Transcript for Scarlett vs. OpenAI, Nvidia's Numbers, and Guest Julia Angwin

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And I'm Scott Galaway. Why why are you in San Francisco?

But if you post a picture of him, he's very, it's, he's a lot more polarizing than I would have anticipated.

So how am I doing? So in a 36 hours ago I was in London. I'm in New York and since then I've also been in Las Vegas. So the way I would describe how I'm doing is I am my brain and me are classmates who've been randomly assigned to a lab project and it's not going well.

Yeah, what a thrill. I went to Vegas for 11 hours, caught two hours of sleep and then spoke at a conference in a windowless conference room, Maria, and then jumped on a plane back to, uh, right in York where I have no food here, so I haven't eaten for two days.

Yeah, but usually someone brings me food. But I'm not doing well. My shoulders hurt. I've worked out and losing weight. I look like the alien from close in Canada to the third time right now. I'm losing weight.

I was actually a little bit nervous. You should be. I haven't slept. They're smart. It's a table full of smart ladies and I'm very, I'm very intimidated by What the I'm hoping that Alyssa Farrah is number three. So it's just I got a lot riding on it.

He has a, um, he was great on the show, by the way. I don't know if he has a clip that's gone viral from the show, but he has a great line in his book, you know, and of all the things he wrote, the thing that the thing, you know, the movie, or stuck with me, as he said, something along the lines that the stupidest thing I can imagine is people who only focus on what's wrong with their life. And I think that we all really do suffer from that. I know I suffer from it. I'm a scale of zero to a hundred zero being someone who's life is full of tragedy and disappointment and a hundred is someone who just just a luckiest person in the world and a life full of love and achievement. You know, I would bet you and I are somewhere between a 95 and a 99 and I won't speak for you, but I focus on the four types of things that aren't right with my life and it's really stupid.

Yeah. I'm trying to be, I'm getting better at it, but it really is. It's human nature to focus on the things that aren't right or the things that threaten you. And he's been working as ass off for 30, 40 years. He still does Mike open Mike. He still does comedy shows. It's, you know, Smollish towns. Yeah.

I got shit for it. The guy's a role model, mine. He's a hero, mine.

I actually think this is this is the government is probably going to be pretty expeditiously come to some sort of agreement with live nation because the old kind of board the problem one of the reasons we haven't had any antitrust come to fruition in Texan's Microsoft was was it was it was decided that it should be broken up and then was overturned but that ended up actually having a huge impact on the ecosystem because it's a lot of people say it's not the decision to break a company up but it's the scrutiny the changes behavior a lot of people would argue the big tech It's not making acquisitions right now because it doesn't want to raise any red flags because it's no tundered scrutiny or it does things like it pretends not to own open AI when it actually does open it own open AI. But the traditional test in any trust is consumer harm and the easiest way to determine consumer harm is if you've raised prices fast to the inflation. And I believe that live nation has something like a market share of live events of like two thirds. And they'll say, okay, this company has a dominant, scary amount of market share of live events. And they'll say, well, that's okay. You can, you need to scale and get all these, all the consumers get all these wonderful attributes from all of our, from our size. And they'll say, well, have you raised prices faster than inflation? And I don't think they're going to have a difficult time showing that live-a-man ticket purchases, and this is anecdotal evidence, but I am absolutely blown away every time I buy tickets for anything, while I best to how much it costs. What they're saying is, is that because the relationships they have with venues, they claim that they are forcing these venues and these events to use ticket master, which they acquired in 2010, and part of their approval to buy them in 2010 with a signed consent to creasing they wouldn't do that and they're saying they've violated that. I think this is really bad news. Well, okay. It's bad news for the combined live nation and take a master. I think they will, they will be forced to die vast, but as is the case with typically with breakups, the shareholders will make money. I'm not sure it's good that these companies

But what you're referring to is an incident point and that is there used to be a big business in scalping and that is The front of mine does this, front of mine from high school still does it. You pay high school kids to go weight in line for, you know, the opening day of tickets for the NBA, you know, NBA game three of the finals. And you can get a ticket for $200 and you can turn around and sell for $1,200. And then the ticket folks got savvy and said, why are we leaving that surplus value on the table? And they massively increased. their ticket prices for the best tickets such that there wasn't any capture that they weren't that they weren't keeping to themselves. And then you saw ticket prices. You know, started, I remember this, but like the producers, the Broadway show, they started selling something called a super ticket where for the best tickets in the front row or the first A-Ros, they were charging $400 and everyone swallowed their tongue. and the ticket and company or the you know the show said this is what you're paying anyways we're just cutting out the middle man and so they'll claim i think they'll have a lot of sharper conema so say we do a really good job we have variable pricing similar to the airlines but i am It's like, when you go to Disney, every time I go to Disney, it sounds weird about get a little bit depressed. I look at just how overweight America is. And the fact that these middle class families have to pay so much money to wait in line for three hours to go on the Avatar ride. You just think, God, this is a rule.

It's a great company. It's well-run.

This is a big deal. We're starting to see enough deals with us, a precedent that if you're a content company who you can show your data is being crawled by these LLMs. There's now a natural, there's precedent for being paid for it. And this is important. And media companies are learning that we won't be fooled again. We won't let Google do. We won't let open AI due to us with Google has been doing to us. This is what you're going to see, I believe, is a lot of middle or sort of meddling content companies that have a lot of content, strike deals that are going to lift their stock price because this is going to be very high margin revenue. I mean, the jazz hands here is that they went out of the way to noted that In addition to providing content, newscore will share journalistic expertise with open AI. I don't think I don't think open AI really cares about their journalistic expertise. I mean, the thing about this revenue is the numbers not that big. But these are companies that have really terrible revenue mixes. What do I mean by that? They're low margin difficult. Businesses because long-form journalism is expensive and hard and so if they can if if you have 50 million what if why there's 40 million 50 million and I think the prices will go up cuz now somebody's gonna somebody's gonna show up one of these four and say there's a way to differentiate If we can get all of condenasts or all of hers or all NYT properties to go exclusive, there will be bidding wars. I think the number is going to go up. And the thing about this revenue is the top line number isn't that big, but it's going to be at 90 or 95% gross margin.

And I'm doing catamine and doing a forgy with Nicole Shanahan later with Jack Dorsey. I'd like to join me. Yeah. I bet that we need to go. We definitely need to get to know that woman. I'd like to party with her. Cara State, stay at Hotel Dog, as Cara does. Yeah. I mean, that we want to roll with that. That young vice president for candidate.

It's a great idea because it basically one, this is a niche market and people will think when people go on sort of these, you know, do these things they want to feel as if they are kind of, there's a term called off the map. When I first got to New York, I was bored and lonely and I very stressed. And so I started doing a lot of yoga and there's a great term in yoga off the map. Typically when you start doing yoga, the other 23 hours a day, they are not practicing. You're a little kind of yourself. You're a little bit more focused on your health, your food. And I would imagine when people take a Zempek, they think a lot about their activity off the mat, specifically their food and take. And if a company says, this is exactly the right food to take. When you're on a Zempek, it needs to be high in protein because one of the downsides and there's no free lunch around anything of a Zempek is the ratio. That's right. Muscle the fat loss is greater than, you know, then Peter, you know, Dr. Peter Aotea likes and it's probably a real issue and this is going to be a high protein meals. In addition, it gives them the chance. You know how everyone is putting out press releases and say, AI, AI, AI, AI. This is a chance for Nestle to go GLP-1, GLP-1. So the problem is, is that a lot of these stocks aren't as much, and Nestling not as much, but a company like Coca-Cola, PepsiCo, McDonald's, Kraft Foods, General Foods. These companies aren't companies. They're obesity indices.

A coming like Diageau really well run company, really fantastic brands. But here's the problem and this is the dirty secret of these industries. Is it 10% of their customer base? In the drinks industry, it's something like 10% of the customer base is responsible for 70 or 80% of the volume. People don't realize how much some people drink. And those are the people who are going to be on these drugs first. And so you're going to see you're not only going to see the customer base go down, but you're going to see volume dramatically decline. And so I don't think I don't think these companies is processed manufactured food companies are quite frankly produced. Just let me be blunt, shitty food that people have to, because it's good value, it's good, they're good brands and it's very expensive to eat well now.

Yeah, it's nice to meet you, too. Oh, what do I call you? Do you have a name?

Where'd you get that name from?

That's funny. I was thinking it didn't.

I don't know, but I mean, it's timely acknowledge that there's something weird going on because naked Colin just looks a lot like me and someone needs to pay me.

Well, this is, this is, I mean, AI is going to create a lot of strange bedflow fellows and raise a lot of really interesting questions. And this is, this is not an original question. I remember a Jamaican singer sued the Rolling Stones and said that One of their most popular songs was basically inspired and ripped off by one of his songs and they played the songs for a jury in the jury said no, they're not that close. And I think where we end up here is with the DOJ or whoever somebody. Looking into it. Well, it's going to have the own LLM that says does and they'll figure out a way to calibrate it and they'll say, does this violate? Is this too close? Because something like voice. I mean, that's pretty right voice.

Well, the crisis management comes down to the same three things all the time, acknowledged the issue, the top gargile takes responsibility and then over-correct. And I actually think, Sam, I mean, the fact pattern here is really bad, specifically Sam reached out to Scarlett nine months ago, asking her to be the voice of the model, but she declined. So that's a really ugly fact of it ever goes to court.

But I think a jury is going to say, wait, you asked her for it, she said no. And this sounds, I mean, to your point, if they like you find it very similar, I just think humans are going to go. And generally speaking, I think humans are humans. jury members are going to say, these companies have just gotten too fucking powerful.

A metal level. It's very straightforward. The transfer of power and money from labor from workers to corporations has been extraordinary. And the jury is probably going to have more workers than shareholders. So he doesn't want this to go to a jury trial. So my guess is, and he's probably going to do the following. He's going to come out with a series of standards. It says, we're going to anyone whose voice is similar or we imitate. We're going to give a royalty to. And then most importantly the person this is gonna have the most impact on a day-to-day level is Colin Jost is never gonna cross his wife. I would be so scared of this woman right now. She is not afraid to lure us. Yeah, I'm sorry. You left the dishes in this sink meet my lawyer.

Oh, he's going to make a better world carry. Doesn't he cares about people is worried.

He's proud of their pop progress, but they need to do better.

I jumped a shark as a rider last night. I promise myself I'm not going to use chat GPT or any LLM in my writing because I'm worried that I won't go back. You know, I plan to do a lot of heroin later in life because I'm my assumption is you can't go back once you use it.

I'm writing, I'm writing a, um, my post this week is on what I think there's a bubble inflating in AI, AI stocks stocks. And I had this one paragraph and I kept rewriting it and I didn't like it and it felt obtuse and clumsy. And I stuck the paragraph into chat GPT 40 and also anthropic, which actually I, or a clode, clode clod, which actually prefer. And I said, can you make this CRISPR tighter and in the voice of Scott Galen, I give it a pretty thoughtful prompt. and it came back with something better and it sent chills down my spine. Yeah, I got chills. Now, granted, I wrote the original paragraph.

Said every woman ever, the view needs me.

Joey. Joey. Joey. Joey. Joey. Joey. Joey. Joey. Joey. Joey. Joey. Joey. Joey. Joey. Joey. Joey. Joey. Joey. Joey. Joey. Joey. Joey.

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I track all of my questions. I get approximately, I think I get about 130 emails from strangers a day and I like to categorize them. I actually use, all right, tempted to say, I'd sort them in categorize them. The number one question I get is usually about a young man or someone's son or for a young man. That's the number one. The number two most common query I get is a two-lake to buy in video. Everybody wants to know is it too late when I tell them is buy an index fund because the answer is I don't know I can see these stocks going up 50 or 100% in the hysteria in the momentum but at the same time you want to diversify away from these companies this company could get cut by 60% and it still wouldn't look it still wouldn't look cheap but having said that in video right now has added more value in the last 12 months than any company in history do you realize in the last 12 months it's grown its market capitalization by the value of Amazon Amazon, it's added the value of Amazon in the last 12 months. It is now worth more than the economy of Canada. I mean, it's just what this company has been able to achieve and how the market has responded is crazy and what asks what the motor and said that really struck me. He said, he's he's he's convinced me and I believe him that fundamentals the underlying fundamentals your ability to grow and produce cash flow is gravity. Michael Jordan jumps you think he's never coming down. Gravity always wins. He always comes down. Fundamentals always rear their ugly head and his analysis. He said that to grow into their stock price and video is going to have to find another sector and dominate it the way it dominates AI right now.

This is Cisco in 1998 or 99. Where everyone goes AI's the future. I buy that, but I don't know where to invest. So I'll invest in the steel underground and the infrastructure. Oh, Cisco's the internet. Oh, Nvidia is a good proxy.

He said it. It's a meme stock. In video, in video has real risks. There's four companies and Amazon alphabet met at Microsoft that count for 40% of its sales and all four of those companies. Madly trying to develop their own ships. They are not like how dependent they have become on this company that is now worth more than them. It goes Microsoft, Apple, and Nvidia in terms of the most valuable companies in the world. And the only negotiation when you show up and try to put GPUs from Nvidia is that we've raised our prices 30% and they're like, well we have a 28% and they're like, no, call us if you want them because somebody just line out the door of everyone that will take these chips if you don't want them.

When is there a filing that shows Trump is able to sell? Because even as biggest fans know that the president Trump tends to look after number one and number two through a million are him. And at the moment, he can sell his shares. He's not dumb. He's crazy, but he's not dumb. And he's mean, but he's not dumb. He's going to go sell everything. And I go, well, crash the stock. And I don't care, sell everything. I need the money. And this is stupid. And I've gotten to know Devon Nunes, and he clearly has no fucking idea what he's doing. No one is on this thing. When I post, I get a bunch of weirdos, but there's clearly nothing going on on this platform. It's going to be just a, it's going to be a really interesting trivia question in about 10 years.

You don't get your money back. I mean, I'll say this when I donate, everyone's going to argue all popped up and I donate money to a politician. And I got to be honest, three, six months later, I'm kind of like it was sort of literally like taking money into the street and just burning it. It just doesn't feel like it happened.

Yeah, I do. I'm fascinated by the concept of proof news. I'm in all of these working groups on WhatsApp, mostly around the Middle East and we're trying to create a repository of data because we find that when we reduce articles a lot of times, there's an absence of data or if they just had some data, the entire article would be framed differently. What is the What is the business model? Are you bringing production values, data that should inspire a story? Or are you helping fact check? Give me an example. Walk me through the customer journey of a client. How they pay you and what value you're adding and how that values differentiated from the other resources out there.

I love Julia's framing here that the threat isn't that it's smarter than us, the threat is that we think it's smarter than it is, right? And it gives you one answer. And there's, there is a power to singularity that any technology gives you the confidence that it knows. And at least Google says, well, here's 55 answers, thousand answers, because we're not sure. But AI's basically saying, this is the answer, right? It gives you back an actual answer. You said something that inspired a question that my guess is you have insight into. And that is when you think about the dominance of TikTok and YouTube, between the two of them, you know, that's sort of the frame to which I would argue young people are seeing the world. And you talked about monetization, maybe being better on YouTube. I'm just curious to get your take comparing and contrasting the monetization for a creator across these platforms. What is your general take on where the money is and how they approach creators? We were talking about the relationship between her. the debacle or the, you know, the stubbed toe of open a ions and in Scarlett Johansson, what's your take on monetization?

Well, if, if I'm a creator, if you're advising, my guess is a lot of people come to you and say, help me figure out this approach to creating content or what are your thoughts. Okay, I have content I can focus on creating content for YouTube or TikTok. And I'm a capitalist. I'm just driven by economics. I got to be self-sustaining. What is your view on the approach to monetization of creator content from the creator standpoint between TikTok and YouTube?

I think Julia is exactly right. The thing I've been focused on what I'm talking about on this show is that if we could go back, and these are energy companies, compute is now the new oil. And I think if we could go back and recognize any time we can put one substance into another for economic gain, you're going to have extra knowledge. If we could go back, I think we would have a bigger taxes on pulling oil out of the ground and then invest it. a movement to renewables or invested in carbon recapture. I think this is a unique moment to place pretty serious taxes on compute to fight, including giving money to Julia's organization to ensure that AI doesn't get out in front of us and we reinvest in some of the harm. So I'm focused on the externalities and how we early on decided to put a tax on compute.

Yeah, first off, that's not true. It's it's changed dramatically. That was like when I think that's when five people voted and the first for whatever like change. Yeah, it's come it's come way down.

What do you say if you were advising the White House and it did get to the point where it wasn't overturned by the courts and you wanted to ensure that we don't continue to march down this road of a few billionaires or a few very wealthy people imposing their own political views on the populace? How would you advise them to do this?

But that's really his point, right? That it keeps happening, but this time it could happen at a dangerous scale, right? This is more than Bloomberg News, which nobody quite frankly, very few people watch. And so what would you, what, what guardrails of any, do you think we could put in in terms of, they're going to have input into who, if in fact, this holds up on court in, in a lot of people say that it won, but assuming it does hold up in court and they're forced to divest it. What guard rails would you want? Would you advise Biden to put in place in terms of the ultimate new owner?

But if you thought about, I understand the rationale there, but that kind of scares me, because I think the point of good media is that it moves my dial. that it says Scott, you have a bias here and your bias is leading you to false or hollow conclusions. It's bad for you and bad for the world. Do you think there's an opportunity for organizations like yours to come up with some sort of index that these companies use or don't use? It's like there's mandatory labeling or disclosure now on on on food. Do you think we get ever got to a point where maybe a company like yours issues sort of a, I don't recall it at truth index, but a fact checking index.

You'd see you, Julia, extra time.

It's inspiring that it's inspiring that people like that give up, you know, quite frankly, give up economic opportunity and influence and status and vanity to do, to do that kind of work.

You know, hopefully she kind of wreaks of integrity. It's just sort of like you get this sure sure she might be wrong every once in a while, but she's her hearts in the right place and she's trying to find she's she's trying to pursue the truth, right, which is what, you know, I think I think good journalists. I try to do anyways, I'm a I like that she's doing that I would love to see. I mean, think about the labeling disclosure requirements and some people think it's over-regulated around food, you know, just the calorie intake that should, you know, just read the back of any any food product, just how much information they have to disclose. I think you could now argue that the data you're getting on your diet is 16 hours a day of digital. The fact that it has absolutely no labeling, it doesn't tell you that it was altered by AI. It doesn't tell you that this is just not accurate, that there is no proof that mRNA vaccines alter your DNA. That is not, that is very suspect. So it would be really interesting if you could find maybe a basket of companies that issue, and you can choose which ones you want labeled or you could hide the label. But I love the idea of some sort of FDA like labeling on the information that people are consuming all day long.

Well, I do think this open AI, the second deal with NewsCore. It's setting a precedent. I do think you're going to see media companies that have a lot of rich data to be crawled are going to kind of feel, feel their mojo and get serious and maybe be able to say have confidence to say no, I'll see what meta-says or I'll see what anthropic says. And the result will be, I think there's an investing opportunity. This is not financial advice. I'm just thinking out loud. But companies such as Genet, they produce a massive amount of content every day in local markets. And it's a shitty business. And disclosure, I was an investor in the debt. I'm no longer an investor there. But I think companies like Genet also think a company that I am an investor in Yahoo, any companies that generate a tremendous amount of relatively good content. Are going to find there have access to new cashless dreams. Because of bidding war, my breakout for the few remnant companies and they'll be different models. You can either lease it for an exclusive. You're going to have to pay up. But I think you're going to see a mini boom in some smaller media companies such as Canette or Yahoo or scale companies. When the marketplace recognizes, they're in now in a position to command a new source of revenue that's very, very high margin. I think there's an investment opportunity here.

This is where it gets weird. And then how much of that do we get, right? Or Penguin probably has 20% of the written word out there right now in terms of sales, maybe 30%. What happens when Penguin before your random house does a deal for $200 million or $500 million? with, with, with, um, anthropic, how much do they're authors get? I, it's, this is going to be very much.

Yeah, but we do get rights on the back end. Yeah. That's true. When it goes above a certain sales, does this qualify as back ends?

Let's call Scarjo's lawyer.

Today's show is produced by Laren Aminzo and Marcus and Taylor Griffin. Ernie Indertot, and Jr. in this episode, thanks also to Drew Burroughs and Mielcubaria. Nishak Khurwa is Vox Media's executive producer of audio. Make sure you subscribe to show wherever you listen to podcasts. Thanks for listening to Pivot from New York Magazine of Vox Media. You can subscribe to the magazine at nmymag.com slash pod. We'll be back next week for another breakdown of all things tech and business. It is great to be with you, Ellen.