Business Breakdowns
· Blake Saunders
[00:00:00] S1: Taking the music one, because in music a lot of musicians never make a lot. So you have hobbyists and stuff like that. There's a company right now where they focus on a couple songs each week and have 20-plus musicians do different versions of that because there's been a few songs that have been put as the intro or outros to TV shows that have become hits. What they're using is technology to help them produce faster. So they send the songs out to everybody, everybody works on it for a week. They come on Friday, they have a listening session where they listen to everyone's songs, they pick five and then they fully produce those and then they go repitch those songs for commercials and all these different things. Taking it a next step further where they're using this base of IP and then they're reimagining it with a slightly different tone and turning it back on. Basically one, they don't have to pay these musicians that much at all, and two, if they hit it and they can grow the value of one song, it could change the entire value of a portfolio of songs.
· Matt Reustle
[00:00:00] S0: Going back into some of the new dynamics of the media upstarts that we're seeing today. One of the interesting themes up until the Chernin deal with Barstool was: how do you apply a multiple on a business where there's such high key-man risk? Where does that stand today just in terms of the comfort level of acquiring businesses that are built around individuals and it's hard to separate the individual from the brand, versus those that are able to accomplish the brand while being a key individual, versus those that just try to go the full brand route and limiting the individual connectivity?
· Blake Saunders
[00:00:00] S1: I think the reason why you see more person-driven brands is the easiest way to get audience and get scale. Obviously most podcasts are led by the person because you can't have a brand. Certain forms of media, cooking, it's really personal. If you're selling a recipe website, you'll get dinged because they're worried about it. But what you're trying to show is, look, this person's been producing content for 10 or 15 years. Even though they may get a large check at the end of a transaction, there's ways to tie them into whatever company going forward each time. It's a unique situation, but MrBeast I think has done it pretty well from the perspective of he's been able to raise a lot of money around the Feastables and other things like that. And when you look at his go-to-market, it's not just the YouTube channels. It's everything else he's going to build that will create ongoing value. But I think people see Jimmy as someone who is much more than just his YouTube channel. And if you talk to people that work with him, he's very focused on this business, not just the content. How he drives to metrics and things like that sounds like any other really strong founder. It's a case-by-case basis. Most large media companies do a pretty good job of trying to get a sense of who that person is and that's what they'll base what they're buying. But when TCG invested in Barstool, Dave smartly said, I'm going to step back from the day-to-day CEO role. But he still drove so much of the engagement. And I think most media companies at a smaller scale need someone like that or they have a team of people. There's a reason why you're showing up and it's not just because of the brand.
· Matt Reustle
[00:00:00] S0: On the idea of those individuals or those brands having a lane. We often think about certain creators or businesses and their Substack or their YouTube or their podcast. But then you see them, they're building out newsletters and they're building out all these other properties. Through the lens of a buyer, how important is it that they have maximum platform exposure versus are they buying these businesses just for that single lane? Whether it's the Substack or the YouTube, obviously that's going to have most of the value, but how important is it to be spread on top of those other platforms as well?
· Blake Saunders
[00:00:00] S1: Media companies are buying other things. They're adding a capability, so that's more of a tech-type acquisition. If they're buying another media company, they're buying audience. If someone has a really strong newsletter that has 50,000 engaged people versus someone who has a newsletter with the same audience plus five other random things that have no engagement, I think they'll probably judge them pretty similar effectively when they look at it. They want to know, okay, if we overlay our ability to grow this, our ability to sell these ads, our ability to bring this value back to our broader platform of consumers that are consuming our media today, it doesn't matter necessarily to be on 5 or 10, just whatever channels you're in, you have the right engagement. So you see this right now with some people where they have their one main thing and then they're adding stuff and the other things are more. There's light engagement. It gives them an opportunity to test and learn, to see what resonates because each thing is different. That's the tough thing, especially if you're not raising any money or just a little bit of money as a media company. You can't copy-paste what you're doing on one thing and hope it works on the next because it won't. They all have different types of audiences, they all have different feed dynamics, how often you have to post and stuff. So in order to be good on multiple channels, you have to probably have a person thinking about it. You have to change the content slightly. It's not an easy thing. So I think for independent, fast-growing media companies it's stick to your lane. If you want to do other stuff, it's an opportunity to maybe engage with people slightly differently, test things out. But that's more on the digital side. I think that if you do a newsletter and then you have real-life events, that's just a typical media company. The nice thing with events is they basically become detached from CPMs and you can sell them on a different thing: influence. There's a lot of reasons why brands will buy events and give someone a lot more money than they would an event that has 200 or 300 people at it. A brand might spend thousands of dollars, where if a couple hundred people showed up to a website webpage, they would get $10.
· Blake Saunders, Matt Reustle
If you have the right engagement on whatever channel you're on, you see some of these live streamers when they walk around New York City cause pandemonium. That to me is just a pure signal that, oh wow, they have real fans. I think any media company wants to buy other media businesses that have true fans that are going crazy. [00:00:00] S0: Where do you think we are in terms of the event cycle? After COVID, there was this pent-up demand for more in-person interactions that has been met with an increasing supply, increasing pivot towards a focus on events for media businesses. I know this is not new, but do you have a sense of whether this is a cycle, whether there's a real secular trend here? I'm not that popular, but I have event invites probably every day, so I can only imagine how many are truly out there.