S07, E17: The New Economics of Building an Audience (with Danny Frankel)

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The problem is that the distinction needs to be drawn between the competence of the economists and the correctness [music] of their analysis.
Welcome to the Mobile Dev Memo podcast. I'm your host Eric Seufert, and I'm joined today by Danny Franklin. Danny, welcome back.
Thank you so much, Eric.
So, you were last on the podcast sometime ago. It's probably more than a year. It's probably worth reintroducing yourself.
Yeah, so I'm Danny Franklin. I worked at

Facebook for 13 years up until May of 2023. Actually, about exactly 3 years ago, at which point I left, quote unquote, and started this company called Punch Up Live that is leveraging a lot of what I learned at Facebook in terms of e-commerce and helping independent businesses sell things online, but operating much more into the live entertainment space, which obviously we'll dive into, but you were also my first investor and the first person that really believed in this.
That's right. Yeah, don't you forget it.
I don't.
Uh so this I think it would just be So you were at Facebook for you know, Meta
Yeah.
for a long time. It would just be interesting to hear your perspective, you know, let me know if you just want to punt on this, but it would be interesting to hear your perspective on the company with like the passage of 3 years and how they've changed quite a bit. Like how how do you perceive their place in the digital landscape now? How do you How do you perceive of like the decisions they've made with respect to

like fully leaning into I It sounds like, you know, AI on the ads platform is is one thing, but they It sounds like they've embraced kind of like the application of AI across the entire company and like all aspects of the workflow. Just just talk to me about like your perspective kind of having been removed for 3 years on Meta.
Yeah. So, I guess the area that I focus a lot about is their innovator's dilemma problem as well, just like in the creator space. So, on the ads side and the company overall, you know, it's interesting I was there for so long that it still feels like I know a lot about the company, but everybody that I talk to just discusses or mentions to me that, you know, it's changed dramatically. So, I guess in some ways, I don't really know the company that well. From the outside, yeah,
[laughter]
it's it's an interesting time. I mean, you know, they just did massive layoffs, which is obviously incredibly disruptive. You know, it went from a place where it felt like there was a real nurturing culture to one that feels

much more ruthless now. In some ways, now having run a company, I have a degree of empathy for, you know, what the leadership team over there must be looking at. And then at the other side of it, I feel bad for all the people that continue to be impacted by, you know, whether it's job losses or whatever else. Like Facebook was a place where as an employee there felt like there was a ton of stability, and now it just seems like it's the opposite. On the AI side, I can't I don't know. And I'm actually curious your position on this as well. They're clearly leaning in. They have a lot of advantages, I would say, essentially just from, you know, training data more than anything else, but the interesting thing for me is they keep struggling on the application of what exactly to do with it, it seems. And they keep touting like how much better targeting is getting as a result of AI,
[snorts]
but I really just like wonder when there's diminishing returns both on the content side and on the ad side of like how much more targeted can you get on [laughter] figuring out who to show which advertising to.

Um, we've been talking about how amazing they are at it now for like 10 years. So, I just don't know like exactly the incremental gains you can see there. I think on the other side on the content side the thing that I actually think a little bit about these days I I deleted Instagram off my phone probably two or three weeks ago and I have not had any desire to put it back on and the reason why actually is the videos were too good. Like I think they were so good at recommending content that I was feeling myself sucked in and I was just wasting too much time on it. And then eventually like when I just like I don't know my kid started screaming at me or whatever and I realized like I came out of this trance I was like what the hell did I just do for 30 minutes? And so I actually think there's some negative impact from getting that good at content delivery as well and I don't know exactly how to measure that, but yeah I I'm unclear exactly what their AI strategy is at this moment.
Yeah, that's an interesting observation. I mean is there just some kind of asymptote that you reach not as a function of performance, but as a result of just users revolting because they

they can observe that they're spending too much time and and like there's no guardrails there. I mean you remember when they did the time well spent initiative? This was a couple years ago.
Yeah, oh yeah, very much so. I talk about this all the time.
But I feel like you know you you'd look at that and you'd say, okay, is that that's probably not driven by any sort of like ethical impetus. That was just seen as a business decision and and maybe they just need another round of that. I don't know. It
Well, the way that I look at that whole time was like Instagram Facebook was the clear leader and that all went away purely by coincidence when TikTok started gaining on Facebook and Instagram. And so really what it was like, okay, you can dial back focusing exclusively on time spent and more on familial connections or whatever because that works really well from a PR perspective and it doesn't really have huge damages to business but once you are feeling threatened on the business side, you got to crank it back towards time spent because that's how you get ad impressions. The point that I always think about is we have

rudimentary measurement opportunities for figuring out what people like or don't like and time spent is kind of the best proxy for that unfortunately, but it's not really the best measure of like how much I'm actually enjoying something. It's just like how much time I'm spending on something as you know, exemplified by my no longer wanting to spend as much time on Instagram despite my actual time spent going up. You know, the interesting thing, you know, I think we both have spent a lot of time thinking about privacy. The real answer is if you could actually like read my mental state and figure out, all right, what is the amount of time that I want to be spending that makes me happy and like I'm not a scientist but triggers the right amount of dopamine or whatever it is. But from a privacy perspective, there's no way I'm giving Facebook or meta like, you know, deep brainwave access. And so we're kind of just like stuck in this thing where like they don't actually want what happened to me to be the outcome, right? You don't want me feeling so sucked in that I actually stop using it. But also, what else are

they supposed to be looking at? Like there's no other real signal for it.
Yeah, I mean that's that's that's the best they've got. And I imagine there's there's just got to like I imagine like there's some kind of universal like like like unobservable sweet spot and like maybe they just edge closer to that all the time through experimentation but but there has to be. And and well, I mean I think this actually dovetails really nicely into what we're going to talk about because like one thing that I've been writing a lot about lately is like the power of AI to ultimately reduce ad load because if you got like imagine this theoretical limit of like they get so good that essentially you're going to click on everything. Well, you're just going to run you know, you've got limited disposable income. Then what's the right ad load at that theoretical limit? And it's, you know, it's probably much lower than we are today. And then also, but like if you fill out the supply side, not not the ad supply, but the actual product supply, like in terms of just the consumer economy, like there's you're enabling people to make more stuff. Right? Cuz they've got the tools now that enable them to do that. And so, and

that could be creator content, but I think that could ultimately be just local services and stuff. Sure. So then we've got way better matching. Like this whole matching mechanism is is vastly more efficient in that world because you've got way better targeting, way better, you know, ad retrieval ranking. Um, but you've also just got the supply side of the consumer economy being filled out with a much more diverse set of products. And that certainly is relevant to to what we're going to talk about today on the creator side.
The one question for you there, when do you reach the Minority Report scenario where like it's not even ads anymore, it's just like you get the max to your bank account and whatever you were magically going to want just kind of like if they're that good at predicting exactly what you're going to buy, like why even show you the ad?
Well, I think that there is, and I talk about this in this podcast series I've been doing, The Prosperous Society, and I think that is there's a chasm. There's a chasm that you you have to cross with the act of doing, right? That was citing a lot of Hegel in that episode, but like you you want your personality is defined by doing, not by wanting. And like that that act is what defines your personality. It's the acting on it is

not it's not the impulse, it's acting on it that defines who you are. And so I think like there is there we talked about like that asymptote, that sort of invisible asymptote. I think that does exist, and I think it if you start fulfilling those things, it just doesn't work. It's not like when I talk about agentic commerce and why I don't think it's going to work, my argument there is not that like this gets executed against really well and we all end up in like a dystopian situation like in the Matrix where we're just plugged into a machine and like our we're living in this in this simulation. I don't cuz I just don't think that's going to work. I don't think it would get traction. I think people would would would revolt against it. I think they would reject it. And so I think it's not it's not a it's not a bad outcome because it's dystopian. I think it's a bad outcome cuz it's not going to work because it's dysfunctional. And so like you shouldn't build that because you're going to waste your money. And then all this cap ex will be wasted and then we are in a bubble. We're not in a bubble if you build stuff that works and people embrace, right? Um but okay, let me let me I want to I want to move into the the topic here because you know, since the last time we spoke we discussed the rise of social media subscriptions and the internet's grand bargain, right? So the the idea was the internet's grand bargain was always

we're going to give you access. You've got to earn attention. If you write good content, you make good content, you produce good content, you're going to get attention. If you don't, you won't. And then we'll just be we're not going to put our thumb on the scale and we're not going to punish you or penalize you because you don't pay us because we're going to distribute the best stuff and the best everyone has equal access to distribution. And subscriptions broke that which I think Snap has moved ahead with subscriptions and they've been fairly successful there. I think Meta's pulled back a little bit on the subscription side. I think it didn't work. Talk to me about how has distribution for independent creators changed since we last spoke? Let's call it like 18 months ago.
Well, I actually consider subscriptions and ads to be somewhat the same, right? Like you're paying to disrupt whatever the organic algorithmic delivery would be. The biggest change to me there's a great article in Verge that just came out and there've been a bunch of articles about this, but like are you familiar with the like these clipping services? You know what this is?
Yeah, yeah, yeah.
This to me is like the biggest problem that kind of exists right now is if there's a world where the trade-off that

you described actually exists where it's like, "Hey, you make really good content and we're going to do a really good job of making sure the people who like that content end up seeing it." That feels somewhat like a meritocratic outcome that like I can get behind. Like you can debate like exactly what the tuning of that algorithm is, but like we're all on the same general page of this is an unadulterated attempt at giving people the most entertaining content. I don't think we're anywhere close to that anymore.
Mhm.
And the result is is the result of rather all these like clipping farms. Where, you know, it used to be that, you know, you'd have all these people who would just follow different accounts. But now it's much worse. You can go join these Discord chats that I'm a part of and observing where every single big viral artist that exists on the internet right now is using this cuz it's still the only way to do it. They talked about it in this article how Justin Bieber even did it post his Coachella set.

Justin Bieber performing at Coachella with a set designed to go viral
Right.
still had to pay these clipping services to promote his videos all over the internet. So it works as you post a video in this Discord chat. It's much much cheaper than advertising. Like the CPMs are like a dollar versus I don't know what Facebook or meta is, $20. And these people will then post whatever clipping whatever versions of the video they think are going to do best on all of these phantom accounts that exist all over these social media companies. And then they get compensated per thousand views that the videos end up accumulating. And this is distorting everybody's feed. Like Clavicular was not the most compelling content.
Right.
That guy just paid a ton of people to essentially boost his content for him.
Yeah.
So the result that I'm seeing for my business specifically is comedians are having to pay a lot more in managed advertising to reach the audiences because their organic reach is going down

You know, we always talk about this as like sort of a as a fraction, right? You have the number of users there are on a platform divided by the number of creators making content. And that used to be the simple thing. Now it's not just like, you know, the number of individual creators, it's number of individual creators plus all of these accounts that are just pushing all these videos all divided by user growth which is not growing significantly year over year anymore. And so everybody's just drying up in terms of the amount of use they would get, and so they're having to pay for it, which increases the overall costs, which then they have to recoup on the back end from a ticket price perspective, which causes ticket prices to go up, which eventually, and as we're seeing now, there's this new thing called blue dot fever.
What's What's that?
So, this is all over the ticketing world. People are essentially just looking at Ticketmaster seat maps and seeing how many seats are left. So, like Post Malone just had to cancel a whole bunch of dates. My favorite artist, again, his name is Sturgill Simpson, just announced his first arena tour. I haven't looked recently, but like there are a ton of tickets left, and it's because they both made

bad bets that we can talk about more later, but also people are just able to see that there's a ton of seats left, so there's no reason to go pay 80, 90 dollars for a seat when you can kind of wait until closer to the date and probably get something cheaper on the secondary market or when they, you know, adjust ticket prices down. So, it's just this like bad cycle where the cost of awareness and distribution has gone up, but it's causing an increase in prices of the final product, which is the tickets, and then getting everything out of equilibrium because the consumer can no longer afford to pay the increase in prices.
That's fascinating. So, this is just transparency distorting the actual market, right? Because it's like if you don't come out of the gate right away with like selling half of the tickets, then people just they just understand that if they wait, they can get the tickets for cheaper than what they're listed at. Is that Is that Am I understanding that right?
Yeah, that's that's I mean, there's other Again, nothing is simple these

days. There's also kind of the aspects of the secondary market, so all these scalpers and bots who buy up all these different tickets are also like a very large factor. Like a lot of times when you see a tour sells out immediately, it's because scalpers are just buying them all up immediately, so that they can then resell them once their confidence threshold in that goes down. And like part of the problem is if artists are pricing tickets higher, then there's less, you know, of an upside essentially for the scalpers to be able to resell them. And so there's all these different dynamics that are kind of playing into it, but ultimately what matters is you do need real people to show up to watch a show. And the end result, as you can see from yourself, from, you know, any of these uh overall seat maps, a lot of people are not buying when they typically would for a show.
Well, that's fascinating. That actually has a lot of parallels in the digital economy, especially in games, because one one trap that companies would fall into is they would get on a predictable discounting schedule. And to to you know, it was predictable

in the way that the users could time it. And so they say, "I'm not going to pay for this. I'm just going to wait until they inevitably discount it, cuz they will in a week or whatever, and and then I'll buy it then." And so they they time their purchases in that way. And so then, well, then what do you do? You have to increase the price. You have to increase the base price. And then you further discourage buying it for at face value, because you know there's a discount coming. Interesting. That's an interesting dynamic. I didn't I I knew about clipping, but I didn't know about this this blue dot phenomenon.
Oh, yeah. Again, we're all kind of living in our own little algorithm here, but that is very large in mine. I think the interesting thing about live entertainment, which is, you know, one of the core tenants of my company, is there's not a lot of good data out there. So there's a few different factors to the whole thing. The first is just like marketing costs. If those are going up, those have to then get put somewhere. The second is judging artificial and real demand. Cuz like bots were a component of demand.
Right.
On the real side, you also have to make

sure those tickets end up in real people's hands at some point. And, you know, one of the problems, like if you look at Post Malone, I don't actually know how long it's been since he last toured, but if you are his agency or promoter, what data do you really have to go off of to figure out what demand is for his next tour. You can look at Spotify streams and you can look at YouTube views. But as you know from advertising, and this is kind of the parallel that I keep trying to hammer home in the entertainment world, but lands more in the ad space, there's a very big difference between people who click on ads and people who end up buying a good. And that's why bidding CPC never really made sense.
Right.
In the entertainment world, it's there's a lot of people who watch videos or listen to music and don't buy tickets. And these two data sets are completely separate. So Ticketmaster knows a lot about who bought in the past. They don't know who's going to buy in the future. And so the whole premise of Punchline is combining these two data sets together, where we are both getting historical

ticketing data, we have primary ticketing, so we know current ticket scenarios, and we have a whole content component where we're able to tie all these different variables together to make really accurate predictions on where someone should tour, how much they should charge, and what capacity they should be playing at, because that is the big gap, and it has never really been exposed until now because coming, you know, we had COVID happen where everything just fell off a cliff. And since COVID, you know, the demand for live entertainment has just outpaced whatever the supply could be, and now for the first time we're really seeing that supply is outpacing demand.
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results. Check them out at incremental.com. That's i n c r m n t a l dot com, or click the link in the show description. So I appreciate you not being promotional, but maybe take a second and and explain what Punch Up is and the genesis of it because I think it's really fast. You came from, you know, Meta and this just like crucible of analytical rigor. I imagine at that time like there was a moment in time where where being at Meta was like it seemed like there was an expectation that like everyone is kind of like fluent in the mathematics of what we do, right? It felt that way from the outside. I haven't worked there, but and I don't know if that's changed. That's not my point. My point is then you you built Punch Up and it's there's a little bit of overlap in terms of like the advertising layer because you do work with that. But like the reality is my sense is and this is why I really love this company. You're taking that analytical rigor and that very sort of like economics-centric view of like marketplaces and you're applying that to

a domain where that hasn't really been applied. Talk talk to me about like the genesis of Punch Up and how you're applying that that knowledge set there.
Yeah, so, you know, advertising is very similar it's a core component of e-commerce. And the general observation that we had coming into this is e-commerce has become very very efficient on the internet. And the way that is become very efficient is for the most part you have people who are marketing a good and then they own the place where people are transacting for that good. And so they can run all kinds of experiments, they can try all different kinds of ad platforms, they can try all different types of general marketing techniques to understand, all right, if we increase or decrease the price by $5, if we choose to make the product in blue or yellow, does that increase or decrease sales? That is how you run an efficient business online. Live entertainment is very unique because the people who are now marketing the goods and again it's hard to think back pre-COVID, but like you used to go

to the venue's website to figure out who was coming to perform there and buy tickets. That is no longer how anybody goes to decide what shows to find. Now, post-COVID, it's all following these people on social media, and ideally, you see their posts when they are mentioning where they're going to go tour, whether that is on a podcast, on, you know, Instagram, wherever else. A lot of times that doesn't happen, which you can come back to, but now you are following the artist. That artist is essentially marketing their goods. They are marketing goods that the inventory is managed by a a venue that they don't control, and the transaction takes place on a ticketing platform that they have no control or visibility into. So, it's an extremely fragmented ecosystem. And so, the whole hypothesis was, if we can bring all of these things under one umbrella, where you have the venues, the artists, and the ticketing all under the same general data set, we can implement the same efficiencies and help people understand, again, like where they are charging too

much or too little, where they should be performing where they aren't currently, or where they suspect that there's more demand than there is, or vice versa. And so, it's essentially just like taking all the learnings that we had from Facebook Meta and applying it to this space that no one has really been able to operate efficiently. And so, we started with comedy for a range of reasons, but one, comedy is a wildly overlooked vertical within live entertainment. Just like some interesting notes there as well, like we now do ticketing for a couple theaters, and we do ticketing for comedy clubs. You know, the interesting thing about a comedy club versus a theater, one, the fees are much, much less, but two, comedy clubs are running shows 7 days a week, many times two to three shows a night, versus theaters that are doing shows, you know, two to three days a week. And so, the volume of tickets is significantly larger at comedy clubs than in theaters. Two, Live Nation doesn't really generally operate in venues that are under 1,000 seats, so we didn't have to compete with Live Nation.

And then the last piece is like resonates strongly with me the the Peter Thiel notion of like start with the smaller market, dominate that, and then move out. And so, we started with comedy as, you know, part of that general notion.
I remember [clears throat] cuz when you were walking me through this, it was shocking just how unsophisticated that this this whole market was in terms of just like optimization and allocation, right? So, you the pitch was like, okay, look, we take the optimization efficiency of a meta and we apply it to this totally greenfield opportunity where, you know, comedy clubs are just they put up a they've got a marquee and they'll put up the name and whatever. Like they got a website and they they maybe they're blasting stuff out on Facebook. It's getting seen by 1% of their followers. And this was, you know, 4 years ago. Now it's 0%, right? So, like how you talk to me about just just how low-fi was it? And where are like the biggest opportunities for optimization there? Because I think it's just like really fascinating that like when you were explaining this to me, like these these comedians, like they were in charge of their own marketing. They didn't know

what they were doing, right? And then they were just you know, they were dropping like quite a large percentage of what they thought they were going to gross on a tour in Facebook ads without any sort of idea of how to do that like efficiently.
Yeah. I mean, this is the best example. I'd say a comedian who I'm now like really really close to, like they didn't even know to prioritize making sure that the dates on their website were up to date or removing like old dates. Like that was just not part of the workflow. Because again, pre-COVID, you know, there were very few artists that were really playing theaters or above. Like it was a very very select few. And so, the assumption was you're going to go play comedy clubs and they're going to do all the marketing for you. So, like what difference does it really make if your website is that up to date or not? There are a couple examples here. Like Kevin Hart was famous for like leaving a pen and paper out of the door, I believe, in comedy clubs when he was first coming up and like collecting email addresses. Well, obviously talk about Louis C.K. and you know, where his innovations came in here. But for the most part, that was

kind of the deal. So, in terms of low-fi like, I don't know how much lower it can get than that. And so, one of the key things that we really did start talking to people about was like, you got to keep your dates up-to-date. Like, nobody knows where the hell you're playing. And that still is true for a lot of comedians. Like, they will be using some Linktree or something where, you know, there's a date from 2024 on there. It's like, well, you're making this incredibly hard for people who want to go see you figure out where they can go watch you perform. In terms of where we are today, it's now much less consistent. I would say most people were kind of on that plane of like, you know, they just weren't really paying attention to details. I want to maintain humility, but I think that we've like had a massive change in the marketplace in so a couple of different ways. So, one, everybody keeps their dates up-to-date at this point. We've done some cool stuff where we do nearby shows at the very top of artist pages. There are now a bunch of people that are copying us on that. I do I mean like there are a couple other companies there, so I don't think it was entirely us, but like, you know, really, really

focusing on mailing lists and collecting as much consumer data as you possibly can is now a big focus for everybody. It's just also still very messy. There are a bunch of different systems out there. And one of the biggest problems I would say for the field in general is we just asked a industry that has not changed that much since I don't know, let's call it the 90s, but it could even be earlier than that to just transform overnight into an e-commerce business. And it's not realistic to ask people who have been training their whole lives for a given role to now be like, all right, now your new responsibility as a manager is make sure that their websites are all updated. Make sure the conversion flow is super efficient. Make sure that, you know, when you're running ads, you're able to understand how much we should increase or decrease spend. And none of this is stuff that they all came up in. And so, there's just still a bit of a gap in terms of what the right support structure is for a modern touring artist to be able to make the most of all this. But again, there's some really good

signs like, you know, we are now doing the ticketing for this festival if you have any listeners in San Francisco for Stern Grove Festival. And so, they had previously worked with Eventbrite that had massive, massive problems when they were doing ticketing for them because they just couldn't handle the demand. And it was a pretty simple fix. Like, I'm a big Fish and Grateful Dead fan. And like Fish and Grateful Dead always their ticketing through a lottery where you would just put in ahead of time for the number of tickets that you wanted, and then they would distribute them. And so, we just adopted that essentially for Stern Grove Festival, and it's worked awesome. And now, you know, I just got a I saw last night Aziz Ansari is doing something for like his show that he's doing in London. And so, we're starting to see a lot of the stuff that like we've been pushing on people really get adopted even outside of our solutions, which I didn't really it would didn't stress me out much. I would say for the first couple years where I was like, all right, we're just teaching best practices. Like, it'll all come back to us. Now, there's like some part of me that's like, that was my idea. But uh, you know, it's still fun to see everybody starting to progress towards

more of a a modern strategy, which ultimately is good for fans. Like, we've all been there where you have your favorite artist coming to town, and you don't realize it till afterwards, and it's just frustrating.
Yeah.
So, ultimately, it's just good to see people getting out to more shows.
So, you acquired a ticket company. Well, stand-up is is is a kind of a unique live experience because the thing is like when you go to see a band, like, you want to hear the greatest hits, and you know, I mean, this is like I'm not this isn't some some unique observation I'm having right now, but like it's but you want to see the greatest hits. Like, play the songs on the on the album, and you know, I wanted to hear them live. That's that's the that's the appeal of that. But like with the comedian, you don't really want to see stuff you've seen before. A joke doesn't really work that way. I mean, if it's you've already heard it, it's not going to be as as good live. And we talk talk to me about that that creator audience relationship and and how transcending the digital realm into these real-world interactions impacts. It doesn't make it deeper, does it make it more dedicated?

And and then how do the how do comedians walk that line where like, okay, well, you're coming to see me because you're familiar with my work, but you can't be familiar with the work that you're going to see, otherwise you won't have a good time, and maybe that'll actually turn you off from going to see me again. And so talk talk to me about that dynamic.
Well, one, it's just a really interesting observation that touring in comedy is the opposite of touring in music. So, in music, you create a new album, and then you go tour that album. In comedy, you tour the hour, then you put out that hour, and then you have to start a whole new one. So, it's it's literally reversed. I mean, I think there's a couple like key differences here. You know, comedians are talking to you, and you know, it's largely you know, personal subject matter. So, the parasocial relationships I think are a lot stronger because you really feel like you get to know them, especially if they do a lot of podcasting. I'm now good friends with Mark Norman. Mark Norman does every single podcast available, and I will tell you, I feel like I still know him

better from the podcast
Yeah.
than like when we hang out cuz like I'll just be like, "Oh, you know, you went to your wife's family or whatever this weekend. That's crazy." And I didn't know that from having talked to him. So, I think that like the relationships that you can have with artists are very strong, but you know, we're in this weird world where to promote, you have to get distribution, which comes from content. To make that content, you have to have material. You can't burn the material that you're working towards for that hour, because that is like the big like capstone of all of your work. So, you kind of have to do this crowd work stuff, which is starting to burn out a little bit. People are not as into it as they were when we last spoke. So, everybody's kind of just trying to figure out exactly what works, Like whether it's just like super topical stuff that you can't use, which we had an idea about of like trying to create a series of just strictly topical humor with a range of comedians just because they couldn't really put it in a special and we thought if we just produced it. And some of that hits, some of it doesn't, you know, if you mention Trump's name, weirdly that doesn't seem to do that well on social media. So,

it's it's this weird place that we're in right now where I don't think anybody feels like they have it figured out. Like Hollywood is in a really rough spot because there's not a great model for making content these days.
Yeah.
YouTube views are down. So, it is hard again just kind of going back to this whole fraction situation. Like there's just more people making content and the YouTube growth is not doubling year over year. So, uh at least I don't think you can probably um fact check me on that one. But, as a result views are going down so they're not getting paid as much. You know, Netflix is one of the few buyers out there. So, there's just not a model really for making this stuff and it's kind of the same thing on the content side. It's just hard to know exactly what people are going to want to see and maybe going back to the first point, the biggest problem is now these clippers are creating this distorted sense of what would ordinarily get distributed and you just kind of have to be paying for these people to distribute your clips otherwise you're just not

getting the distribution that you need to be able to sell your tickets.
So, the YouTube observation is a is an interesting one. So, you know, I they don't release like view statistics, but you know, you could proxy by ad revenue, right? Because it's just a function of views and and CPMs. And YouTube and search were basically in lockstep from Q2 2024 to Q3 2025 and then they diverged and YouTube growth is down. And I want to say lockstep the growth was almost in lockstep. Very similar growth rates every quarter. And now the YouTube growth was way down in Q4 2025 and only slightly up above that for Q1 2026. So, YouTube in 2021 and let's just go to Q1. Q1 2026, YouTube growth is 11%. Search was 19. On a much larger baseline. And so, you know, that maybe that part partly is that that fractured nature, maybe it's also just like this slop that's getting distributed out there and it's just much less compelling and I don't know, but it's interesting.
And there's more competition. I mean, like I I don't know if you've seen this, but you know, every major streamer is

now going to come out with like a shorts
Yeah.
like solution.
Right.
Like this is the real like it's funny. I got in a little bit of a disagreement with a venture capitalist couple years ago now. And the premise was YouTube is different than every other platform out there. And I was just like, I've seen this movie before. I know exactly how this goes. Which is essentially like there's a whole bunch of user growth and time spent increases, which means people are going to be able to get that positive reinforcement of more views and more distribution. So, all the creators flock to it.
Yeah.
Then there's so many creators competing for views that, you know, the overall uh distribution of any one creator goes down. And then everybody's looking for whatever that next platform is. And he was just like, "No, like YouTube's totally different." And it's just inevitable. Like I'm actually and I should be more up to date on uh YouTube revenues. But like, if YouTube revenue's down, well, they're going to start squeezing through the creators more. Like right now they've a very generous rev share. Like that is going inevitably

to get squeezed at some point. As well increasing ad load. Like this just isn't rocket science. Like that's how these publicly traded companies have to operate. They have a fiduciary responsibility to return, you know, investment for their investors. So, yeah, it's interesting what's happening there. I will also say on the YouTube side specifically, right now the AI slot piece is kind of a question of like, is it [snorts] going to actually displace a lot of the real creators on there or not. They've had a very admirable viewpoint on it, which is like they were going to downrank, I believe, AI slop. I don't know exactly how that's going to work. Again, it's kind of the same notion of like when Facebook was doing meaningful time spent. Like everybody is taking the right position until it starts really hurting your bottom line, which
Yeah.
At some point you got to put the stuff out there that's going to get more ad revenue if you're a publicly traded company, and that's just the reality of it.
So like the AI slop is one thing, but I'm talking more about the clipping slop. So you're just getting, you know,

just different cuts from all these different sources of the same underlying material, and that's all getting pushed into shorts. And so
Totally.
you know, like the thing is like I my podcast I I built a tool that uploads it to an LLM, gets the five most clickbaity segments, cuts that up using a separate tool, then builds the video, and then auto uploads to shorts. And like it's interesting cuz the shorts can take off in like a matter of minutes. Like get thousands of views in a minute or two. And then the longer form stuff just stagnates, right? I have to drive traffic to that. It won't get distribution, but the shorts get all the distribution from the algorithm.
Or is that just where people are spending their time?
That's where the people are spending their time. Exactly exactly. It's just scrolling. But that's that's the whole thing. So like, you know, if you've got the clips then just dominating there, which is all the same kind of source material, you're just diluting all of that revenue opportunity To your point, like the creator has to pay for that if it's a service, right? They got to pay for that. And then and then then that's that's ultimately like kind of hurting

their margin as such. But but it's it's just a really interesting phenomenon.
The other key piece, I mean like again, it might just be as simple as YouTube gets to keep more money from shorts
Yeah.
than they do from the long form stuff. I don't know I don't exactly know how it works in terms of the revenue shares, but like, you know, it [snorts] could be as simple as that. Their revenue's down, and this is the way by pumping more of that, they get a it's higher margin for them. And so they're pushing more and more of those videos. Like it's all this kind of thing where again going back to this purity of the algorithm notion, like it just doesn't really exist in reality. And so it's just this weird game constantly of trying to figure out where you can get distribution before or where your where your incentives are essentially aligned with the platforms. Yeah. But the platforms never really explain where their incentives are exactly other than just looking at their quarterly revenues. So yeah, it's it's a fascinating time. And like I said, nobody has it figured out.
It's interesting that you say that because, you know, we're like a week out from Google I/O.

And you know, they had the sort of like last refuge of in search, the last sort of like refuge of non-AI enablement was just the core search functionality, right? So they had AI overviews, but that was pushed into the serp.
Right.
They have AI mode, which is just a pretty much a canonical chatbot experience. But now they've actually expanded search to be like as I'm typing I get AI sort of feedback, AI-enabled feedback. So so they're closing their they're closing the loop there. I mean, they're just kind of wrapping their arms around the experience. They want to keep you engaged there. And there's going to be less outflow of clicks. And you know, there's someone on on Twitter who had written like, "Oh well, you know, this you know, the platforms you could see that that Google is is sort of the ground shifting underneath Google's sort of like distribution dynamics." And I kind of responded back like, "No, that's always been the case. That's always been the case with distribution on these platforms. Like your incentives might be temporarily aligned, but there's always going to be another shoe to drop uh in terms of how they see, you know, the the best path to optimizing

their business. That happened with Meta a long time ago with organic reach of pages, right? You just get none now. You get nothing for free. And and with Google, like that that always should have been seen as the end point, the eventuality. It was like, "No, they're going to get way more value keeping you here, keeping the engagement here than driving you out with a click." And so that was always going to be the case. But talk to me, how is is impacting the creator experience, creator distribution? Because if essentially at Google we do get Google zero and I think we're probably already there in a lot of different verticals. Like, how do you launch your creator career? What what How do you get started? Had had Do you just finding platforms like Punchup that are probably more domain specific and then getting the aggregation there?
Yeah, well, two things. So, one is just interesting, you know, right now the market is rewarding Google for having an AI plan essentially. I think the question is like, as that starts to really cannibalize their business, how Google will then change their product strategy. But the the key I wish I had mentioned this earlier in the podcast. The key thing that I really firmly believe in is we are missing regulation and not actually by the government but it's

actually by the creators themselves. So, the real problem that I think exists with platforms on the internet is a lack of audience portability. Because there's no audience portability nobody has a voice. Google can do whatever the hell they want, same thing with Meta. And so, you're seeing a new generation of platforms coming out that are all treating this very differently. So, I would include Substack in this, I would include Patreon in this. Beehive isn't as much a platform but like it's trying to allow you to have more direct relationships with your fans and we obviously are in this as well. And my fundamental belief is that there will eventually, hopefully, be a new platform that can compete with these legacy platforms that has this core tenant that says essentially like we are going to provide you with opportunities to make the most of your business. So, we will give you distribution, we will allow you to sell tickets, sell content, sell newsletters, sell whatever it is on the platform and we are going to allow

you to have direct access to your fans. So, should we ever do anything that is particularly predatory towards you you can get up and leave and go to a competing platform. That to me is how you actually have a long-term durable business in this space rather than everybody just like getting up in arms and then eventually reaching some sort of a boiling point where they're like, all right, it. Let's go try this new platform. And that's where, you know, like it doesn't work, you know, being real right now for a new artist. Like if a new artist were to come out and join Punch Up as a comedian who's never performed before, you know, we have 1.6 million monthly active users. I'm really proud of it and it's really hard in this day and age to to get that level, but that's not enough to, you know, break a new comedian. So, they still have to go to these larger platforms, but the game as I see it is performing on these larger platforms to then get as many of those people as possible to come join you in one of these new age platforms. And over time, that will continue to grow and I I think

there will be some consolidation among these new age platforms as well to make them larger and more competitive towards the more like legacy ones. And then the goal is over time to ideally exclusively be able to use these places where, you know, we just allow you to have more direct relationships with your fans.
And that that direct relationship, I mean, that's the that's that that'd be that core innovation here. It's like rather than just being at the mercy of the platform to distribute my content to people that they perceive to be, you know, relevant for my content. It's it's me having that that line of communication, whether that's an I mean, email would be the the the primary key, I guess, for the most part, right?
Yeah, email and te- I mean, like again, there will be problems here as well. If you start getting emails from every single creator that you interact with, like, that's going to be an issue and you're not going to want that. So, we're going to have to continue to figure it out. And, you know, I actually applaud Substack for trying to innovate in this space where they have both a subscribe and a follow. And

so, like, they're trying to figure out later touch point models and like provide the value of a platform with direct relationships where consumers, you know, have that desire. We're in a similar with some key differences strategy to them. And that's what I think is the right long-term model.
But but you know, I think what you what you bring there is that real-world interaction component, right? Cuz that's effectively what you're doing. You're facilitating that real-world consumption.
Right. So, the way that I look at it, I mean, this is now more of like my actual pitch, but I do believe that there will be consolidation in this space. I think there will be like a an actual like creator platform that emerges. Because right now we I teased this at the beginning, but there is an innovator's dilemma problem. If I were to ask you like, who is Instagram's client? Is it the advertiser or is it the creator that is now creating all the content that the advertiser gets to show their ad behind? The answer is inevitably the advertiser. The advertiser is paying, and the advertiser is the one who gets to, you

know, call up, you know, whoever the executives are and get upset. That does not scale in the long run. So, what I believe is that there will be a platform whose underlying service is all geared towards helping these creators build their businesses. So, then the question is, all right, so what is going to determine the the winner of this platform? Well, I think there's three factors. The first is who has the largest network. Who can generate that organic incremental growth? The second is who has like the largest product completeness, for lack of a better word. So, who can allow the artist, creator, entertainer, etc. to make money in all the different ways that they possibly can. So, that includes podcast, that includes newsletters, that includes merch, branded content, and on top of that, tickets. Because it isn't just comedians that are selling tickets or musicians. Jordan Peterson sold out the O2 Arena. Sam Harris is selling out multiple Beacon Theaters. Like, everyone who has an audience is making money the exact same way now. And then the last part is

what is the take rate of that platform? So, Substack and Patreon take 10%. Beehive has a flat fee. We're taking 7% on content and nothing for, you know, all of our marketing and automation tooling. So, you know, the question is like who has the right mix of all these variables to emerge as, you know, the next generation platform and I think we're right in the throes of it, right? Like Substack just is going hard at podcasts. Uh, Patreon started off in the podcast space and is now trying to move into newsletters. Yeah. Beehive is going incredibly hard at Substack and just debuted podcasts. We're just unique in that we started in the live space.
Yeah, Netflix is going to podcasts. I mean, that's a big push for them.
Yeah, totally. I In Netflix is teasing. I mean, like the hard part with Netflix again, and I saw this at Facebook, like nobody could work on anything at Facebook unless it, you know, had a hundred million dollars in potential revenue attached to it. You know, is Netflix ever really going to get into the live space? I don't know. I don't know if there's enough, you know, margin and revenue for them to pivot away from their core

business, but you can see the steps and they are doing
Netflix is a joke and getting more and more into the live space.
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I was in New York last week and we were staying at the at the the Plaza Hotel and right next to that is this little theater that I was talking to a guy at the restaurant in the in the Plaza and he was saying, "Oh, that used to be like an indie theater. Netflix bought it." And now they they it to premiere their

own shows and and you know they and he was telling me he said that the Landman people were there to premiere that but that's not Netflix that's AMC plus if I remember correctly. So I he may have been mistaken about that but but anyway
Was it Cherry Hill Theater?
Uh I don't know. It was just right there. They were and NYU was having a graduation thing as we were asking like what's going on and he was explaining it but uh anyway that that's it it seems really interesting but I I'd imagine that's not a strategy for them that's just like a fun thing to do like a movie premiere. But you know if you think about like I wanted I wanted to talk to you about this cuz I mean you're an expert in the space like the the roasts I mean that feels like it's got to be massive margin for them. I mean like it's probably pretty cheap to put on. I mean I don't know if you they had a lot of people participating in the the Kevin Hart one but like so so there's there's kind of two separate things here. One is the stand-up special which that feels like the economics on that must be very very attractive cuz it's like okay well they fill out a stadium they write the jokes.

Uh it's not a big production here. We need like a camera crew and some people in the control room and they do their hour and we just got an hour of content. The the roast these are sort of like cultural milestones now and they get a lot of attention. Talk talk to me about the economics of that and like if that's not that's not like a live event strategy but it seems like it's it's something that is very very attractive to like a Netflix given how broad-based it is. So talk talk talk to me about the economics of that and like is that something that kind of takes off more because it's not they're not doing material that ever do again. I mean insulting Chelsea Handler is that something you probably work into your regular routine so they're willing to give it away in that moment but like talk talk to me about the those events like that is that something that you you see like proliferating more?
It would be funny if she just went on an I hate Tony Hinchcliffe tour. Well a couple things. So the economics behind it I I don't know how much anybody got paid on it but I would assume that it's pretty similar to like the economics of a Super Bowl where I think the Super Bowl performer gets paid some insanely small amount of money or and or nothing.
Right.
And the payment is essentially exposure.

Exposure, right.
Which is like this is the right model long term. And like again, what the entire premise of Punch Up is is like taking viewership and turning it into the actual core durable business, which is ticket sales. So my sense is like that's the general economics of it. Like it or the value I would say dwarfs whatever the production costs on it are. And I would assume that they can cover most of the production costs from selling tickets. I again, I have I have no clue on exactly how that's works. But you know, I think what it comes down to is a couple things. And again, it it relates back to nobody really knows exactly what the right thing is right now. Like there was a period of time where roasts weren't really that big.
Mhm.
I've always loved them. Like the old Greg Giraldo Comedy Central roasts are some of my favorite content on earth.
RIP.
Uh but they certainly were not as big until, you know, the Tom Brady roast came back. And so I think, you know, what it is, well, it it fits a couple different nice spots. So the first is you know, like you said, it's not burning material, so artists or comedians are happy to spend a bunch of time on it. The second is you know, it's

culturally relevant. They're not roasting my grandmother or what you know, like it's someone that everybody can know. Like there's a reason they chose Kevin Hart and Tom Brady. And the last is, you know, like they do a great job on the marketing side of it. It kind of comes back to the clipping piece of like they're big, they can buy a whole bunch of marketing around it and build a lot of buzz. And so the whole thing pays off. You know, it's interesting. I think I saw numbers. I again, don't quote me on this, but I think it did not do as well this time as it did on the Tom Brady side.
Huh.
Which I find somewhat surprising given all the buzz around it.
Yeah.
But yeah, I mean these you know, I don't know if this is going to be the next like cultural event. They'll probably keep doing these once a year. I think it's just like it's another thing that you kind of rotate in there. You don't want to abuse it. They're certainly not going to do them every month. And it'll be another, you know, form of stand-up comedy that people are able to watch and doesn't cost a ton on the production side. Like you're right, Dave Chappelle, his last special did, you know, more watch time than most big budget movies, and that cost a tiny, tiny fraction of a movie

production budget. So, yeah, that's why, you know, Dave Chappelle can command $50 or whatever it is per special because the costs are just so low.
Right. Well, yeah, and I've been writing about this with the Netflix's YouTube strategy series that I've been doing, but like, you know, they talk about they got they got Danny Go, they got Miss Rachel, and they're buying like proven content here. There's no risk, essentially. And they're buying they're And it's like it's kind of a win-win because the content creator spent nothing on that. It was cheap. And And it's already there. It's It exists. And they they don't have to take it off YouTube, either. And so, they sell it to Netflix, Netflix packages it up into a season. They don't use everything. They kind of curate it and and they filter it. They make a season out of like the best parts, and then that's probably much cheaper than having a whole new series developed with some big-name producer and uh and director. And, you know, you get a proven franchise that people are spending a lot of time watching. It was Miss Rachel's uh first season, uh I don't remember the exact ranking, but it was like pretty It was like third or fourth. And if you

adjusted the watch time by the hours of content, it was like number two. It was above Squid Games. I mean, it was because they didn't have that much content, right? So, it was massive.
Yeah.
Yeah. It's a fascinating time. Like it it's just like it's so insane And it it it goes back a little bit to like even the layoffs of Facebook. There was a period of time where everything was very, very stable.
Mhm.
And you could get paid a very nice living to not work insanely hard. And that time was an anomaly, and I think that we are now past that time. And that in a lot of cases is a bummer cuz it allowed for work-life balance and all these other great things that, you know, like I definitely uh enjoyed for a period of time. And now we're in a very different time, which is both really scary because it is so much more tumultuous in a lot of ways, but also like the opportunity is so cool. Like there is more time ever being spent watching content. There's not a model for how exactly to support making all of that content, but

the demand is certainly there. There's never been, you know, like you talked I needed to learn about this whole you know, podcast clipping situation you have going on cuz we're actually building something similar, but you know, there's never been a time where you don't have to pay a bunch people to do all of that work. It allows you to operate a lot more leniently. Like I have personally I'm not an engineer. I've built so many tools in the last few months. Like it's so fun. And so it's just a question of figuring out like with all these different variables how you can, you know, make the most of it all.
Danny, thank you so much for hopping on. Where can people learn more about Punchup?
You can go to punchup.live. We actually going to have a couple really fun new videos coming out. Mark Norman just debuted a new episode of his page to stage, and there's going to be a very very big debut coming as well. I don't want to tell any of the secrets, but there'll be something coming out in the next couple days there as well. And we have some big announcements coming from the podcast side of our product offerings.
Fantastic. Thank you so much.
Thank you so much.

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