Capitol Hill’s TikTok Challenge

Plus: Netflix’s new ad tier has Hollywood agents salivating ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

January 3, 2023

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Good morning, Happy New Year, and welcome back to The Daily Upside!

There are a million reasons for parents to leave Tokyo in 2023.

As part of its ongoing plan to repopulate areas outside the capital, the Japanese government is more than tripling the existing incentive, from ¥300,000 to ¥1 million per child, for parents to move out of the overcrowded capital. The goal is to push families into the villages and municipalities that have been economically decimated by urbanization over the last decade, a trend even Covid could not reverse. Let’s see if country living really pays off.

Morning Brief

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The clock is ticking for social media.

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Ads on Netflix means agents are out for blood.

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Beer just got a whole lot cheaper in Dubai.

Tech

Congress Wants More Social Media Regulation in 2023

TikTok was just the beginning.

Last month, the US Congress banned the Chinese-owned platform from all government devices, and now members are saying they want to install still more social media regulations for the new year. So Instagram, Twitter, and Facebook all better watch their backs in 2023 because Congress might be creeping.

The Ban-ish Hammer

The TikTok ban was cited as a national security measure rather than a way to keep federal staffers from wasting their time finding out if it was a “bones or no bones” day. Chinese companies are required by law to hand over user data to their government if requested, but while TikTok and its parent company ByteDance have repeatedly said no US user data is accessed by China, leaked audio from company meetings says otherwise.

Now Congress wants to go even further. Voicing concern for America’s mental state, Rep. Mike Gallagher of Wisconsin called TikTok “digital fentanyl” and said it should be banned throughout the entire country. “It’s highly addictive and destructive,” he said on NBC’s Meet the Press. Taking on Big Tech won’t be easy, though. As we all know, the only thing more powerful than Capitol Hill lawmakers are Silicon Valley lobbyists:

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In 2020, the Trump administration tried banning TikTok nationwide and removing it from Apple and Google app stores, but federal judges halted the action, saying Trump would be overstepping his emergency economic powers.

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Last year, Congress failed to pass multiple bills that would regulate big tech and social media such as the Kids Online Safety Act and an antitrust measure that would have prohibited major companies like Amazon and Google from promoting their products unfairly over smaller businesses that rely on their services.

Sen. Amy Klobuchar of Minnesota said even when a bill has strong bi-partisan support, the tech lobby is so powerful that promising legislation can disintegrate “within 24 hours.”

Way Behind the 8 Ball: The US is a relative piker when it comes to regulating tech. The EU became big tech’s biggest adversary in 2022 when it passed the Digital Markets Act, which seeks to reign in the market dominance of gatekeepers like Microsoft, Meta, and Apple and level the playing field for smaller, third-party tech companies. In countries like France, Germany, and Singapore, social media companies have only 24 hours to remove hateful content, extremist views, and misinformation from their sites or risk being fined millions of dollars. Frances Haugen, the whistleblower who claimed Facebook’s lax security allows for the spread of misinformation and harms the mental state of young users, said the US feels like “we’re back in 1965, we don’t have seatbelt laws yet.” Sounds like the makings of a TikTok challenge.

–Griffin Kelly

Media

Major Agency Wants Profit Deals From Netflix Advertising

(Photo Credit: Stock Catalog/Flickr)

Netflix’s turn to advertising was supposed to ensure a safer financial future, but the streaming giant evidently forgot to factor in the industry’s apex predators: agents.

Jeremy Zimmer, CEO of major Hollywood agency United Talent Agency which reps huge celebrities including Kevin Hart and Charlize Theron, let drop in an interview to the Financial Times on Monday that Netflix’s new ad-supported business should mean his clients get bigger chunks of a show’s profits.

Call My Agent!

Netflix’s fortunes have faded since the heady days of 2013, when it hit the streaming world with a bang in the form of House of Cards and Orange Is The New Black. By adopting the uncommon strategy of offering creatives upfront payments rather than strike deals based on the success of their shows, Netflix attracted writers and showrunners who were eager to see their work realized, even if that meant missing out on earnings if their show turned out to be a hit.

In November the company turned to a business strategy it had long eschewed: advertising. Netflix introduced a new ad-supported subscription option for $6.99 per month, over 50% cheaper than its previous $15.50 plan. The idea is to boost subscriber numbers, which fell for the first time in April 2022, while keeping revenue ticking higher. For agencies, however, it’s a chance to re-negotiate their relationship with streamers:

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Zimmer told The FT that by adding an ad-supported tier Netflix had “changed all the rules,” adding: “There’s a different revenue stream coming in that they had said wasn’t going to be there.” He argued that hit shows would attract more advertisers, which should translate to bigger payouts for UTA’s clients.

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The addition of advertising-supported tiers to Netflix and other streamers (e.g. Disney+) means their data will become more public via Nielsen Ratings, giving extra leverage to agents hunting down better deals for their clients.

The British Aren’t Coming: Global macroeconomics certainly aren’t helping Netflix’s quest to add subscribers. British research from analyst firm Ampere Analysis estimates Netflix lost half a million subscribers in the UK alone in 2022, and that the cost of living crisis there will lead to a further loss of 200,000 this year. Recapturing those subscribers would take a miracle — or possibly another Harry and Meghan documentary…

–Isobel Asher Hamilton

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Alcohol

Dubai Drops 30% Tax on Alcohol

Yes, Dubai has the world’s tallest building and biggest mall, but just try getting a drink in the Arab desert.

It’ll be easier now. Dubai has made a major change to its alcohol policy with the UAE’s largest city saying goodbai to its 30% tax on booze and will no longer charge visitors for permits to buy drinks for at least a year. It’s the latest step by a Middle Eastern country to become more attractive to tourists, workers, and businesses on a global scale.

Breaking from Tradition

Middle Eastern countries, and especially the Gulf States, are recognizing they need to at least soften their traditional legal and economic values if they want to be competitive worldwide. Dubai’s population is 90% foreigners and expats, so the UAE has had to adopt progressive policies like letting unmarried couples live together, instilling a Monday-Friday work week, and allowing immigrants to work and live in the country without needing a local sponsor.

Until now, drinking in Dubai came at a hefty price. A pint of beer could set you back about $15, bottles of wine started at $100, and if you wanted to buy alcohol at a store, you’d need to be approved and then pay roughly $75 a year for a permit. Removing the fees gives Dubai a little bit more breathing room from countries that still ban or heavily tax alcohol.

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Dubai doesn’t have an income tax, so the alcohol levy helped generate revenue for the city. However, experts say there’s no need to worry as it can be offset by a 9% corporate tax planned for June.

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Dubai’s tourism industry has been designed around luxury stays and high-paying guests, but with the removal of the alcohol tax, it can now appeal to a more modest demographic.

As soon as the change was announced Sunday, local distributors rejoiced by slashing prices. “Buying your favorite drinks is now easier and cheaper than ever,” alcohol retailer Maritime and Mercantile International wrote on its Instagram.

Qatar Kerfuffle: The desire to change and introduce more Western culture has come with speed bumps for some Middle Eastern nations. For 12 years, the small but fabulously wealthy country of Qatar had been building arenas, hotels, and new infrastructure to host the 2022 FIFA World Cup. But just two days before kickoff, its conservative government banned the sale of alcohol in and around soccer stadiums, angering fans and disrupting a $75 million deal between FIFA and Budweiser.

–Griffin Kelly

Extra Upside

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Your newest employee is not real: Baidu sells “virtual people” for $14K in China.

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Elon Musk’s wild ride continues: Tesla still sold a record 1.3 million cars in 2022, missing analyst estimates.

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