think possibly even before the pandemic, but at least from very early on in it, experimenting with different stuff. And I'm quite excited to start rolling it out soon.
[00:53:10] Josh Constine: [00:53:10] Yeah. You guys actually were building like a live audio feature back in 2016, which seems like eons ago now in the internet age. But I think when it was locked inside the News Feed. It felt like it was so much harder to quickly sample a piece of audio compared to a video or photo where you can really quickly get a sense of whether you're interested in it.
[00:53:27] Same goes for text. And audio is just so much more difficult with that. That's why we haven't really seen an Instagram of audio discovery. And so I think it sounds like what you really need to be building is new destinations or more sort of peer-to-peer mediums rather than those traditional just like asynchronous broadcast mediums.
[00:53:44] Does that make sense?
[00:53:45] Mark Zuckerberg: [00:53:45] Yeah, I think it's going to be all of these things, right? I think people are going to want to broadcast audio. They're gonna want to save long-form audio and be able to play it in the background. And I think that there are going to be shorter-form things and more discovery-oriented and quick exploration.
[00:54:00] So I know there's a lot of different use cases here. I mean, the trick to building products is not having just having a high-level theory on where things are going, but as you say, it's the execution and getting the details right. And making it so that everything adds up and makes sense.
[00:54:17] So that's why you can try things a few times before you get them to work and you just keep learning. And until you can make it work. But I'm quite optimistic about the space and. I think there's going to be a lot to do here beyond the products that exist today.
[00:54:30] Josh Constine: [00:54:30] Yeah. I think a lot of people get the sense that this kind of social audio is all about these kinds of talks. Like these kinds of big public speakers talking to a large audience. When I think one of the parts I'm most excited about is the smaller social, private rooms, where suddenly you can seem to get on the phone with somebody that you might never call on the phone, because I think there's so many people between our 10th best friend and our hundredth acquaintance that we don't get to talk to on the phone or have these sort of spontaneous interactions with but we'd love to cause we want to stay in touch with them. And that's especially hard right now. But Daniel, what are you thinking about this space? You guys are doing podcasts, but are you thinking of anything else around interactive audio or things that are more live?
[00:55:11] Daniel Ek: [00:55:11] Yeah for sure. And by the way, it brought up some fun memories.
[00:55:15] I remember Mark and I, we first collaborated on social music, which is a form of social audio back in 2011. We launched Spotify in the US that way actually, where it was pretty cool. If I was listening to music and Mark was on Facebook, you could tap into and listen to exactly what I was listening to at that time.
[00:55:37]It obviously wasn't as smooth of an experience as you can imagine it us today. But it was the first inning of that. So it's definitely something that we've been thinking about for quite some time. I think for both Mark and I, the way I look at it is, the internet is an audio, visual, and interactive medium.
[00:55:56] And so as such even as it comes to audio it was bound to become interactive. And I think Clubhouse and all of those type of formats are a great way of creating an interactive format between people and in a discovery format. I think at Spotify, we deliberately have framed our focus towards creators who aspire to be or already are professionals. So we are not trying to be a social network of some sort. But instead what we are interested in and what we're going to focus on is obviously creating more interactivity features between creators and fans. We think that there's a ton of work to do there and not just casual users, but even the segmentations like we spoke about earlier between your true fans your super fans and allowing those new and novel ways to interact with you.
[00:56:54]So those are definitely things that we're thinking about. And I think Clubhouse has just shown to the world that audio can be interactive as well. And obviously I'm not surprised, but I think the fantastic thing has been that this has been something of a trend that's been going on now for quite some time, I believe. I don't have the data to back this up, but I believe that the AirPods may be one of Apple's all-time most sold devices next to the iPhone.
[00:57:23] And so if you think about that and just think about ambient computing and the ability for people to consume more and more content now via their ears, because most of us are having these sort of white earbuds in for many hours per day, that's just an enormous opportunity, both for social experiences, but also for consuming more content like podcasting, like music.
[00:57:44]And of course, some of that will also be interactive.
[00:57:48] Josh Constine: [00:57:48] Yeah, it feels a bit like when his phone screens got bigger and the network speeds got faster, suddenly video became a viable option and people started consuming a ton more of it. And now it seems like we're experiencing that with audio.
[00:57:59] Maybe we don't need the screen size and the bandwidth actually isn't that tough, but it's really that sense of not having to fiddle with a tangled set of cords in your pocket just to be able to listen to something for 30 seconds while you're in line. Instead I'm excited to see content get cut down shorter and shorter.
[00:58:14] So I can ask for a set of comedy clips about a current events topic, or a quick news brief about something, or just some natural poetry when I'm taking a nice walk in the woods. I think that there's such an opportunity for that short-form part, especially if you do build in that AI discovery where you don't have to pick every time, but instead it can queue that stuff up for you.
[00:58:33] Daniel, I'm also really excited about curatorship because I think when you get enough content, naturally, you need that next layer of curators. The playlisters are incredible on Spotify, but it seems like there's limited ability to interact with those playlisters or for those playlisters to really understand who is listening to them and be able to build that second set of creators that are indirectly creating by helping other people find content to experience.
[00:58:58] Are you trying to build more for those curators as well as the creators?
[00:59:03] Daniel Ek: [00:59:03] Yeah. We're definitely trying to add more and more tools to allow you to be a better curator if not on a social basis, at least for yourself. But we did during the pandemic launch an ability for you to share what you're currently listening to with your friends and the way we did that was actually by just sharing a link.
[00:59:24]You can do that on any social network or on Facebook messenger or WhatsApp or any of that to your friends and they can tune in and listen to exactly what you're listening to. So it's a live playlist where you can interact around that and your friends can suggest if they want to listen to other songs as well.
[00:59:40]There’s definitely inroads in terms of that. But the primary focus for us on the roadmap is just enabling you to be a much better curator even for yourself. Just by, for instance, suggesting content that's relevant to the things you've already put in the playlist, enabling you. What we find at Spotify is that people had a lot of the same songs in the playlist, so just being able to augment that playlist by adding more great content.
[01:00:08] That's similar as something that our users really want us to be able to do. So there'll be a lot more of that stuff coming where it's both actual humans, but then augment that with machine learning as well to just make the experience much better.
[01:00:21] Josh Constine: [01:00:21] Wait, are we going to see like a Spotify first-party kind of turntable FM experience where I can actively DJ for a bunch of my friends?
[01:00:30] Daniel Ek: [01:00:30] Yeah, it doesn't look anything like Turntable, by the way, I love the icons and the visual expression of Turntable. But this is more like the functionality in the sense that you can actually already today create kind of a library room where you're able to tune into what your friends are listening to at the moment.
[01:00:50] Josh Constine: [01:00:50] That's amazing. So I wanted to go through one of the incredible top tips that you guys gave us today and some of the major insights. So I love that Mark, you started off with talking about your favorite meme of yourself was that “smoking meats one” and your Sweet Baby rRay's super cut of your deep affection for that barbecue sauce.
[01:01:07]It’s just great to see that you're playing along with it and you're laughing along with it. Cause I think those meme do bring a lot of people joy. When we got into talking about the creative economy, we talked about how the creator, really need tools that there are new business models around journalism and entertainment and that people using their personality as their brand and turning their passion into their profession to make a real living. It unlocks a whole new type of occupation and something that might give people a lot deeper fulfillment.
[01:01:30]But in order to do that, you have to cobble together all these different tools. Creators have to become founders as well, and bring together a wide variety of teammates as well as tools. We're seeing this explosion of startups to help them relieve some of that friction. Because a lot of times, content has been one size fits all, and that's mean that you have to boil it down to this lowest common denominator.
[01:01:50] And it's really one size fits none. And that now people are starting to move off of these platforms or deepen their monetization through new features on the top social platforms. So they can develop that deep relationship with their super fans and cater to the niches that truly love them. Tobi said that that trend of people moving off platform might be a little bit overblown and that the internet is the biggest city in the world, and you can find those first thousand fans for nearly any niche.
[01:02:14]And Mark, you talked about wanting to offer people a lot of different ways to monetize. that could be selling the actual content or creations, but there's also things like merchandise, if you're doing curation or live streams with tips. That the ad revenue share is not going to work for everyone.
[01:02:29] And we need to move to this more 360 view and that you guys are working with other companies to help you with that instead of having to try to do it all yourself. And that, it's a leaky bucket to think that we have to constantly fill up employment. And instead, if people are moving more to the sort of passion professions, even if they don't end up having a traditional job or being able to make a living as a creator, I think long-term that'll be okay because we're going to have more subsidies as automation helps change that economy.
[01:02:54]And that the internet is this sort of ultimate promise of the future of finding your audience, as Daniel said, and helping to monetize everyone from casual users to super fans, to be able to make that all come true. And Mark, you guys are making incredible progress here. You now have 1 million active shops and 250 million people using them, which really shows that people care about those small businesses on Facebook.
[01:03:13] And that's where we brought in that talk about Apple. I asked you guys about how you felt about these changes that Apple is making, and that, it could be really detrimental to some of these small businesses, as you said, if they're not able to target their fans in the same way, it's detrimental to creators.
[01:03:27] If they can't necessarily monetize or take those sort of micropayments or do subscriptions. And some of the things that you guys hope for was the idea of opening up the API. So that all services, regardless of who makes them can use all of Apple services or, Eric Migicovsky the Pebble founder talked about sideloading and how if Apple doesn't want to be the distributor of these experiences, it doesn't have to. Let people do the sideload them themselves, and let people choose their own default apps rather than demanding that they have one specific one.
[01:03:55] I would love to see an iPhone dialer replaced with a third-party app that can remind me to call people that I love that I haven't talked to in a while. And we can't do that if we can only use the native dialer. You guys talked about reducing taxes so that creators of all types can earn a living because you mentioned that when Facebook tried to let your creators monetize online events during the pandemic, you guys didn't take a cut, but Apple was still taking that 30% cut, or that for Spotify, Apple's 30% cut is actually more than Spotify even makes on the entire service. And I think that that poses a real problem for the long-term opportunity for experimentation on the internet, if people are so locked and constrained by what they can do on the predominant platforms.
[01:04:35]And then we talked a little bit about audio apps and, Mark's theory that at the intersection of every medium and audience size, there's something interesting to build, whether it's one-on-one or small groups or broadcast. And we've seen that from blogging and Twitter, long-form and short-form and text or gaming going from microgames or instant games like on Facebook to bigger console games.
[01:04:57] And you think that there's going to be similar things like that for audio and that we’ll have longer-form stuff like Spotify or podcasts, or even Clubhouse, but there's room for those smaller, shorter audio formats. And as Daniel was talking about, because everybody is starting to have Bluetooth earbuds in their ears,
[01:05:14] they're not having to untangle these wires to be able to listen to something, we have a lot more opportunity for consumption. And I think that when you put all that together, there's a real opportunity for people to not just follow in the footsteps of the old economy, but find their own path to what fulfills them and makes them excited about living and getting up every morning.
[01:05:32] And so with that, I wanted to ask each of you to guys just give a quick final word of inspiration or advice to entrepreneurs and creators out there. Daniel, maybe you could start us off.
[01:05:43] Daniel Ek: [01:05:43] Wow. Yeah, that was quite a summary, Josh. So thank you for doing that. No, look, all I would like to say is it feels like pretty much everything on the internet might've already happened, but just know that this is the beginning.
[01:05:58]So keep being curious, keep trying out new services. For many of us a few months ago, Clubhouse didn't exist. And it's funny I just saw Josh that you had over 3 million followers here as one creator. Play around with the services. Try out new things on them.
[01:06:15]Try to interact, try to work on all services. Build your fan base. Don't be afraid of collaborating with others. You started off by saying we're in the kind of remix culture. Stay curious and know that we're in the beginning of this.
[01:06:32] Definitely not the end. Much more to come
[01:06:35] Josh Constine: [01:06:35] love it. Tobi, what do you think?
[01:06:38] Tobi Lutke: [01:06:38] Same sentiment. I think we’re in the beginning of this new city that everyone just immigrated to and we don't know what things look like. I think honestly the only strategy has to be adaptability, change is going to be constant. And as the services change, the terms change, the game changes, the most adaptable will do well. And I think that's the right strategy for everyone to take. There's going to be incredible amount of opportunity just because some of the platforms and all the work and people building business models around helping others.
[01:07:21] And then taking revenues and reinvesting them into platforms to make it even better and widening things further. That's what's going on. I think that's one of the best stories in the world, and I think that's important. And it's good.
[01:07:35] Josh Constine: [01:07:35] I love your quote about that, “You should look at failure as the successful discovery of things that did not work” and that you shouldn't be afraid of experimentation because you're always going to learn, even if things don't go right.
[01:07:45]And Mark, why don't you give us another final thought? And before that, I just want to let everyone know if you weren't able to catch all of this talk. I know there was some trouble getting in the room, you'll be able to get the recording at constine.club. I'll be putting out that recording as soon as we can possibly do it, because I want to make sure everybody gets access to this and it shouldn't be exclusive to iOS users.
[01:08:01] That's for sure. But Mark, why don't you give us some final thoughts on the creator economy or what advice or inspiration you might have for creators.
[01:08:09] Mark Zuckerberg: [01:08:09] Sure. And thanks for doing this, Josh, this has been fun. And I have to say, I really liked Tobi's analogy of the internet as a city.
[01:08:17] And it just feels like for the last 10 or 15 years a lot of the community and social aspects of the city have filled out. But I do think the kind of creative and economic opportunity for individuals is really just about to take off. It's already big by some numbers, but you know, if you're thinking about whether this is something that you want to do with your career, the tools and the monetization and the ability to reach people and get more precise at finding the people who are going to be interested in what you're doing
[01:08:54] are just getting so much better year over year right now that, what we're seeing across all of these different modes, whether it's journalism and people moving over to tools like Substack or -- hopefully we can enable some of that too, with the project that we announced this week --
[01:09:11] to the other mediums that we're talking about here, whether it's audio or video, or just other creative pursuits gaming, I just think that we're right at the beginning of this, and there's just so much opportunity for individuals to do things that unlock their own creativity, serve important niches in the world, and make a living doing some fun, exciting stuff.
[01:09:30]And I think it's really just going to get a lot more exciting from here.
[01:09:35] Josh Constine: [01:09:35] That's amazing. Thank you guys so much for joining us today. Again, if you guys didn't catch all of the talk, we'd love you to check it out later. Please go to constine.club and you'll be able to get the recording soon. Next week, we have a super exciting show.
[01:09:46] We're going to have the CEO of WordPress, Matt Mullenweg, as well as the COO of Salesforce, Bret Taylor -- one of your former employees, Mark -- talking about going back to the office and what it takes to actually return and whether we're going to see remote work continue. I know you love working with Bret
[01:09:59] Mark Zuckerberg: [01:09:59] yeah, that'd be great. Bret is amazing. I'm looking forward to tuning in for that one.
[01:10:05] Josh Constine: [01:10:05] Awesome. Yeah. And if you guys are interested, we also presented this incredible NFT portrait of the guys onstage from fnnch. We would love to have you guys check that out. You can find it on Foundation.
[01:10:15] It's up for sale and we're giving 20% to charity through give directly. But again, I think the creator economy is something that if everyone experiments, finds the medium, that fits their voice and makes it feel like it's not really work, that there's a real opportunity for us all to find a way to find self-expression if not also monetization and maybe even a profession.
[01:10:35] So I want to thank you guys all for joining us. And I'm going to talk with Finch for a few more minutes about the artwork that he made, but I know you guys are busy people, so if you've got to go, I totally understand.
[01:10:46] Mark Zuckerberg: [01:10:46] All right. Thanks Josh. This was awesome. Thanks for doing it.
[01:10:49] Josh Constine: [01:10:49] Absolutely. Mark, Tobi, Daniel. Incredible to have you guys here. Thanks for joining us on PressClub.
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