Two Scaramuccis

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S1: Hello. Welcome to the Dos Scaramuccis episode of Money Guide to the Business and Finance News of the week. I’m Felix Salmon of Axios. Emily Peck of Axios is with me. Hi. Hi. Emily and Elizabeth Spiers.

S2: Hello.

S1: Hello. So you remember what a Scaramucci is, right? It’s the length of time Anthony Scaramucci spent as comms director for Donald Trump. I think it’s 11 days. CNN Plus managed to outlast that in its lifetime existence, but not by much. I love that about to Scaramucci. So we’re going to talk about CNN Plus and Netflix earnings, which were disappointing their subscribers going down rather than up. We are also going to talk about mask mandates and why everyone seems to be happy that they are going. We are going to talk about inflation and what it has to do with prices on the Internet. And we have a sleepless about Elon because we can’t stop talking about Elon. It’s all coming up on slate. Money. Okay. So let’s talk about streaming, because it was the future of all things, televisual until this week, at which point shit got real and CNN plus got canned and Netflix stock fell off a cliff. And Netflix said it was losing subscribers and was going to have to start pivoting to a grab bag of other business models like selling ads and video games and stuff. And, yeah, what happened? Elizabeth, you’re the media person. You understand these.

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S2: Things. I think what we’re seeing is just kind of people hitting a ceiling on the number of things that they can subscribe to. And we’re in a, you know, heavy inflationary environment. So people are looking for areas where they can cut back costs. And, you know, Netflix raised prices on the subs pretty recently. So I think, you know, that’s just one of the things that people consider maybe dispensable. And when they have to tighten, belt tighten, it’s a thing that has to go.

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S1: Yeah, I will admit I was one of those people when Netflix raised its price. I texted my wife and I was like, Can we cancel Netflix? Because we really don’t watch it very much and it’s now expensive. If you add up how many dollars a year you’re spending on this, it’s a non-trivial like you know we for reasons didn’t watch much Netflix and it works out to about sort of $10 per show or whatever that we were watching it and just like it seems expensive, you know. So that was an issue that was actually which I want to just come in and. Say, Hey, Netflix, if you’re pivoting to weird things like ad supported and video games, maybe pivot to like a non subscription model. I would love a non subscription model for Netflix where you just allocate pay for whatever you watch, but I suspect they’ll never do that.

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S3: Yeah, I’ve always wanted that because there are these some shows on some of these streaming networks, like everyone’s talking about them and everyone rushes to subscribe. To subscribe. Like I subscribed to Showtime for like three weeks to watch Yellowjackets, and then I tapped out. But it would be cool to not feel bad about that kind of behavior and to just be able to subscribe ala carte. But I don’t think that’s a winning strategy for the streaming services whose the subscription model is like. Hook gets you paying automatic payments and you forget about it and they have a steady stream of revenue coming in.

S1: So that yeah, there’s this in all sort of subscription based businesses, there’s this concept of the lifetime value and the customer acquisition cost. And the idea is that if the value of a subscriber is greater than the cost of acquiring a subscriber, then you’re like golden and. With. And so the you know, so there are certain shows which will get you in to subscribe to a service like, you know, you will subscribe to Showtime because they have yellow jackets or you will subscribe to Apple Plus because they have severance or something like that. And then the idea is once your subscribe, your lazy and you just keep on paying, even if you’re not necessarily watching the show and or there are other shows on that service that you might not subscribe to the service for. But once you have subscribed, you’re like, I’m subscribing anyway. There’s all of this other stuff on the service and you’re going to keep on watching the other stuff, and then you get into the habit and then you you stick with it. And this is the thing that I think we’ve tapped out on. Per What Elizabeth was saying is that there are so many services and this applies to new subscriptions as well, right? Every single news organization seems to have a subscription that is based on the idea of if you subscribe to us, then you will come to us and read us every day. And that’s just not how people consume the news. There might be one publication that they do that with, but they’re not going to do that with all of their publications that they subscribe to. And similarly, if you subscribe to Showtime to watch Yellow Jackets, that doesn’t mean that you’re going to when you turn on the television, just fire up your Showtime app and see and say like, let’s see what’s on. And when you’re in that mode of like I, I am only going to navigate to that website when there’s a specific article I want to read, or I’m only going to open up the Showtime app when there’s a specific show I want to watch. Then the value of subscribing becomes much lower.

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S2: Yeah, I think also, you know, there’s something about Netflix design that kind of undermines the ability to sort of browse through their catalog. You know, when they move to original programming, they emphasize it so heavily on the platform that if you’re just scrolling through the Netflix, you know, dashboard, you’re seeing the same shows repeatedly. And they’re mostly Netflix is original shows or things that they’ve recently syndicated. So if they think the value to the customer is partly their their larger catalog, they don’t make it particularly easy to have for a user to have much visibility into what’s there. If you’re not specifically searching for something, you know, they’re promoting the same handful of shows over and over again. And I think it it drags people to thinking about Netflix and some of the other streaming services as largely purveyors of original programming in the back. Catalogs don’t don’t matter as much.

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S1: Well, here they are right in the Netflix became a streaming giant by having a huge by syndicating a huge number of shows that people would just binge and watch like huge numbers of episodes of. And then now that we’re in this much more competitive streaming space and they’re up against Peacock and HBO, Max and Disney and Hulu and Amazon, and most of those shows that they used to syndicate have now gone, you know, and if they’re not gone, they’re going with that. Those contracts are running out. So they don’t want. So they want to be much more reliant on their own shows because that’s the only thing that they can be reliant on going forward, really.

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S3: Netflix still is the most subscribed to streaming service. It’s had an insane growth over the past decade, and particularly in the pandemic. Everyone signed up for Netflix. Everyone was watching Netflix. They still have. They have 100 million households just free riding on other people’s passwords. Like they have a big chunk of viewership. And I mean, and they put out 500 original shows just last year. Like, I think they just they grew a lot. They were a high growth streaming company. Now there’s a lot of competition and there was a sudden, maybe unexpected. Definitely unexpected, I guess, stop, halt to the growth. I don’t think it’s like, oh, Netflix is bad now or it’s just like you can’t. Maybe to borrow like a Felix kind of theme is like you can’t have the big growth forever. Like, sometimes things slow down, sometimes they slow down gradually. Sometimes, you know, you go bankrupt slowly, then all at once or whatever it is. So like Netflix just like hit a wall. And what’s what’s interesting to me is just I mean, my God, there must have been like 6522 hot takes about Netflix hitting a wall. I’ve never seen anything like it. Like, people just really feel passionate about it, which is kind of sort of interesting on itself. And then the other thing I wanted to mention, the the user interface on Netflix I think is so interesting and kind of good. Like we will I will go to Netflix and just like browse to see what’s on. And the way they set up the interface now is like if you hover over a show, it’ll show you like a quick little preview. So it almost feels like the old days of like scroll like channel surfing because you can get like these little snippets of shows as you go through. Like they’re doing everything they can to draw you into those, to those shows.

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S1: Yeah. The discoverability on on streaming services is no one has done it super well in terms of like finding that serendipity of like, oh, that looks interesting. I’ll watch it. I think you’re right that Netflix probably does it better than most. But, you know, part of the problem is that there are so many different platforms that people watch these things on. You know, there’s Apple TV, they’re smart TVs, there’s roku’s, there’s, you know, chromecasts that. It’s very hard to, though. And then there’s just like people watching on in a browser on their laptop the it’s hard to create a consistently good experience across all of those platforms because they all have very different limitations. One thing I will say about that is that Apple has famously terrible discovery because of its privacy, self-imposed privacy rules, I guess you can call them Netflix, knows everything about you, knows what you’ve watched. It knows how much you watched. It knows when you got bored. It knows what you watched two years ago. And it uses all of that information into an algorithm to try and feed you the stuff you’re going to be most interested in. Apple, by design, doesn’t collect any of that information. So when you open up the Apple TV Plus app, all it does is just show you the same thing that everyone else sees, and so it feels less personalized.

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S3: Do you guys think it’s the end of binge watching? Like some of these other successful places are one episode at a time?

S1: Places like I will say apropos the what you’re saying about like the Felix rule of why the companies always need to keep on growing. Netflix fits uncomfortably into that rubric. You know, often I will say, you know, why does the company need to keep on growing? It’s a perfectly good, perfectly profitable company and it can just keep on doing that. Why does the stock market need it to keep on finding new sources of growth? This is a familiar complaint to anyone who listens to Slate Monthly very often. Netflix is not in that bucket because I don’t think it has steady state profitability. It’s profitable right now, partly because TV production hasn’t really recovered from the pandemic yet, and so it’s spending less money than it normally would on new shows just because it’s much harder to make shows because of COVID protocols and stuff. And it is facing much tougher competition. So, yes, it is bigger than Disney plus right now it is bigger than Hulu right now. But if it just kind of keeps on doing what it’s doing, it will continue to lose market share to its competitors and it will shrink. And the economics of Netflix are a bit like the economics of Facebook, like the amount of money it costs to run a platform like that is so enormous that it can’t even pay for itself with. It’s North American subscribers, right? It needs a global level of subscribers just to pay for the content costs. And it needs all of that. It needs that huge scale and that growth in order to keep the flywheel going. If that if it really does start getting cannibalized by people who are like, I don’t want to spend as much on Netflix, Disney Plus is better. Hulu Plus, you know, Hulu is free or much cheaper if it’s ad supported or whatever, then that is an existential threat to Netflix. It’s not just they can’t grow it, you know, it becomes big. They could stop making money and start getting into real trouble.

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S3: Although there are some things they could do. Like they didn’t need to put out 500 original shows last year. No one needed is this cake. Or maybe they did because it’s buzzy. I don’t know what the names of the other 400 so you know.

S2: When they were buying so much, they seem to be looking at themselves as being akin to HBO, you know, just the sheer volume of stuff that they were buying, but there weren’t a lot of that stuff doesn’t get made. I feel like the value proposition for them is totally different than it is for HBO. When they buy up IP to keep it out of competitor hands. Those dynamics don’t necessarily work for Netflix, you know, they mean.

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S3: That.

S2: Incident. Yeah.

S1: What do you mean by buying stuff and not making it?

S2: There’s HBO used to optioned stuff all the time just to take it off the table so that, you know, they weren’t sure they wanted to make it, but they didn’t want competitors making it. And I think when Netflix buy stuff.

S1: And Netflix does that as well.

S2: No, but they were buying it. The volume that HBO was giving it was optioning and buying pilots and, you know, things like that. So but with them, they don’t have as much incentive to just kind of sit on the IP and not produce shows.

S1: Yeah. I feel like that’s just part of how television works. You auction a bunch of stuff and some of it gets made and some of it doesn’t. For whatever reasons, I don’t think they have, like, a strategy of buying stuff up and not making it. They just have a strategy of buying stuff up and trying to make it and not it won’t always succeed. And you want to err on the side of buying stuff so that you will get the stuff that gets made. May like you sometimes need to have a wider funnel at the top in order to have a wide enough funnel at the bottom.

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S2: Oh, sure. But I think they they kind of overdid it the last couple of years and overspent.

S1: But I don’t think they overspent on optioning. I think they overspent on making stuff. I think I think the real the the content costs when they’re big because they’re spending millions of dollars per episode on the stuff that they’re making much more than they’re spending a whole bunch of money on stuff that they’re not making.

S3: Yeah, I think their whole, their whole jam on overspending was, were kind of like an unknown place. We need to spend extra to sort of build our brands and get the best people to come to us. So we’re going to pay Shonda, you know, millions and millions of dollars to produce Bridgerton and other shows. And we’re going to pay creators more than any other platform will pay to attract like quality content and like get an Oscar or whatever. And I think they’ve like bumped up on the limits of that. I think Netflix said this week it’s going to cut back. The Journal had a story that it’s going to, you know, cut back on spending and not be so just wild. I think they were kind of a cash cow like comedians, anyone.

S2: They they’ve canceled a bunch of shows that they bought in the last 12 months that are in development, mostly in the animation department.

S1: But and I feel like the, you know, the prestige movie stuff, you know, Mank and Power of the dog and Roma and stuff like that. It’ll be interesting to see what happens with that. I have this kind of gut feeling that’s moving over a little bit to Apple, certainly in the wake of Apple winning the best picture Oscar, the first streamer to do it. No one expected that, right? No one expected that. The first stream of to win the best picture Oscar would be Apple rather than Netflix.

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S3: And Apple doesn’t need streaming, obviously, the way Netflix needs streaming, it’s just a part of its business. It’s not its core. And even the same with Disney, although it’s a different calculation. I mean, I think what happened to Netflix is like streaming is it’s competitive, it’s growing up, it’s not what it was. And Netflix just like hit that wall. I don’t know. Right. It’s not.

S1: We should see an CNN plus as well just because, you know, that was such a massive disaster. They managed to burn through $9 million a day or something. They lasted to Scaramucci’s before they got pulled, which was this huge bet that the company that has HBO, Max, which is this surprisingly successful streamer, instead of including CNN in HBO, Max should create an entirely separate streaming service called CNN Plus. But you’d have to pay over and above HBO, Max, for this was a big strategic decision. They spent an enormous amount of money on it. And then this decision was made in the knowledge that they were getting bought by Discovery and that the new executives were Discovery executives and that they would have their own strategic outlook on life. And then the Discovery executives, basically the day that the deal closes, say, wait a minute, you know, CNN plus makes no sense. It’s going to take years if ever before it becomes profitable. It’s not core to how we see this company working and they just kill it. And on the one hand, I kind of like the idea that the rules about like you can’t talk about strategy with your future acquirer until the deal is closed, you know, seem to have worked in this case. Like, you know, it’s good the companies can’t control the company before they’ve bought it. But on the other hand, you kind of don’t want to make a massive strategic bet of that magnitude unless you have some indication that your new acquirers are going to be on board with it.

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S3: Yeah, it’s dumb. It’s dumb. When when I was at Huffington Post and behind the scenes, everyone knew they were about to get acquired by BuzzFeed. But like plebs like me didn’t know we would be pitching long term. I was pitching long term projects all the time and I would just keep hearing like wait and see or Let’s meet on that next month. Or, you know, people put it off because they were like, We don’t know what’s going to happen. It’s just common sense. Why would you make a multibillion dollar bet right before you’re getting acquired? I there’s a lot.

S2: Of baffling internal logic there. You know, not just that thinking. There seemed to be some idea that if they just rammed it through, then, you know, new owners would just say, well, now we’re stuck with it. We’re just going to keep doing it.

S1: Yeah, it’s a fait accompli. Yeah. It’s like, no, that’s not how discovery works.

S2: Well, the other thing was that there is a specific executive and I don’t remember who it was internally at CNN. Plus, you kept sort of selling the idea internally as being equivalent to the Times digital subscription business. These are two utterly different things. You know, it’s sort of like they couldn’t work out what their internal analogy was for, why this was why anybody was going to want this product. And so they were just sort of casting about for something that seemed more necessary than CNN, of course, would, ostensibly. But it just doesn’t make any sense, really.

S3: Also the whole time. Okay, CNN is a 24 hour channel. What the hell do you need? Plus, for like, it’s on all the time. If there is content, you feel like you need to add to it.

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S1: I can ask.

S3: 24 hours.

S1: To answer that question. Emily Thank you. The answer to that question is all based around cable contracts. So CNN is a 24 hour cable. If you if 24 hour cable channel, which is only available if you pay money to a cable provider for cable TV, and if you don’t, you can’t watch it and it’s completely inaccessible to you. And the way that the cable providers, the deal that they do when they pay money, every subscriber wins that. If you subscribe to cable, then a certain amount of that subscription fee goes straight to CNN. And under the terms of that deal, CNN is not allowed to stream that content. It can only go through cable. So if CNN wants to be able to reach people who don’t pay for cable, they need some other way of doing it. They can’t just repurpose the existing CNN content. This is why it took so long for all of the other media companies to get into the streaming business is precisely because. They were making so much money from cable that they couldn’t understand how it made sense to try and like take them, you know? They couldn’t get out of those cable contracts. And so they wound up being very late to streaming.

S3: So there’s like a big structural issue at play that is sort of if if not being ignored, then not being brought into like the 2020s. Right. I mean, I want to.

S1: At CNN.

S3: This news.

S1: CNN is an incredibly profitable franchise. Right, because they get, you know, however much it is, $2 per subscriber per month, like for everyone who gets cable TV. But over the long term, if the number of subscribers to cable TV goes down and down and down, which almost certainly will, then the amount of money that CNN gets is going to go down and down and down. And if you want growth rather than shrinkage, you’re going to need to do something else. That was the entire strategic imperative behind CNN. Plus, the only good example of people streaming live. And the thing really is sports and even that is still largely tied up with long term cable contracts. And broadcast contacts.

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S3: Yeah. Sports is the good is the good counterexample. I just. I can’t. Could you imagine paying more for more CNN? I just. I really never understood.

S1: But you’re you’re Emily. You are coming at this from the point of view of someone who already has CNN, right?

S3: Yeah, but I don’t I mean, the only reason to watch CNN is like, if something major is happening and you want to see what’s going on, but it’s not like, ooh, Tuesday night, what are we going to do, fam? Let’s put on CNN and just hang out like, no.

S1: No, no, you should you should open up CNN plus and watch Jake Tapper’s book club.

S3: I’m I’m speechless now. I don’t know.

S1: All right, let’s let’s. We’re off. We cannot speak there. Must we remain silent? Congratulations, guys. The pandemic is over. Yeah, there’s some, like, crazy federal judge in Florida decided that mask mandates were unconstitutional or some such. And then the general reaction to this was. Surprising to me. Everyone goes, Oh yeah, great. Like, no one really loved the reasoning. The jurisprudence here was to use the technical term batshit, but everyone is like, Oh yeah, okay, like it might be batshit, but let’s just run with this. And the airlines were like, Yeah, we are not going to enforce this anymore. Even the Biden administration didn’t seem to push back against it very much. Everyone who had mask mandates was like, Well, I guess there’s nothing we can do. We’re just going to have to get rid of them. Because it seemed quite clear to me from the reaction that the people who had the mask mandates just didn’t like those mask mandates. And they kind of wanted an excuse to get rid of them.

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S3: I mean, they were causing trouble on airlines, according to the reports. Right. A lot of unruly passengers. Extra work for anyone who’s on the flight attendants, you know, having to enforce these rules. It’s like a new part of people’s job that you don’t get compensated for. And you get a lot of anger and pushback for having to enforce mask mandates. So I could see why as an employee of an airline, you’d be pretty relieved to have it go away, except for if you’re worried about being sick.

S1: I think one other thing is that it became more and more obvious to the people who were implementing the mandates that they weren’t really working, that people would kind of half wear those like little baby surgical masks, mostly under their noses. And they just weren’t effective. In the age of Mike one and the super infected infectious variant, you really in order for a mask mandate to work you need many more people to be wearing and 95 and then 94 which fit well and there’s no mask mandate in anywhere in the world where people actually do that. And so it was like if they’re not that effective to begin with, do we really need them?

S2: Well, it’s it’s not it’s not just the the efficacy issue. I think part of what happened was, you know, even if you’re required to wear a mask on a plane or, you know, in public transportation, if you can take the mask off to eat, this sort of reinforces the idea to people who are anti-mask that this is all theater, because just common sense tells you that sort of defeats the purpose of wearing the mask.

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S1: Especially when on an airplane everyone eats at exactly the same time, so everyone takes their masks off at exactly the same time. You’re like, Wait, this this does not make epidemiological sense.

S3: But it’s not clear to me. There was a Axios had a poll today that most people a majority of people said they’re still fine with wearing masks on planes. They want to wear the mask.

S2: So their problem is the people who are really not fine with it are super vocal. Those are the people picking fights on planes.

S3: Right?

S1: Yeah. I think most of us I mean, speaking for myself, I, I will continue to wear a mask on planes like wearing a mask is not does not make me feel angry or terrible. And I’m just like, yeah, I’ll do it. I’m perfectly happy wearing a mask. I’ll do it unilaterally. The question is really, is there a purpose to the mandate? And I think that there is a strong case to be made that the one it causes very bad behavior by people who are strongly opposed to wearing a mask at all. And you kind of don’t want that behavior. And to. That there is this way in which people try and get away with doing the least possible amount of masking while still pretending that they are paying lip service to the idea of wearing a mask. And when you have so much kind of halfhearted masking, it’s far from clear to me that a mandate is actually achieving very much.

S3: Also, I want to just say, any time something gets labeled a mandate in the United States, it is doomed. People hate a mandate. Like it doesn’t matter what it is. Health care mandate, which was just like you have to have health care. You have to pay this minimal fine. Huge issue. Vaccine mandate. Everyone hated that. Even though we have all other kinds of vaccine mandates. As soon as you label something mandate. It’s over. It’s going to fail. There will be some crazy judge in Florida like this one who shuts down your mandate.

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S1: We have freedom, goddamn it. You can’t force me to do anything. This is America.

S3: Yeah. It’s a big rhetoric fail.

S2: There’s a concept in child psychology called demand resistance. Where, you know, children, when told to do something, will just kneejerk, not do it because they don’t like being forced to do anything. And, you know, to some extent, there is a whole huge swath of America that just is in permanent demand resistance. So I think that’s part of what you’re saying, that the sort of the language makes it sound like the government is demanding that you do something. Yeah. Just it doesn’t matter what it is. It’s there’s going to be resistance.

S3: And the irony is, we’re talking about air travel. I think many people pointed this out. Liz Lenz noted it in her email that I read all the time. Like one time a guy put a bomb in his shoe and got on a plane and it didn’t go off. Right, I believe. Ever since then, we’ve all taken off our shoes like blind sheep. Every time, you know, you go through security, everyone just takes off their shoes. It’s a mandate. No. I mean, it’s fine.

S1: Unless you have pre-check, in which case you don’t. Sure.

S3: Fine. But, you know, like we do all we we’re jumping through a lot of hoops on the to get on an airplane these days. So it’s a little weird that like this one was the one. It was too far.

S1: But security theater is interesting. Like people people don’t like security theater, but they do feel like it’s they have less political control over it. It’s hard as a politician to run on, you know, a. Platform of I’m going to make the airports less safe by ratcheting down security, whereas epidemiology and but like public health data is is people are is a much more politically violent issue. And it is possible to run on a platform of like, I’m going to get rid of COVID restrictions and people will vote for that.

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S3: Yes, people are constantly voting for less for less health restrictions and trying to dodge various.

S2: Yeah, there’s there’s some disturbing research around that that I think interesting, you know, sort of plays into what you’re saying about security theater, where there’s a report that came out a few weeks ago that said that once people understood that COVID was more likely to infect people who were immunocompromised or minorities, they were less willing to do basic things to stem COVID spread. And with security theater, things like, you know, shoe bombers, I think the average person thinks, well, that could happen to me. But there is a huge, huge swath of America who thinks, well, I’m a healthy person, I’m not going to get COVID, and they just don’t really care about what affects other people. So I think part of the difference, too, is, is individual risk perception about how much of a problem this might be for you individually, and that will determine the extent to which you’re willing to do pro-social things to mitigate COVID.

S1: Yeah, one of the interesting things that I have seen happen with COVID is that it has become. A completely terrifying disease for most people. And it is still a terrifying disease for some people. And there is still a terrifying number of deaths every day caused by COVID. But if your friend says, Oh, I can’t come out tonight because I’ve got COVID, you’re like, Oh, okay. And you’re not worried about your friend normally, you know?

S3: Right. Right. It has become a very it’s at that’s at the start of the whole thing. It was a very much a public health issue, a community problem. And now with vaccines, it’s become like another quintessential, like American personal responsibility kind of thing. Like there’s like there’s new data out, I think on Friday or Thursday, about a quarter of a million of COVID deaths in the U.S. were people who weren’t vaccinated yet, like is attributable to people not getting a vaccine. I feel like that gives cover to the. Yeah, but this feeling of like, it’s fine. I can, I can handle it kind of mentality.

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S2: Yeah. But I also think the sort of people’s psychological bellwether for when they think COVID is really over is a moving target. And so initially it was, you know, whatever we get vaccines. But I think one of the big markers that everybody said was when I don’t have to wear a mask on public transportation, airlines in particular. So I feel like this is a lot more psychologically significant than it is in terms of how it affects the airline business specifically. And part of the reason why DOJ is challenging that ruling, but the administration is not being too vocal about it because they realize that so many people want this to be over and they think it is that they don’t want to be the bad news. People who show up and say, actually, it’s not, we’re going to reverse this.

S3: I want it to be over.

S1: I have a theory that the pandemic ended in terms of a public sort of understood to be the public health emergency on the day that Russia invaded Ukraine. One of the genius things that Jeff Zucker did at CNN is he realized that the public could only have one story in its head at any one time. We’re just not smart enough to think about, be able to think about more than one thing at a time. And so, you know, for a long time, it was like there was a missing plane. And he would just that that was the one story that you would see on CNN. And then it was Trump. Trump was the one story on CNN for many years. And he got Trump elected basically by just going full on like Trump is the only thing people can watch. And then it was the pandemic. And for a while, like the pandemic was the one story that basically dominated the planet, and that ended with the invasion of Ukraine. Now it is Ukraine. It is not the pandemic anymore.

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S3: Maybe. I don’t know, George. The George Floyd protests kind of overshadowed COVID for a while, I think. And where was the story for a while?

S1: We should talk about inflation. I had a theory in my newsletter this week that one of the things that is making inflation surprisingly easy is dynamic pricing. That because everything is on the Internet and everything is digital, prices can move around much more than they used to be able to move around. And that makes it easier for. People to raise prices. And it also makes it harder for people to have a mental idea of what prices should be. And if you don’t have a mental idea of what prices should be, that makes you less price sensitive. Do you buy it?

S3: Fully buy it? I’m I’m fully buying it.

S2: I’m buying. But I think that there’s one thing that cuts against that is just the psychology of inflation generally, which is that everybody knows we’re in an inflationary environment and they’re constantly being told things are more expensive. They may believe that they are, even if the prices that they’re looking at on a daily basis don’t reflect that.

S3: One thing I learned doing some reporting this week is that if prices at the supermarket supermarket go up on like one thing you buy, like your meats more expensive, you start believing everything is more expensive, even though it’s not because it’s confusing and priced. There are a lot of prices on a lot of things because you’re buying lots and lots and lots of different stuff at the supermarket. So not only is Felix’s theory of like No. One, the prices of things are changing all the time. So no one even really knows what the price, the right price is anymore. It’s like you kind of like extrapolate from one data point, a bigger trend. Everything’s going up even though it’s not.

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S1: And it’s true that when you go shopping at the supermarket, you don’t have a mental model of how much your entire cart is supposed to. Well, you might have a mental model of like roughly how much you spend overall, but you don’t have a mental model of how much every single item in your cart is going to cost. You have a mental model of one or two items in your car. For whatever reason, the, you know, price of a box of crackers stick stuck in your head or the price of a dozen eggs stuck in your head or whatever it was. And when that one changes, you’re like, I saw that one change, even when the other, and then one with the other one’s change, you don’t notice it. But everyone has different items that are salient for them.

S2: And I think not a grocery, but gas prices in particular, high salience for everybody. And they just take up a huge amount of real estate in terms of the way people think about expenses and, you know, just completely outsized proportion to what people are spending categorically.

S1: So, Emily, does that then also apply to what you were talking about? Like if gas prices go up, do people think that everything else is going up just because gas prices have gone up? Was it just within supermarkets?

S3: Well, my reporting was supermarket confines, but it’s not a leap to to to believe that that’s also true. People see gas prices getting much higher and then they sort of and they see a lot of stories about inflation and then they think everything’s costs more, but people adjust their behavior in ways I hadn’t considered. I started doing some reporting this week because I was like, Oh, meat prices are up. I mean, the data from the CPI report was wild. It’s was like 20% for this 50 and for that I was like, Oh, maybe people are buying cheaper kinds of meat or something or going vegetarian. And I was speaking to a supermarket analyst and she was like, Well, what actually happens is people just buy less meat. You just kind of like rifle through the meat packages and just buy things that way less that cost less and it’s like you just start adjusting. So maybe you’re in the end, your grocery cart costs basically the same because you’ve made these like little weird adjustments and stuff like that. And maybe it’s a good thing that people eat less meat.

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S2: So that’s why I always thought the idea of historic substitution, where you are switching from, you know, filet mignon to ground beef never made any intuitive sense to me because I don’t I’ve never seen anybody actually do that to sort of say, like, well, I was in the mood for a steak, but now I’m just going to have a hamburger. Like, I just don’t think that it happens in the real world. I think you just have fewer steaks.

S3: I do it. I switch stuff I bought like we used to buy flank steak. I buy like.

S1: Chunks. It happened to me with wine, like there’s been a bunch of wine inflation over the past few years. And I basically. Moved from. You know, I used to drink a lot of local wines because they were cheaper and then they became more expensive. And now I’m drinking out the German reds and stuff that are cheaper because, you know, I’ve also I’ve decided I prefer them. But like one of the things pushing me in that direction is also like if I can get something that’s cheaper, then it’s much easier to make that switch.

S3: Yeah. I’m very interested in what people are doing to sort of adjust to price inflation so people can email money.

S1: Or say dot com. The one thing I’ll say about supermarkets is that there has been a revolution in what is known as menu costs. It used to be back when people were studying inflation in the seventies, which was the last time anyone really cared about inflation, that there were real costs to changing the prices in a supermarket. You’d need to pay human beings to walk down the aisles and literally physically change the prices on everything. And now with these, like eating price displays, it’s all if you just press a button and the price changes and you can change the price every day and they do. The prices in supermarkets change super frequently because the cost of changing the price has gone way, way down.

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S3: Yeah, that’s interesting. That’s really interesting, too. I want I want to talk to someone from The Price is Right and see like are people getting the price wrong more now because it’s more confusing.

S1: Yes. Yes, they are. There’s there’s a paper about this. Yeah. I actually link to it from my I think I link to it from a newsletter. There is a paper where people have downloaded every single episode of The Price Is Right Over. However many seasons, there’s like 40 seasons or something, and the accuracy of the guesses is going down and down and down over time because people don’t know how much things cost anymore.

S2: I feel like I’ve seen that the Arrested Development Men way more in the last year. How much can it possibly cost, Michael? What’s a banana?

S3: $10 banana? Oh yeah.

S1: If someone charged me $10 for a banana right now, I would be like I would barely blink. We should have a numbers round. Elizabeth, you have a number?

S2: Yeah, 450,000. This comes from a story that’s a couple of weeks old, but new to me. There’s a company called World Coin that’s backed by Andreessen Horowitz and Sam Altman, and they have a piece of technology called an orb, and they’re scanning the irises of people in developing countries to develop a global identity. Amazing. Yeah. And they’ve already scanned 450,000 people, mostly in low income countries, not at all creepy. And they pay the Arab operators $0.14 a scan. So they’ve spent $63,000.

S1: There’s nothing dystopian about this at all.

S2: Super Baby.

S3: What is the goal?

S1: To create a new global payment coin thing.

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S2: Yes. And in a global identity system that’s completely ironically centralized.

S1: Where you just look into a phone and it will look into your eyes and they’ll be like, I know who you are. Yeah, this is. Yeah. Yeah. Anyway, it’s terrifying. My number is 500, which is the number of dollars that NYU students are being offered for tickets to their commencement ceremony at Yankee Stadium. Every NYU student gets, like, two tickets. They can have, like, two people come and watch them graduate. And now there’s like an active secondary market in these tickets, even though you’re not allowed to sell them. And NYU is like, we tell you, you are not allowed to sell them. They’re not transferable, but people are transferring them. And you know why? It is because Taylor Swift is getting an honorary doctorate.

S3: Well, that makes a lot of sense. I’m surprised it’s not higher than $500 a ticket.

S1: She is not going to be performing, but she is going to be speaking.

S3: Wow.

S1: I feel like you need to be a real Taylor Swift and to want to see her receive an honorary doctorate. But there is no shortage of those.

S3: And like, won’t the video just be on the Internet and like, right.

S1: It’s going to be streamed. Exactly what you. I’m saying. Give us.

S3: A.

S1: Uh Emily.

S3: Uh, my number is 4.5%. That is the number of vehicle crashes increased in Texas, 4.5% after the state started putting up signs reminding people of road fatalities. So what.

S1: Like this public health intervention that managed to make it worse?

S3: Yes. A new study done, actually. Yes. They looked at the impact of these roadsides in Texas and found that they may cause more.

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S2: Number of needs to be higher.

S3: Yeah.

S1: Yeah. Numbers go up.

S3: Yeah. Yeah. It was kind of counterintuitive.

S1: So you put up a sign saying this is a dangerous road. You know, 800 people have died on it in the past ten years. And people are going, oh, shit, it’s dangerous. I should, like, run off the road and kill someone.

S3: Yeah, it says something like the sign. I’ll say something like, there have been 1600 traffic fatalities in Texas so far this year, whatever it is. And they’re like these big signs. And the idea is to make people drive more safely. But apparently big signs on roads are distracting, according to the study. And it’s true.

S2: It creates more anxiety.

S1: And it it is especially like in large swathes of America, it’s just covered in billboards. Billboard through a public health hazard. They are distracting and no one regulates that. One of my favorite little corners of philanthropy is something that Bloomberg Philanthropies actually specializes in, which is public health interventions to reduce road fatalities. And there are proven ways to do it. And some of them are very low cost. You know, some of them involve, you know, just little signs in buses saying, you know, please sit down rather than standing up, stuff like that. Some of them are more elaborate, but it’s one of it’s one of the most bang for the buck interventions that you can do if you get it right. You can save a lot of lives for relatively low cost if you get the road fatality stuff. Right. But it’s thankless, right? Because no one knows when their life has been saved by one of these interventions.

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S3: One thing it wasn’t clear to me from reading the story about the study or skimming through the study is there is there is a roadside intervention where I live, where they they put up like a sign that tells you how fast you’re going. And they say it says like speed limit is 35 and then you pass it and it says like you’re going 45, slow down. And I always slow down and I feel terrible. And now I yeah, I’m not clear if anyone knows they could email us. I’m not clear. Does that work or does that make.

S1: Those ones work?

S3: Yeah, it seems like it does, because and speeding is one of the three main drivers of a fatality of traffic accidents, speeding, drinking and something else.

S1: Just one of the ones, one of the ones that I like and I haven’t seen it very much, but I’ve definitely seen it in Manhattan is the is putting little louvers on top of green lights so that you can’t see them from very far away. And you need to drive up to relatively close to the light before you can look up through the louvers and see that it’s green. And what that does is it stops speeding because there was this phenomenon on like New York City cross streets where people would see the green light and then be like, Oh, shit, I need to floor it to be able to get through the green light. And then if you can’t see the green light, they don’t do that. Anyway, that’s my favorite. Try and reduce road deaths in intervention if you have more sentiments. Like many at Slate.com, we will be back on Tuesday with the one and only Cardiff Garcia talking about office space. You remember that 1999 movie 99? 1999 was great movies. So talk about office space on Tuesday. Tune in for that if you’re into the movies and otherwise, we’ll be back on Saturday with yet another Shayna Roth produced.

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S3: Slate Sleep.

S1: Money. Slate. Plus, folks, you get the pleasure of having us talk about Ellen one more time. He has put financing together. He has actually got money for his $43 billion bid and he’s like 21 billion of it. I’m just going to raise by selling shares and then another, what, 13 billion I’m going to borrow against my jazz. And then I’ve got a bunch of debt financing. And if you add it all up, it comes to 43 billion. So I do have the money. Honest, guv. But 43 billion. I feel like he’s maxed out the debt at this point that he can raise. I can’t work out. Like, does this make his bid more realistic or is this just more of a sign that he’s kind of maxed out and he’s not going to be able to pay enough to buy the company?

S3: I mean, it does make his deal his his offer more realistic, because when he first launched this endeavor, everyone was like he didn’t say where he’s going to get the money. So it’s not real. Now he’s like, okay, you guys, this is how I’m going to get the money. So, I mean, now it is indeed more real.

S1: And although literally half of it is a letter from Ireland to Ireland saying, Hey, Ireland, if you need some money, I’ll give you the money.

S3: Right. But like he is like Morgan Stanley’s assistance and they’re going to help him write it.

S2: It’s also it’s what he’s got committed isn’t enough to to buy it. So is it more strategic for him to say, I’m almost there or to, you know, if he is maxed out, he may not have a choice? Or would it make more sense for him to get a higher amount and commitments and say, look, I’m going to do this whether you like it or not?

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S1: Well, I don’t think he can get a higher amount in debt commitments. I think like given the cash flows of Twitter, he’s kind of maxed out on how much he can borrow against Twitter itself, you know, how much of a mortgage he can get on the company, basically. And then he’s he’s already dipping into. Margin loans on his Twitter, on its Tesla stock. I think he that’s about as much as he can get on that. So from here on in, he’s going to need equity investors. He’s going to need people to invest in the equity alongside him. And that’s going to be hard when he’s going up on stage and saying, I don’t care about the economics.

S3: Right. But no one else really wants to buy Twitter, as far as I can tell. Maybe you’ve seen other other interests.

S1: Of people like kicking the tires, but yeah, nothing.

S3: It maybe CNN should buy it.

S1: Maybe Apple should buy Netflix, that old or just on Twitter.

S2: Plus, that’s the new play like.

S3: There is some Twitter plus, I think.

S1: I think, you know, for Slate Plus, that’s what we’re going to do on Ellen today, that there’s a finite amount of Ellen said to be said and we have said it.

S3: By sleepless.