Latest / Bloomberg Intelligence / Madison Reed Sold Hair Color Every 5 Seconds in Pandemic Peak

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Madison Reed Sold Hair Color Every 5 Seconds in Pandemic Peak · Bloomberg Intelligence

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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
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Speaker 1: my co host Matt Miller. Every business day we bring
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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
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Speaker 1: with essential market moving news. Find the Bloomberg Markets podcast
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Speaker 1: called Apple Podcasts or wherever you listen to podcasts, and
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Speaker 1: at Bloomberg dot com slash podcast. Talking about the v
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Speaker 1: w I D four, pretty cool looking vehicle, I have
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Speaker 1: to say, um, and I'll be psyched to get into
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Speaker 1: that tear down for sure, but I want to focus
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Speaker 1: now not on cars. Um, but I was gonna say
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Speaker 1: on hair, but really I want to focus on growth
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Speaker 1: in business because we're gonna bring in Amy Errett right now.
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Speaker 1: She is the founder and CEO of Madison Read out
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Speaker 1: of San Francisco, and she has started a killer at
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Speaker 1: hair home color business. Um. Now, I don't have any hair, Amy,
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Speaker 1: and Paul's hair is a beautiful shade of wisdom white
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Speaker 1: that he would never want to us with. But it
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Speaker 1: is incredibly impressive the business you started and the and
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Speaker 1: the growth that you've seen. Talk us through what was
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Speaker 1: like for you. Yeah, so thanks very much for having me,
1:13
Speaker 1: and uh, we're we're all good that you don't have
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Speaker 1: any hair that's okay. Um. So yeah, we uh, you
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Speaker 1: know the businesses about six and a half years old,
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Speaker 1: we were growing really well, uh and then the pandemic
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Speaker 1: hit and that our business girl hundred seven percent last year.
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Speaker 1: So why is that just because people? A means that
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Speaker 1: just because people couldn't go to the salon um or
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Speaker 1: do you think they were coloring their hair even more
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Speaker 1: just because the time they had at home? I think
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Speaker 1: it's both. I think they couldn't go to the salon,
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Speaker 1: So we saw an influx of what we're at that
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Speaker 1: time salon goers who have now many of them have
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Speaker 1: been converted to our business and seeing that the results
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Speaker 1: uh and the cost savings are fantastic and we have
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Speaker 1: a great ingred the in story in eight pree ingredients story.
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Speaker 1: So what we think is a very high quality product.
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Speaker 1: And I think there are a number of people that
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Speaker 1: were looking on Zoom all day and realizing that they
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Speaker 1: wanted to color their hair because it is emotional and
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Speaker 1: it makes you feel good about yourself when your hair
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Speaker 1: looks great. So I think there was another people that
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Speaker 1: were coloring at home already, but increase their frequency yeah,
2:24
Speaker 1: I mean that's kind of what I wanted to get at.
2:25
Speaker 1: I'm not sure if you've done any survey work with
2:27
Speaker 1: your customers, but you know, a lot of things in
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Speaker 1: terms of what we do day to day got disrupted
2:33
Speaker 1: during the pandemic. But a lot of folks say, well,
2:36
Speaker 1: I'm just gonna go back to kind of my old
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Speaker 1: ways once we get to the other side of this.
2:40
Speaker 1: How's that. How do you think your customer base is
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Speaker 1: going to kind of evolve post pandemic in terms of
2:45
Speaker 1: their behavior. Yeah, so we've been watching that very closely.
2:50
Speaker 1: We've obviously been spending a lot of time on what
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Speaker 1: we call retention and loyalty and making sure that our
2:57
Speaker 1: customers are very happy. We have not seen that drop off,
3:00
Speaker 1: and in fact, we've seen continued growth every month. Um.
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Speaker 1: One other nuance of our business that may not be
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Speaker 1: clear is we have thirty one nationwide what we call
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Speaker 1: hair color bars, which are a faster, less expensive, uh
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Speaker 1: take on getting your hair colors in the salon um
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Speaker 1: and so we have we had those pre pandemic, only twelve.
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Speaker 1: We've opened over nineteen during the pandemic, which is the
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Speaker 1: whole separate story. But we also have seen a major
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Speaker 1: influx as some people are getting back NATed of actually
3:36
Speaker 1: people coming into our hair color bars because they love
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Speaker 1: the product and they want us to apply it for uh,
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Speaker 1: it's it's the s l a of that is about
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Speaker 1: seventy five minutes, which is radically different than going to
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Speaker 1: a salon and lot less expensive and the authenticity and
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Speaker 1: transparency of the product. So sometimes you may want to
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Speaker 1: do it at home, sometimes you may want to come
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Speaker 1: into a hair color bar. So we really haven't seen
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Speaker 1: the part that's going away from our business at all.
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Speaker 1: I also think it's quite cool that you have developed
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Speaker 1: the Color Crew, which is a team of licensed colorists.
4:10
Speaker 1: They help UM customers online. UM. When I was a
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Speaker 1: kid and I used to dye my hair purple or
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Speaker 1: blue or green with manex panic that I would go.
4:23
Speaker 1: I was really into you know, um punk rock, and
4:25
Speaker 1: I'd go to Ricky's in New York and it was
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Speaker 1: I don't know, ten box or even cheaper. But but
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Speaker 1: your hair product has been dubbed the broken bag of
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Speaker 1: home hair color. Why why is that? Is it just
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Speaker 1: a higher level of quality than say Loureal or Claire
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Speaker 1: All or whatever else is out there. So our product um,
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Speaker 1: I love that description. The broken bag of hair color
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Speaker 1: um our product is salon quality. And so historically there
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Speaker 1: has been a difference between the color that you buy
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Speaker 1: on the shelf of Ricky's or Walgreens or Dwayne Reed
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Speaker 1: and the color that is applied in a professional salon.
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Speaker 1: Those are very different quality um, whether it's color molecules,
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Speaker 1: efficacy of the product that our taste, ingredients that we
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Speaker 1: take out, and some good things we put in that
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Speaker 1: are reparative. And so there has never been before us
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Speaker 1: a salon quality professional grade. Maybe that's the best way
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Speaker 1: of saying it. Hair color product that is direct to
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Speaker 1: a consumer. And so what is what is part of
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Speaker 1: the disruption is giving the consumers the same product that
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Speaker 1: we apply in our hair color bars, which is the
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Speaker 1: efficacy of a professional product where in nothing again against
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Speaker 1: whatever you used that was set up for at home
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Speaker 1: use les. Yeah, okay, so I just you know, before
5:50
Speaker 1: we wrap up and we only have thirty seconds to
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Speaker 1: anybody got to ask U, I, p O or spack
5:56
Speaker 1: you what does your exit look like? Uh? Well, you
6:00
Speaker 1: know you'll have to stay tuned and have me back
6:02
Speaker 1: to know the answers of that. But uh, let me
6:05
Speaker 1: put it this way. I the spack market is that
6:08
Speaker 1: if I get another inbound I'm spending most of my
6:12
Speaker 1: time spending inbound UM. But um, you know, I don't know.
6:16
Speaker 1: We're we're well poised to be, you know, a public company.
6:19
Speaker 1: We'll see which way that direction goes. And we're excited
6:23
Speaker 1: about the opportunity. Hey, Amy, thank you so much for
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Speaker 1: joining us. A fascinating story which you continued. Good luck, Amy, Eretic,
6:29
Speaker 1: founder and CEO of Madison Read. They just completed a
6:32
Speaker 1: fifty two million dollars Series F funding round and have
6:35
Speaker 1: raised close to two d million dollars since launch. In
6:38
Speaker 1: the private market is suggested maybe the next move will
6:42
Speaker 1: be a spack or an I p O. Senator Elizabeth Warren,
6:47
Speaker 1: Democrat from Massachusetts, says her ultra millionaire tax um would
6:52
Speaker 1: raise three trillion dollars over the next ten years and
6:55
Speaker 1: help fund infrastructure, childcare, and education. She spoke with Bloomber
7:00
Speaker 1: Kevin Cirelli on Capitol Hill. More and more people are
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Speaker 1: starting to look at the wealth tax and say, wait
7:06
Speaker 1: a minute, this makes a lot of sense. You know,
7:09
Speaker 1: people across this nation getting independence, Republicans, Democrats, a majority
7:15
Speaker 1: of all of them want to see us to a
7:17
Speaker 1: wealth tax because they know that the system is rigged
7:19
Speaker 1: against them. With that in mind and a little bit
7:24
Speaker 1: of disclosure, I keep hundreds of dollars in my checking
7:28
Speaker 1: account Huntington's Private Bank. Dan Graffith joins us right now,
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Speaker 1: director of Wealth Strategy out of the great state of Ohio. Dan, Um,
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Speaker 1: what do you think about the idea of wealth tex
7:39
Speaker 1: I mean, it wouldn't hit me too hard, so I'm
7:41
Speaker 1: not terribly bothered. But um, I guess a lot of
7:45
Speaker 1: your other clients would lose some cash. Well, good morning,
7:48
Speaker 1: Thank you for having me. I agree with you. It
7:50
Speaker 1: sounds like our balances are somewhat similar. Glad to have
7:53
Speaker 1: you as a client, for sure. But I think that's
7:56
Speaker 1: the biggest concern that a number of our clients have
7:58
Speaker 1: raised initially is although it may appear that this will
8:01
Speaker 1: affect not that many folks, the concern that our clients
8:05
Speaker 1: are raising is what is that valuation? Num? We're gonna
8:07
Speaker 1: look like, you know, what, what is my business really worth?
8:10
Speaker 1: We know that here in there's gonna be huge numbers
8:14
Speaker 1: or mergers and acquisition activities, and as a consequence of that,
8:17
Speaker 1: what are the valuations for business is going to look like.
8:20
Speaker 1: So we know that we can probably tell what balance
8:23
Speaker 1: sheets look like when it's stocks and bonds, but when
8:26
Speaker 1: they're illiquid assets, this could be a real problem for
8:28
Speaker 1: a lot of clients that exists out there. And Dan,
8:31
Speaker 1: are are some of your clients. Are they concerned that
8:33
Speaker 1: maybe this is just the you know, the first step
8:36
Speaker 1: towards just a higher tax regime overall, which is in
8:41
Speaker 1: effect at some point will come down and impact many
8:45
Speaker 1: more US citizens. A lot of clients are obviously concerned
8:48
Speaker 1: about many elements of tax pieces. I had somebody just
8:52
Speaker 1: this week who mentioned that the original a m T
8:55
Speaker 1: was put in place to only affect about a hundred
8:57
Speaker 1: and fifty people, and obviously now that's grown to affect
9:00
Speaker 1: to a a lot more folks. A lot of our clients
9:02
Speaker 1: are concerned about the same things that Senator Warren articulated,
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Speaker 1: income inequality, UM. But I think a lot of them
9:08
Speaker 1: are just concerned about making sure that we can address
9:11
Speaker 1: this in a way that's most effective for making community
9:14
Speaker 1: stronger and keeping businesses strong as well. When I think
9:17
Speaker 1: about when I hear about audits, I kind of get
9:19
Speaker 1: the heb gbs I mean literally sends shivers up my
9:22
Speaker 1: spine to think about that, um and I guess you
9:26
Speaker 1: would have to oversee a lot of them for your clients.
9:29
Speaker 1: How much would it cost to make sure the wealth
9:31
Speaker 1: tax is properly enforced? You know, that's a great question
9:36
Speaker 1: and one of the other big concerns that our clients
9:38
Speaker 1: have raised the cost of enforcement and more the more
9:42
Speaker 1: I would say, the cost of compliance is going to
9:44
Speaker 1: be a big one. We mentioned the fact that a
9:46
Speaker 1: lot of illiquid assets are gonna need to be uh
9:49
Speaker 1: put through valuation processes, and obviously, if you're going to
9:52
Speaker 1: be doing that every year, then you've got the I
9:55
Speaker 1: r S that's gonna come back and say, well, we
9:56
Speaker 1: think these assets are worth this, you know, the family
9:59
Speaker 1: farmers worth this bunch, and the taxpayer is gonna say
10:02
Speaker 1: maybe they have a different position on valuation and they're
10:04
Speaker 1: going to have to potentially do that every single year.
10:07
Speaker 1: So a clients are expressing a lot of concern about this.
10:09
Speaker 1: This This will definitely potentially add to the number of
10:12
Speaker 1: people who work for the I r S. But it's
10:14
Speaker 1: gonna be a big, a big employment number for people
10:17
Speaker 1: who are in tax and valuation enforcement. To a lot
10:20
Speaker 1: of lawyers and accountants will be put into work if
10:22
Speaker 1: this proposal is adopted. Hey, Dan, you know, on a
10:26
Speaker 1: just kind of a stepping back more broadly, what are
10:29
Speaker 1: you telling your clients these days? We've got equity markets
10:32
Speaker 1: at or near all time highs. It seems like on
10:34
Speaker 1: a daily basis, we have interest rates edging up here.
10:37
Speaker 1: It's kind of been some of the more recent discussions
10:39
Speaker 1: you've had with your clients um at Hunting Private Bank. Overall,
10:44
Speaker 1: I think our chief investment office is really still very
10:46
Speaker 1: optimistic about the markets overall. You know, earnings reports continue
10:50
Speaker 1: to be very positive, and there are a lot of
10:51
Speaker 1: indications that things are still going to look up and
10:54
Speaker 1: there's more opportunity there. The benefit of what we do
10:57
Speaker 1: in the Wealth Strategy Group is we get to work
10:59
Speaker 1: with business owners directly. So part of the fun and
11:02
Speaker 1: excitement of that job is that we get to talk
11:04
Speaker 1: to the business owners and see what they're thinking. And
11:07
Speaker 1: I have to tell you that the conversations that I
11:09
Speaker 1: have with our clients are equally optimistic at a kind
11:13
Speaker 1: of micro level as well. So I think in a
11:15
Speaker 1: lot of ways, we think there's a lot of reason
11:17
Speaker 1: to be optimistic about the future. I guess your your clients, though,
11:22
Speaker 1: if if this thing starts to gain steam, they're gonna
11:25
Speaker 1: look to take as much income as they can now
11:27
Speaker 1: to get out ahead of it. I think liquidity is
11:30
Speaker 1: probably the biggest concern that's exactly right when when it
11:33
Speaker 1: comes to clients relative to not just this wealth tax,
11:35
Speaker 1: but any volatility in the tax policy that happens, you know,
11:40
Speaker 1: anything that happens with with a business when it comes
11:43
Speaker 1: to liquidity is an important piece. If you've got fifty
11:46
Speaker 1: million dollars and you're paying an annual wealth tax of
11:48
Speaker 1: two percent, that's a million dollars that you've got on
11:51
Speaker 1: the on the sidelines. That our clients would be concerned
11:54
Speaker 1: is a million dollars that they're not able to use
11:55
Speaker 1: to pay employees or invest in research and development, or
11:59
Speaker 1: even their business growth or community activities that many of
12:02
Speaker 1: our our clients are very much committed to. And so
12:05
Speaker 1: I think liquidity is a big concern um not just
12:08
Speaker 1: for this but for a lot of our clients as
12:10
Speaker 1: we move towards what could be some changes in tax policy. Hey, Dan,
12:13
Speaker 1: thanks so much for joining us. We appreciate your thoughts there.
12:17
Speaker 1: Dan Griffith, Senior Vice president and Director of Wealth Strategy
12:20
Speaker 1: at Huntington's private bank based in North Canton, Ohio. Just yeah,
12:26
Speaker 1: just below Uh you know, it's a it's entering in
12:29
Speaker 1: the Ohio State University, which I'm not sure why we
12:32
Speaker 1: have to accent the North Canton's pretty far away from
12:34
Speaker 1: the Ohio State University, but I bet you Dan, as
12:37
Speaker 1: a Buckeyes fan anyway, it's are not to be there,
12:40
Speaker 1: pretty solid there. So it's always good to hear uh
12:42
Speaker 1: Dan's thoughts here about this, you know, wealth tax that
12:44
Speaker 1: is winding its way through Congress. Will see if there's
12:46
Speaker 1: any bipartisan support for this at all. I think most
12:53
Speaker 1: people know that my dog and best friend, Stephen is
12:57
Speaker 1: a Rottweiler. He is not a German shepherd. Greg Jared,
13:00
Speaker 1: thank you very much for that business flash. Now, I
13:03
Speaker 1: want to talk a little bit about Muni's with our
13:06
Speaker 1: Amanda Albright Er Bloomberg Muni Bond reporter. Um. One of
13:10
Speaker 1: the reasons Amanda, that we bring you in is because
13:14
Speaker 1: it looks like the state rescue funds from Joe Biden's
13:19
Speaker 1: proposal kind of dwarf the tax hit and then turn
13:23
Speaker 1: into more of a stimulus than the drag. Yeah. Absolutely, Um,
13:28
Speaker 1: it's been UM super interesting just the way that UM
13:32
Speaker 1: kind of are thinking around UM, state and local aid
13:35
Speaker 1: M throughout the pandemic has changed over time. UM. But
13:39
Speaker 1: so my colleagues and I we tallied the expected tax
13:43
Speaker 1: revenue hit for fiscal UM and we found that it's
13:47
Speaker 1: about thirty one billion UM, which is still a very
13:49
Speaker 1: material number, but UM, it's obviously less than the UM
13:53
Speaker 1: nearly two hundred billion that states would receive under the
13:56
Speaker 1: Biden UM proposals. So does that put that two billion
14:00
Speaker 1: at risk? If I'm a congressman concerned about you know,
14:03
Speaker 1: the soaring dead here, I might say, Hey, the states
14:05
Speaker 1: actually did better than we initially thought. They don't need
14:08
Speaker 1: to a rebillion. Yes, And I think that's exactly where
14:11
Speaker 1: the conversation is heading UM in Congress. It's absolutely it's
14:15
Speaker 1: it's very nuanced UM and states. There's there's a lot
14:19
Speaker 1: more than just revenues UM that states they're dealing with.
14:22
Speaker 1: They're dealing with pandemic related costs, they're dealing with UM
14:25
Speaker 1: trying to meet unemployment claims. So the picture for state
14:29
Speaker 1: finance is very complicated. But we have seen UM forecasters
14:34
Speaker 1: who kind of look at the situation for states holistically.
14:37
Speaker 1: We've even seen forecasters who look beyond just revenues and
14:40
Speaker 1: also look at costs. They've also UM come down in
14:43
Speaker 1: their forecasts of how much of the fiscal impact COVID
14:46
Speaker 1: is going to be on states and so UM it
14:49
Speaker 1: definitely all all signs points that that two billion dollars
14:53
Speaker 1: is UM. It is generous UM, but it won't be
14:58
Speaker 1: necessarily UM. Space will still find ways to use that money,
15:02
Speaker 1: and we point out in the story that that could
15:04
Speaker 1: go to kind of economic stimulus projects which would kind
15:07
Speaker 1: of give UM President Biden a headstart on his kind
15:10
Speaker 1: of ultimate goal of proviving the economy. When you get
15:14
Speaker 1: back to your markets dashboard, is this all priced into
15:18
Speaker 1: the MUNI market? So the way the union market is
15:22
Speaker 1: pricing things is very interesting. There's been a sell off
15:25
Speaker 1: lately because of treasuries UM, but I would say that
15:29
Speaker 1: a lot of investors have been factoring in stimulus aid
15:32
Speaker 1: to credits like Illinois and New York m p A UM.
15:37
Speaker 1: So at this point UM if state state and locals,
15:40
Speaker 1: if that money was taken away from them, I don't
15:43
Speaker 1: know what the reaction would be. Because I also think
15:46
Speaker 1: UM the way that the pandemic UM has played out
15:49
Speaker 1: for municipal finance. It really kind of underscores how resilient
15:52
Speaker 1: some of these issues are. UM. So I'm still very
15:56
Speaker 1: curious to see if this will actually have any bond
15:58
Speaker 1: market impact if that ad taken away. But that's obviously
16:01
Speaker 1: not what I'm um necessarily expecting. But I do think, um,
16:05
Speaker 1: the clearly the amount of the three fifty billion dollar
16:08
Speaker 1: top line number clearly left being talked about, and um,
16:11
Speaker 1: you know, could be altered in the Senate. So let's
16:16
Speaker 1: under a scenario where the two billion dollars doesn't get through, Amanda.
16:22
Speaker 1: You know some of the states. Is the expectation that
16:25
Speaker 1: they will spend it on bridges and tunnels and roads
16:28
Speaker 1: and that kind of thing. Yeah, that's kind of what
16:31
Speaker 1: I'm most interested in watching going forward what that money
16:35
Speaker 1: is used for. I'm sure that some of the states
16:37
Speaker 1: will maybe try to do infrastructure projects, broadband projects if
16:42
Speaker 1: depending on what the guidelines are from the federal government. UM.
16:45
Speaker 1: But there's also in some kind of you know, economic
16:49
Speaker 1: experts have raised you know, potential issues um in their
16:53
Speaker 1: eyes if some states are saying, hey, we just got
16:55
Speaker 1: all this money from the federal government, let's just cut
16:57
Speaker 1: taxes or UM, you know, we'll is caused states see
17:01
Speaker 1: this windfall of money. Are they going to behave responsibly
17:04
Speaker 1: with that money? Um? We saw this play out a
17:07
Speaker 1: little bit with the Carezack money that they got. UM.
17:10
Speaker 1: We covered some of the political bickering that happened last
17:14
Speaker 1: year with some of the care Zack funds because obviously
17:17
Speaker 1: with fifty states, UM, fifty legislatures, governors like, there's a
17:21
Speaker 1: lot of variants and how states will kind of speak
17:23
Speaker 1: to use that money. And I think that's also caught
17:26
Speaker 1: the attention of economists who are starting to maybe question
17:29
Speaker 1: a little bit is this money going to be used responsibly?
17:33
Speaker 1: And it's a it's a big question mark. And I
17:35
Speaker 1: think that's kind of where the debate stands right now.
17:38
Speaker 1: So it's very very interesting. I was kind of wondering, Um,
17:43
Speaker 1: if you are either at Duke or U n C.
17:47
Speaker 1: Do you hang out in Chapel Hill or do you
17:49
Speaker 1: you don't gonna Durham? Right? Does everybody hang out in
17:51
Speaker 1: Chapel Hill? So it's funny because when you're when you're
17:56
Speaker 1: in underground, all the kids go to Chapel Hill to
17:58
Speaker 1: hang out. But now that my friends and I are older.
18:01
Speaker 1: We really like Durham, So all right, I'll give you.
18:04
Speaker 1: I'll give it the real Amanda's Amanda's right. When I
18:07
Speaker 1: was a student at Duke, Amanda's tar heel and Paul
18:09
Speaker 1: is a Blue Devil. Yeah, you basically got through the
18:12
Speaker 1: Duke social scene in about fifteen minutes and then you
18:14
Speaker 1: went to to Carolina. But things have changed. Durham has
18:18
Speaker 1: become a very hot, trendy, chic market. Think you know,
18:22
Speaker 1: a smaller version of Austin, Texas if you will. Um
18:26
Speaker 1: lots of new restaurants and bars and hotels and things
18:30
Speaker 1: like that that I'm seeing a lot more Chapel Hill,
18:34
Speaker 1: Power Fernal. You're walking around Drham on our Friday night
18:37
Speaker 1: than we ever did before. So things are changing. So
18:40
Speaker 1: it's a hot area of the country, which is good
18:42
Speaker 1: for everybody down there. And what we're seeing these a
18:45
Speaker 1: lot of folks leave in New York that that's one
18:46
Speaker 1: of the markets people are going to. I have written
18:49
Speaker 1: a Ducatti Monster asked for us through both towns, and
18:52
Speaker 1: I thought it was pretty awesome. The reason I'm kind
18:55
Speaker 1: of wondering about this is all my college friends Amanda
18:58
Speaker 1: a couple of months ago and started asking me a
19:00
Speaker 1: ton of questions again about stocks, and I joke about
19:03
Speaker 1: the retail popularity of muni's. But is there any play
19:06
Speaker 1: across from the Reddit crowd, from the robin Hood crowd
19:09
Speaker 1: into your universe? Um, I would be um, who's always
19:17
Speaker 1: looking for interesting things. I would be very excited about that.
19:20
Speaker 1: But I haven't heard about that happening. But um, there's
19:23
Speaker 1: lots of like interesting credits in munies that I think
19:27
Speaker 1: would probably appeal to the millennial gen Zum investor base.
19:32
Speaker 1: But munis are more expensive to buy in, so it um.
19:36
Speaker 1: But I would be very curious if that happened. Um,
19:38
Speaker 1: that would be very exciting as a reporter. So al right,
19:41
Speaker 1: a manute, thanks so much for joining us. Unfortunately, I
19:43
Speaker 1: don't think you unc or Duke is going to the
19:45
Speaker 1: n c A tournament this year, so we're gonna have
19:46
Speaker 1: some extra free time on our hand. Amanda Albright, Bloomberg
19:50
Speaker 1: Municipal Bond Reporter. We appreciate that. And um, hey, the
19:54
Speaker 1: muni market, it's been so hot, Matt, I mean funds
19:58
Speaker 1: flowing into the muni market. Um. We hear from Joe
20:01
Speaker 1: Meisa every Friday, and that's one of the issues where
20:04
Speaker 1: we talk about and the funds going in there are great,
20:06
Speaker 1: particularly in a taxable municipal market, which was a market
20:09
Speaker 1: I never even knew existed up until you know, a
20:12
Speaker 1: year or two ago. But Joe and Eric Kazatsky Bloomberg Intelligence,
20:16
Speaker 1: who also covers municipals, they talk about that taxable municipal
20:19
Speaker 1: bond market being super hot, lots of demand. When I
20:25
Speaker 1: was a kid, you had to pay for stuff like
20:27
Speaker 1: music and movies and magazines. But um, for a while there,
20:33
Speaker 1: over the last couple of decades, that stuff all became free.
20:37
Speaker 1: Alex Webb says, you're gonna have to get ready to
20:40
Speaker 1: pay for it again because of Google and Facebook. The
20:43
Speaker 1: Bloomberg Opinion columnists joins us. Now, so Alex, um, what
20:48
Speaker 1: are we gonna have to start forking out cash now
20:51
Speaker 1: to read news by journalists show particularly hopefully by like
21:00
Speaker 1: you and me. Um. No, I think the key thing
21:03
Speaker 1: is there are really three phases to this. In the
21:05
Speaker 1: original sort of model, you know, pre Internet, the original
21:10
Speaker 1: but certainly the model pre Internet, most of the content
21:13
Speaker 1: that we consume was the very least subsidized by ads.
21:16
Speaker 1: So actually, if you look at the New York Times
21:18
Speaker 1: in circuit two, thousand and six, when it's as revenue
21:21
Speaker 1: peaked um it would make five dollars a year from
21:24
Speaker 1: a print subscriber paying for the physical copy of the newspaper,
21:28
Speaker 1: but it would make another thousand dollars a year per
21:31
Speaker 1: subscription from advertising. So ads subsidized all of our media consumptions.
21:35
Speaker 1: The same applies to television, the radio, and tending more. Besides,
21:39
Speaker 1: what's happened with the internet first wave of the Internet,
21:42
Speaker 1: all that stuff went online for three with the hope
21:45
Speaker 1: that they'll be able to sell ads on top of it.
21:47
Speaker 1: Never really worked out that way, and all of the
21:49
Speaker 1: ad revenue has now been sucked up. And I say
21:51
Speaker 1: all of it, but literally three quarters of the three
21:54
Speaker 1: hundred billion dollars that were spent on online ads last
21:56
Speaker 1: year went to Google and Facebook. And that means that
22:00
Speaker 1: the companies, the organizations that previously were the beneficiaries of
22:04
Speaker 1: advertising income have got to find other ways to pay
22:06
Speaker 1: for themselves, and frankfully, the most the easiest way of
22:09
Speaker 1: doing that is with paywalls and alex Yes it relates
22:14
Speaker 1: to the news business. The number of examples of successful
22:18
Speaker 1: paywalls is few and far between. You know, the New
22:21
Speaker 1: York Times okay, Law Street Journal, Okay, maybe the f
22:25
Speaker 1: T as well, but there's not a whole lot. What
22:28
Speaker 1: does that mean to the future of news? Do you
22:30
Speaker 1: think in an online world? So I think some things
22:35
Speaker 1: this isn't just about news. You know, we've seen it,
22:37
Speaker 1: We're now seeing it everywhere. And the reason I wrote
22:39
Speaker 1: this column now is because Swifter is introducing a paid tier.
22:44
Speaker 1: And UM, I think one of the reasons that there
22:46
Speaker 1: have been but not all paywalls have been successful is
22:50
Speaker 1: because not everyone has a paywall. So in order for
22:53
Speaker 1: the paywall models of work, you kind of need everyone
22:56
Speaker 1: to be doing it. UM. If there is sort of
22:58
Speaker 1: a chink in that armor where by um, you know,
23:01
Speaker 1: substantial publications else where are free, UM, web users are
23:06
Speaker 1: going to say, well, why should I pay for you know,
23:08
Speaker 1: company X, when I'll get company ye gratis And UM,
23:11
Speaker 1: I think now that we've reached this consensus that content
23:14
Speaker 1: is something that should be paidful because it's no longer
23:17
Speaker 1: able to be as supported. Mentalities are starting to change
23:21
Speaker 1: and people getting more comfortable with the idea that actually
23:24
Speaker 1: you have to pay for your video streaming, video on
23:26
Speaker 1: demand streaming service, your music streaming, your news magazines, whatever,
23:31
Speaker 1: it might historically have been. I gotta say, as somebody
23:34
Speaker 1: who you know, I grew up probably shelling out one
23:38
Speaker 1: or two or three hundred bucks a month for records
23:41
Speaker 1: and tapes, um, and and then c d is obviously
23:44
Speaker 1: later in life. But now I'm so stunned. Every time
23:47
Speaker 1: I look at my Apple Music, I pay eleven dollars
23:50
Speaker 1: a month for all of the records, tapes and c
23:53
Speaker 1: d s, which is pretty awesome. On the other hand,
23:56
Speaker 1: alex journalism has been hit hard by free news. Is
24:00
Speaker 1: um you've witnessed I'm sure swathes of layoffs. The New
24:05
Speaker 1: York Times is a shadow of its former self and
24:08
Speaker 1: but growing again. Though Yeah, well maybe this is a
24:10
Speaker 1: good thing. Maybe if people get used to the fact
24:12
Speaker 1: that they got to pay for news or just be
24:15
Speaker 1: sort of dumbed down by the facebooking of the world,
24:18
Speaker 1: they'll choose the former. Are You certainly are seeing the
24:22
Speaker 1: trend that there are some companies who have said, well,
24:25
Speaker 1: actually we're going to introduce a paywall simply because um
24:29
Speaker 1: don't necessarily need one. But there's a quality perception that
24:32
Speaker 1: if I'm paying for publication X by implication publication, why
24:37
Speaker 1: if it's free, it must be worse, and so there's
24:40
Speaker 1: an element of pride amidst all this. I think the
24:43
Speaker 1: New York Times, frankly now is reaching a level that
24:46
Speaker 1: is comparable to where it was fifteen years ago. It
24:49
Speaker 1: now has six million digital subscribers. It had it its
24:52
Speaker 1: peak over selling a million copies of the print newspaper
24:55
Speaker 1: a day. I think that might have had three or
24:57
Speaker 1: four raiders the readers for each copy, so to slight
25:00
Speaker 1: a different calculation. But I think that the key consideration
25:03
Speaker 1: now is that this is extending beyond just your classic media.
25:07
Speaker 1: As I said before, it's about the way that actually
25:11
Speaker 1: it used to be that much of the web was
25:13
Speaker 1: funded by advertising. If it wasn't literally an e commerce
25:16
Speaker 1: website or something where you're paying for product to be
25:18
Speaker 1: delivered to you. Um, stuff tended to be free because
25:21
Speaker 1: it was funded by ads. As more and more of
25:23
Speaker 1: those ads go to Google and Facebook, it means that
25:26
Speaker 1: there's more than just media organizations that are having to charge,
25:29
Speaker 1: and that is a big change, and I think one
25:31
Speaker 1: that people are solely having to adapt to. You know,
25:35
Speaker 1: a related story that just came out this morning courtesy
25:38
Speaker 1: of dal Jones reporting that Google announcing that it will
25:41
Speaker 1: stop selling ads based upon your specific web browsing and
25:46
Speaker 1: story as well, I should say, pardon stay as well. Yeah,
25:51
Speaker 1: good excellence. So I mean that that sounds big to me.
25:54
Speaker 1: Um Alex, what do what do you make of that?
25:56
Speaker 1: Because it seems like what one of the things that
25:58
Speaker 1: these digital players pitch to advertisers is, hey, we know
26:03
Speaker 1: where your audience is, we can track them. What do
26:06
Speaker 1: what do you make of this news? So it's it's positive,
26:10
Speaker 1: but there are heavy caveats here. The way that people
26:12
Speaker 1: used to track, or that Google and any other ad
26:14
Speaker 1: sex company used to target ads was to do with
26:18
Speaker 1: third party cookies. This gobits of information that websites would
26:22
Speaker 1: drop onto your computer so they could see what you've visited,
26:24
Speaker 1: what your browsing activity was. Now, for companies like Google,
26:29
Speaker 1: they actually sell most of their ads on their own website.
26:33
Speaker 1: So if you try to search into Google for brown
26:36
Speaker 1: t shirts, the results that it provides you, there will
26:39
Speaker 1: be ads at the top of that. That's one piece.
26:41
Speaker 1: Then there's also YouTube where it's you know, serves ads
26:44
Speaker 1: based on what you're looking at on a Google owned website.
26:48
Speaker 1: That is the majority of Google's advertising income. So when
26:51
Speaker 1: it says it's not going to track you across other websites. Yes,
26:54
Speaker 1: that might be true, but frankly, that isn't a terribly
26:56
Speaker 1: lucrative business for Google. It makes money by essentially tracking
27:00
Speaker 1: what you're doing on its own website, and that is
27:02
Speaker 1: not going to stop. We're going to see the stopping
27:04
Speaker 1: of tracking on third party website. Thank goodness, because as
27:08
Speaker 1: a consumer, I love those targeted ads. You know, I
27:10
Speaker 1: don't have to look all over the internet for my
27:13
Speaker 1: next grateful dead trucker's cap because Google knows I want
27:17
Speaker 1: it and it's already got like four ads displayed along
27:20
Speaker 1: the side of my search results. Yeah, it's interesting that
27:23
Speaker 1: you're actually in the minority there, Matt, because like it's
27:26
Speaker 1: Google and Facebook, and thickly Facebook will say this, people
27:29
Speaker 1: want to see targeted ads rather than see the not
27:31
Speaker 1: targeted dads. But actually people didn't get angry when they're
27:35
Speaker 1: watching television and in the ad break they would see
27:37
Speaker 1: ads that were imperson into them. You know it is
27:39
Speaker 1: this is the sort of fallacy that people prefer to
27:41
Speaker 1: see targeted dads. It's like if they know they're being
27:44
Speaker 1: except for me, I guess you're saying, but yeah, I
27:46
Speaker 1: think you're the exception, if I think if they people
27:49
Speaker 1: know they're being trapped and then they see an AD
27:51
Speaker 1: that isn't personally to them, they get angry because they
27:54
Speaker 1: sort of go, what does Google think I am in
27:57
Speaker 1: the world? Words ads are not being targeted. People didn't
28:00
Speaker 1: get creeped out or angry as the one relevant to
28:02
Speaker 1: It's true ever since I had a daughter in October
28:05
Speaker 1: and I've started getting like little princess ads exactly, and
28:09
Speaker 1: they know where you live now. Alex Webb, Bloomberg Opinion,
28:12
Speaker 1: Technology and Media column were columnists for Bloomberg Opinion. We
28:17
Speaker 1: appreciate that. Again, a lot of changes in the digital
28:19
Speaker 1: advertising space, and what we saw during the pandemic, Matt
28:22
Speaker 1: was just an acceleration of the ad dollars away from
28:25
Speaker 1: traditional media to these online platforms like Facebook. Like we'll
28:30
Speaker 1: have all that coming up. Thanks for listening to the
28:31
Speaker 1: Bloomberg Markets podcast. You can subscribe and listen to interviews
28:35
Speaker 1: with Apple Podcasts or whatever podcast platform you prefer. I'm
28:40
Speaker 1: Matt Miller. I'm on Twitter at Matt Miller three. Put
28:44
Speaker 1: on fall Sweeney I'm on Twitter at pt Sweeney. Before
28:47
Speaker 1: the podcast, you can always catch us worldwide at Bloomberg Radio,