Why Netflix is Reducing Parental Leave
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Hello! Welcome to Sleep Money, your guide to the business and finance news of the week. I'm Felix Amon of Axios with Emily Peck of Axios. Hello, hello. With Elizabeth Spires. You've still got the New York Times thing going. Yep. It's awesome. We love it. We have a cool show this week. We are going to talk about debanking. If you have had your bank account frozen and been told...

that you have to move somewhere else and they're not going to tell you why. You will know exactly what I'm talking about. We're going to talk about whether this has been happening with uncommon frequency to people in the crypto world and whether that's all some kind of Elizabeth Warren conspiracy. We are going to talk about Netflix, which has become a big normal company rather than a fast-growing tech company. We are going to talk about Spotify, which has become a big normal company rather than a fast-growing tech company.

We have a Slate Plus segment about crumble cookies and waiting online and doing it for the gram. It's all coming up on Slate Money.

So let's start with a big conspiracy theory, which is also kind of real, but not really, which is this whole thing about debanking.

Friend of the pod, Ron Lieber, has had a bunch of stuff about how banks will just debank you. You'll be poodling along, having a perfectly normal life, and then one day your bank will say, all of your funds are frozen and you need to take all of your money out right now and we're not going to bank you anymore. And you'll say, what? And they'll say, sorry. And you'll say, why? And they'll say, sorry. And it's very annoying.

And this has been happening for decades for various reasons that we can go into. And in recent years, it has been happening to a fair number of people in the crypto industry.

And the people in the crypto industry feel that they're very special and they're not just people like the kind of normal folks that Ron Lieber talks about. And so instead of saying, what is going on? I hate my bank. They say, this is all of a conspiracy cooked up by Elizabeth Warren because she hates crypto. Are they wrong?

I don't think... But wait, I don't think quite that they're wrong. There's a good story in the New York Times where the reporter talked to a few crypto company CEOs who were debanked. And the reason these crypto companies appear to be getting debanked is because...

banking regulators had concerns, understandable and reasonable and rational concerns about crypto companies. So they were saying like, banks, hey, watch your interactions with these crypto companies and...

This is unclear to me, and maybe you can explain, Felix, but there is some kind of 15% rule where banks could only have, yeah, 15% exposure. Regulators, after the crypto winter and the implosion of Silvergate and the implosion of FTX and all of that, the bank regulators basically said, we don't want any bank to have more than 15% exposure to crypto.

So the word conspiracy is so weighted and loaded, but clearly banking regulators didn't want banks to overexpose themselves to crypto. That's not a function, I think, of banking regulators hating the crypto industry or anything like that. Oh, it is. Well, it's a function of the way that they perceive risk. They do the same thing with cannabis companies. I think there's a lot of confusion here.

First of all, most importantly, banking regulators are not politicians. Banking regulators do not take orders from politicians. What the banking regulators did with the crypto industry made perfect sense from a banking regulation point of view, regardless of what the politicians may or may not have been thinking. One of the craziest parts of this conspiracy theory is that the

Crypto conspiracy theorists are blaming the CFPB because the CFPB was set up by Elizabeth Warren and they reckon that Elizabeth Warren has a lot of control over the CFPB. Which she may or may not, we can argue that. But the fact is that the CFPB is the one regulator that is fighting against debanking and is going up to the banks and saying, like, you shouldn't be doing this.

even as the other bank regulators like the OCC and the FDIC and the Fed and whatnot are basically saying, we don't want you to be super concentrated in crypto. Now, the reason they don't want you to be super concentrated in crypto is not the same as the reason they don't want you to be in cannabis. The reason they don't want you to be in cannabis is because cannabis is illegal. And they're like, don't touch things that are illegal. The reason they don't want you to be in crypto is because

Crypto inherently is not illegal, but it does have a strong correlation with various things that are illegal, like compliance failures on Know Your Customer, compliance failures on anti-money laundering, commingling of funds, fraud, all of this kind of thing. If you look at the long history of crypto companies, an astonishingly large number of them, including pretty much all of the big ones, have been

you know, charged or convicted with criminal offenses. And so the banks and the bank regulators are not assuming that all crypto companies are legal, but they're like, you need to be more careful. You need to really dot your I's and cross your T's when it comes to the KYC and the AML and all of that kind of stuff. Know your customer and... Anti-money laundering. Anti-money laundering. And the fact is that most banks aren't set up to do that.

There was one bank that really advertised itself as having what's known as the EDD, the Enhanced Due Diligence, needed to onboard crypto companies. That was Silvergate. And Silvergate turned out not to have Enhanced Due Diligence at all. It basically had no due diligence. It would bank anyone. It banked Binance. And then that imploded in the crypto winter and liquidated. So that's number one. And then number two is the bank regulators in general want –

banks to be diversified in their exposures. They don't like it when a bank does nothing but bank oil companies, because then if the oil industry goes out, the bank implodes. And so they want some kind of diversification there. And, you know, Silvergate was basically 100% exposed to crypto. And that was one of the reasons why it imploded. If Silvergate had been 15% exposed to crypto, it would probably have lived.

I have a theory about the conspiracy theory, and it is this. It's that the people complaining about the CFPB and suggesting that, by the way, the banks are too woke and that's why they don't like crypto, is really just a function of people like Marc Andreessen not understanding how the government works and viewing it as this sort of monolithic entity that just exists to stifle innovation.

Correct. And they conflate innovation and crypto. And they, importantly, really, really don't understand how banking and banking regulation works. Banking and banking regulation is a very recondite area of the world. And if you don't live in it and work in it, you have no particular reason to understand it. But

you know, there's a bunch of sort of Dunning-Kruger going on here. This effect where people, you know, the less you know, the more you think you know. You know, they just kind of assume

That obviously politicians control the bank regulators and the bank regulators are, you know, doing the bidding of politicians. Whereas if you talk to any of the bank regulators, like that's not how it works at all. A few things are interesting. One is that there's a real thing that was happening that some crypto companies were getting debanked. 100%. And debunked.

Now, the conspiracy theories have sort of confused the whole situation, but there is a real situation happening. And that just makes it more... Yeah, the conspiracy theories is that there is a top-down, politically motivated decision to debank crypto companies. Whereas, in fact, it was much more a bottom-up, if you just take all of the bank regulation rules in,

as set and being the same that they have been for decades, then this is a natural outgrowth of that. Right. I think also some of the crypto companies just don't understand that they are subject to different regulations than, you know, a typical tech startup. And they seem to think that they have, you know, way more scrutiny than other types of companies. Well, yes, but they think it's because for political reasons, they think it's just, you know, people or Democrats hate crypto.

So, yeah, whereas in fact what it is, and this is also, you know, to broaden it out to like what Ron Lieber has been writing about for years, the reason that people get debanked is not because what they are doing is on its face illegal. It's because what they are doing is on its face something that requires a little bit more effort on the part of the bank in terms of the KYC stuff, the New York customer stuff, right? Yeah.

And banks spend a lot of money on KYC and it's expensive for them. And if you're a relatively small customer, then it is easier for them to just debank you than it is to go spend a whole bunch of money

delving into you and finding out whether you're legitimate or not. And so what they do is when someone raises like some yellow flags, they just like it's easier for us to just debank that person than it is for us to investigate every single yellow flag individually. That would be cost prohibitive. So they can't do that, but they don't want to be accused of missing, you know, some criminal activity. So they just debank all of the yellow flags.

This is something that the CFPB really hates. And this is why the CFPB is on a mission to try and reduce debanking. This is also something which Brian Brooks, who used to run the OCC in the Trump years, really hates. Also put forward a rule saying like, you can't do this. You can't just like debank people because they raise the yellow flag. You have to actually look into that individual case and make those decisions on a case-by-case basis. And...

Weirdly, you know who opposed that Brian Brooks rule was Maxine Waters, was like the Democrats in Congress, because she quite rightly said this was a political attempt to prevent banks from refusing to deal with firearms manufacturers.

And so they, that was, this is where the anti woke thing comes in is that the, you know, a bunch of banks, you know, got woke or for whatever reason decided they didn't want to deal with firearms manufacturers. And they started debanking firearms manufacturers for like moral reasons, which is something they are allowed to do. But Brian Brooks is like, no, you can't do that unless there's evidence they're doing something illegal. And so, yeah, he promulgated this rule. It never went into effect.

And now I suspect that under the Trump administration, a rule very similar to that is going to wind up coming into effect. I think that makes a lot of sense. Getting debanked is really destabilizing. I mean, you need, even if you're a crypto company who deals in a product that's supposed to be outside the banking system,

You still need to be banked. I did a What Next TBD episode recently, a year ago, in the past year probably. Sometime this century. Sometime where we talk to sex workers who get debanked like all the time. It's like really, really hard for them, even if they're doing just legal sex work, to have a bank account. And it does seem like there is a tie between sort of morality and banking that probably, I don't know if I...

I'm saying I agree with like a Trumpy regulation, but probably banks shouldn't be making moral judgments. Elizabeth Warren's CFPB basically agrees with you on this. Yeah. Banks shouldn't be making moral judgments about their customers. I mean, I understand you don't want your banks to be like overextended into some industry that has a history of not knowing their customers and will implode because you're like...

only banking wine companies or only banking crypto companies. That makes sense. But you don't want to be making judgments like I don't want to bank this lady because she is on OnlyFans or something. The one thing that we should mention is there's two different types of debanking. There's the kind of debanking that plagues the cannabis industry and the sex work industry, which is that it's really hard to open a bank account at all.

And then there's the kind of debanking that plagues crypto and various other people that someone like Ron writes about, which is that you have a relationship with your bank. For whatever reason, the flag goes up. They debank you. You're forced to move your accounts to some other bank. And it's relatively trivially easy to open another bank. Anyone who's ever changed banks

knows that it's a pain in the ass to move banks. Like, it is not fun. You have to change a million different forms. And, you know, it's not something anyone would voluntarily go through unless they have a good reason to do it, which is why there's this meme going around that people, you know, are more likely to get divorced than they are to change their banks. But it's not like there's a grand industry-wide conspiracy to make sure that these people can't get bank accounts.

in, say, crypto. Whereas there is actually that broad industry-wide conspiracy in the case of illegal activity like cannabis or, you know, legally gray area activity like OnlyFans.

Also, you know, the cases that Ron writes about are often so extreme because particularly when individuals get debanked because they have a hard time figuring out why. In a lot of cases, they have a hard time accessing funds. In a lot of cases, the bank is legally prohibited from telling them why. This is one of the big problems that in –

Probably more than half of debanking cases. It's because of various SAR reports, which we don't need to go into and stuff. But basically, if the bank makes a decision to debank you, it is a criminal offense for them to tell you why. Why? Treasury rules. This is why people come up with conspiracy theories. Exactly.

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I'm still in the post-Thanksgiving glow. And I have a short list of things I'm grateful for not appreciating very much. One of them is whiskey. One of them is champagne. One of them is burgundy. And these are things where I totally trust...

people who tell me that the very expensive ones are amazing and that they are worth all of the money that they cost but I just don't personally understand it or get it and I have no particular desire to consume the very expensive ones and that's one way that I save money

Yeah, it's interesting. You can enjoy life's pleasures if life's pleasures for you are relatively simple and inexpensive, right? Like I, for sports, I choose running, which is a relatively cheap sports hobby as opposed to say skiing or tennis. Or for dining out, I'm not going to, you know, four-star Michelin restaurants that break the bank. Maybe I'm going out for...

you know, the burger or something more modest. So in that way, you can live a lifestyle that feels luxurious, but is affordable. I just think that I actively dislike going to most fine dining restaurants where you get 15 tiny little courses and everything has to get explained to you. And they are insanely expensive. And I do think that on some level, some people feel like if it's going to cost that much, then it must be great.

I, you know, there's a lot of restaurants that are a lot cheaper than that, that I actually prefer going to. And I just think that it's worth cultivating those preferences and thinking to yourself, hey, this is a great way of having more fun with less money. Shall we talk about Netflix?

Okay. Emily. Yes? Is Netflix becoming a worse place to work than it used to be? Maybe. I don't know. The Wall Street Journal this week had a story from reporter Jessica Tunkel about how Netflix's...

free culture is changing. So Netflix used to be all about like trust your employees. Freedom and responsibility was like their big tagline. And they had all these great policies. They were one of the first to do unlimited vacation. And then famously, and I remember writing about this like a decade ago, they had 12 month unlimited parental leave. And everyone was like very excited about that. Well, limited, but limited to 12 months. Limited to 12 months. But when they unveiled it, they called it unlimited, which was

But anyway, it was really just 12 months. But now, apparently, like the company and managers inside the company, according to this journal report, are actively telling people do not take 12 months, six months. Maximum of six months is all you're going to want to take. There was surprise within the company that when they unveiled the 12-month lead that people were taking it, which I think is hilarious. Well, that was the whole point of the unlimited vacation too, right? Is that there's been...

many, many empirical studies showing that when you give people unlimited vacation, the amount of vacation they take goes down rather than up. And they're like, well, maybe if we do that for parental leave, that'll go down rather than up as well. And then the new parents were like, actually, no, I don't want to go back to work. And I guess a lot of this came to a bit of a head in the COVID period because...

or not, a lot of people on parental leave wound up getting laid off. Like maybe they came back and the next day they were laid off or they were laid off during leave. And this happened throughout the tech industry. But I think it got people even more anxious inside of Netflix. And at the same time, other... They were a bit like crypto execs being debanked. They're like, is it because...

Because I was on parental leave. Yes, exactly. Except they may be right. Yeah. Yeah, exactly. Just like the crypto execs. And so at the same time, Netflix, you know, it boomed during COVID and then it kind of, subscriptions fell off and revenue fell off in the period after. So it was really like cost cutting, tightening its belt, all of this. And it's like more like freewheeling, freedom and responsibility vibes are kind of going on.

It's a different place. But like it was so generous to begin with. To me, I'm reading this and I'm like, it's still fine. Like in the past, employees could order unlimited amounts of Netflix swag. And now they're upset because there's like a $300 limit per year. And I'm just like, that sounds amazing. Or like one of the things about corporate freedom and responsibility was that the company would send an email explaining why someone had been fired, which is...

Which is also, by the way, incredibly Dutch. Like all Dutch companies do this. That is wild behavior and so un-American. Like we keep it all hushed up and no one says anything. And you're like, whatever happened to Bob? And everyone's like, huh, that's weird. We send Bob an email that just says, we've decided to eliminate your position after 24 years working here. But no one else knows. You've been de-jobbed. Yeah. So now they're not doing that anymore. And I'm kind of like, go.

Great. Don't do that anymore. Like some of this was not, to me, the best practices for a strong corporate culture. The number that really jumped out at me from this article was 14,000.

which is the number of employees that Netflix now has. And if you read the various different books about the early days of Netflix, there's a lot of talk about, you know, the obsession with hiring only the most high-end, most excellent, most incredible, ultra-high performers and cultures of excellence, and we will give you enormous amounts of responsibility and freedom, and then you will thrive and all of this kind of stuff. And in general...

That kind of workplace just doesn't scale beyond a certain point. And to just take it to its logical conclusion, you know, if you are the post office or McDonald's or, you know, a place like that, then...

What you have to do is set up a system, basically, where you can plug almost anyone into the system and they will be able to do a good job and contribute and earn their wages and all the rest of it. It's not super reliant on hiring only the creme de la creme. And with 14 people, you can hire creme de la creme. With 14...

14 million, you can't. With 14,000, you're basically closer to 14 million than you are to 14. And you have to start putting structures in place which don't assume that every single person in the company is exceptional because that's impossible with 14,000 employees. Well, also some of these policies, like unlimited vacation, for example, I don't think people really want unlimited vacation. What they want is more flexibility. And so there was another study, a totally different story that came out

yesterday about a study demonstrating that return-to-work mandates have basically bled companies of their top talent, the creme de la creme kind of people, because they just have other options and they like the flexibility that work-from-home or hybrid situations give them. I was wondering about this because that was one of the arguments that

in the piece and you hear all the time, you know, if we don't do this great stuff, Netflix needs to do this stuff to attract the best people to Netflix. I think that was definitely true when Netflix was a little startup or like when its future was a little unclear. But now it's a corporate transformation

giant, a really well-known brand. People want to work there and you don't have to do as much to attract that talent. So one of the interesting things, another interesting data point in the story is that apparently when they're hiring people now, they are paying between 50 and 95 percent of

prevailing wages when famously in the past they would pay like 150% or 200% of prevailing wages and they would massively overpay people you know and that was part of the deal we will pay you way more than you can earn anywhere else and in return you work really hard and you have to be exceptional and yada yada like it is good that they as they grow they're becoming a little bit more

normal and we're going to talk about Spotify in the next segment, but like one of the big things that changed over the past few years at Netflix, probably the biggest thing that changed.

is that they pivoted from a culture of growth to a culture of profitability. And so when you're concentrating on profitability, you start caring about how much do these people cost, how much do these people spend, and all the rest of it. And the cost side of the equation starts becoming important. For the first I don't know how many decades of Netflix, they didn't worry so much about the cost.

the costs. And I remember, you know, sitting in this very studio with Anna Shemansky having arguments about like, you know, their costs are out of control. They're never going to be able to be profitable. Well, eventually it turns out they were able to get their costs under control, but that involves changing the culture. Yeah. They did that very Amazon thing of spending, spending, spending to corner the market. And now they've cornered the market. So now they're raising prices and they're not as cool anymore. But I wonder if

if that switch from hiring exceptional people, prioritizing growth to, you know, just profits and

Girl, profits are so boring. So basic. The result for consumers, I feel like, is just not as good. You know? Like, for a while when it was trying to get its legitimacy as, like, we make movies, we make Oscar-worthy movies, it was putting out, like, really highbrow stuff. And now it just, like, churns out, like, I don't know how many holiday movies it has now, but it has, like, Hot Frosty. You know about Hot Frosty, guys? I do not know about Hot Frosty. You don't know about...

Okay, well, I haven't seen it because I can't get anyone to watch it with me and I haven't had time yet. But it's a small town and there's a widow, which is like apparently the plot of most holiday movies. And she is sad and someone in the town makes a snowman, but he's like a very like built and chiseled snowman.

And she's feeling sad. She like puts a scarf on the snowman one day. And the snowman comes to life. Comes to life. And he's totally ripped. Totally ripped. Super hot. And anyways, this is not going to win an Oscar for Netflix. You know what I mean? And maybe it is good for customers to have more movies like that. Well, Netflix famously did that, you know, Adam Sandler deal yesterday.

years ago when they paid him like half a billion dollars to make a million movies but they used to do I'm just saying they used to spend a lot on the highbrow stuff and now I know they're spending more on like Love is Blind and reality shows I'm in the middle of season two of The Diplomat and I can tell you that shit is expensive yeah

And it's relatively highbrow. But this is also, this is, you know, the whole streaming industry because the margins are falling. So the amount of original content they're doing is lower and lower. And Netflix now, a lot of what they're doing is just licensing entertainment from foreign markets. Hmm.

and repurposing them because it's much cheaper to do that than to create original stuff in-house. Yeah, so I feel like the innovation and the doing interesting creative things like House of Cards by David Fincher kind of things that is how they launch their whole original content strategy is kind of behind us. I think they're still doing probably as much, if not more of that than basically anyone else. That's fair. The whole TV industry...

is in a little bit of a sort of slumpy right now. But yeah, I do think that the unsustainable things stopped because that's what happens to unsustainable things. It's called Herb Stein's law. Anyone, anyone. No, that's his son. I know. All right.

You should explain. No, let's not. Okay. Look it up or email Felix if you need an explanation. We'll leave that as an Easter egg for the listeners. Yeah, but it's a good, vaguely healthy, large company now. And we're going to talk about Spotify in the next segment, which is another good, vaguely large company. And that pivot...

from like high growth tech darling to mature company that is deeply entrenched, has a lot of brand loyalty people don't want to give up on and is also profitable is a surprisingly hard pivot to make. And if the worst thing that happens is that people end up with six months of parental leave, that's okay. And what about you can only buy $300 worth of company stuff every year? I mean, how people get by? Yeah.

Are they going to be okay? I have like $4,000 worth of Slate stuff and I couldn't work here without it. I think I have a Slate tote. I don't have any Slate items. Aren't the overlords listening to this podcast? Overlords, we want more swag and we want an invite to the holiday party. Was there a holiday party we didn't get invited to? We're aggrieved. Again. Yeah. Is this all about Slate's pivot to profitability? Yeah, I think it is. ♪

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Subject to credit approval. Apple Card issued by Goldman Sachs Bank USA, Salt Lake City Branch. Terms and more at applecard.com. Talking of pivots, let's pivot to Spotify, which is the audio version of...

And the news there is that it is now a $100 billion company. Its market cap is there or thereabouts. You know, stonks go up and down. What does that put it in league with? To put it in the important context, there are three major record labels. Warner, Universal, and Sony. And they are almost... Sony's not...

It doesn't have an independent valuation because it's part of Sony Corporation. But probably if you added up the value of the three of them, it would be less than all three combined. The Spotify is somehow worth more than the record labels, which are basically 100% of its business. And that is kind of wild. Yeah, I think some of it was just that they were expecting that live shows would just die off with the pandemic. And that didn't really happen. But as a result, subscriptions went up.

I don't think I know a single person who doesn't have a Spotify subscription. It's become social. It's become the way that people share music. And so if you subscribe to any of the...

many streaming services that aren't Spotify, then you're left out of that sharing culture. And given that they're all pretty much interchangeable and they all pretty much cost the same, like there's no reason not to switch to Spotify. I mean, again, it's a bit like changing a bank account. Switching over can be a pain in the ass. But once you switched over, then you're speaking the same language as everyone else. It's like social networks. You want to be where the people are. You don't want to be where the people aren't.

The best example of the social aspect of Spotify is, of course, Spotify Wrapped. Which people really hate this year. And people hate it so much this year. And I think it relates back to our Netflix conversation, which is Spotify has gotten bigger. They had layoffs. They're now profitable and-

A big company, and they didn't put as much spice or, you know, innovation into Wrapped this year. And people are calling them out for it, but it's not like people are leaving Spotify over it. Yeah, exactly. Like, Spotify Wrapped was this way to try and keep Spotify, you know, mindshare up, especially at the end of the year, and it worked. And this year, they decided, because everyone needs to be AI, they decided to do a bunch of AI bullshit in there. And it turns out that was a bad idea. And next year, it'll probably be fine again.

Well, also the fun of rap in theory is that it's sort of like taking a BuzzFeed quiz that's like, which type of cheese are you? It'll tell you something about yourself based on your listening habits.

But this year, there was a lot of, this is how much time you spent on Spotify. And sometimes you're like, oh, that's a lot of time. Maybe I'd rather not. Yeah, it wasn't like you wanted to share that information with other people. Like, oh, I spent tens of thousands of minutes on this site listening to Slate Podcast. I listened to this one song over and over because I have, you know, ADHD and needed to hear it for hours.

The one thing I did learn from Spotify Rapped this year is that Emily and I have very similar taste in girly pop. Oh, yeah. My top songs were like total girly pop. It was definitely Olivia Rodrigo on the list, which was on my list, too. Yeah, yeah. Olivia Rodrigo, Chapel Roan. I'm very hip, Britney. Yeah.

Very hip. She was just a Britney. Very early off tip. And my number one song was She-Wolf by Shakira. Okay. And now, since you have the list up on your laptop, you can tell them what mine are. I have no shame about this. You guys have to write in and tell us if you're surprised. But Felix's top song was Houdini by Dua Lipa. Love that song. He loves it, apparently. Great pop song. And then...

There's Selena Gomez, Annette Three, Bad Liar, Olivia Rodrigo, Good For You. What is this one? Massive Attack.

Oh, Unfinished Sympathy by Massive Attack, which is, that's my Gen X showing. Incredible. I thought it would be all like classical music or like really highbrow, you know? Things that pair with really fine wine and good art. Wine stuff. Yeah, good art music. This is shocking. No, I just love rocking out to Dua Lipa, man. Always.

My rap indicated that I'm just a bearded Brooklyn dad. It's my top three artists were Jason Isbell, Warren Drugs, and The Decembrists. The Decembrists! Oh my god, that's a name I haven't heard in a decade. My top artist was very like Gen X identifiable as Soundgarden.

Oh, that's pretty good. From the 90s. So there you go. But yeah, so back to the actual money aspect of this. You're absolutely right that Spotify is profitable now. And, you know, there was a time when it was in that super hyper growth mode. And it was, I mean, famously, it spent a gazillion dollars on buying Megaphone from Slate, which is why we all still have jobs. And its idea was...

that the record labels would extract rents basically equal to the revenue associated with music streaming and that they would need to make all of their profits somewhere else. It was like the gas station model that people come to the gas station to buy gas, but like you sell it at cost and then you make all your money on the convenience store.

And that was kind of the way that Spotify was thinking, that people come to Spotify for the music, but you sell that at cost and you give all of those revenues back to the record labels. And then you make all of your money on podcasts and audio books and stuff like that. Turns out that in fact, Spotify has the ability to charge more for music than it pays the record labels.

The record labels now need Spotify because Spotify is the incredible growth engine for them. Spotify is what is making the record labels profitable for the first time in a while. And they are seeing this and they want to see that growth. The record labels actually love the idea that Spotify is this big universal utility that everyone wants to join and everyone wants to subscribe to. And Spotify growth for them

especially in paid subscribers, is much more valuable than extracting every last marginal dollar from Spotify that it gets. And so that's how Spotify winds up being worth more than any of the record labels. I think it's also almost entirely replaced terrestrial radio for music discovery, which

Which normally the labels pay for. And of course the record labels need Discovery more than they need anything else. Is part of it that the record labels have capitulated to reality? Like, you know, remember when, I'm old, remember when Napster came out and it was like, oh, like the music industry is going to die. Like,

this service has debuted. You can find every song that's ever been released here on Napster for free. And like the music industry kind of freaked out. And the question was like, what will the future be? Like, will the music industry shut down a service like Napster? Which they did. They did. But then, I mean, Spotify is basically the same thing. I mean, on steroids. But it's not free. But it's not free. And the point is that while there were plenty of

of music lovers

who spent hundreds or even thousands of dollars a year on CDs. There were also a vast mass of the population who would listen to the radio and would basically pay zero dollars a year on CDs. And so now if you can get like a chunk of that vast mass of people and get them to start paying you $15 a month, that adds up to more than on average than people used to pay on CDs. Right. Oh, it's interesting.

It's scale. Everyone likes to say scale. So Spotify now has a quarter of a billion paid subscribers, which is wild. And that is something. There were never a quarter of a billion people spending that much money per year on CDs. Right. They found the people. They found a new customer base, a new audience. Wow, that's really cool.

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Shall we have a numbers round? Emily, what's your number? I'm so excited about my number. Oh, I like it when Emily is excited about her number. This number comes courtesy of Slate Money listener Curtis Lee Gabriel. Thank you very much, Curtis. That was your ad read voice. It's an ad for Curtis. Mm.

My number is two. That is the number of vehicles available in the U.S. that have adapted driving beam headlights. This is the cool European-approved and Japan-approved and everywhere else in the world-approved technology for headlights that make them less bad. But this was the technology that the big article we talked about last week said was not allowed in the United States. Well, I have updates. I've done some reporting. Okay.

OK, this technology wasn't allowed in the United States until 2022 and was passed in the Inflation Reduction Act, I believe. It was passed and approved and given the green light in one of the Biden signature bills. So now it's OK to have it in the U.S., but the way that it's allowed to be is different from how it's allowed in Canada or Europe. So it's taking like.

Of course the Americans need their own slightly bespoke version of the rule, so you can't just import the European cars. It's 3% shittier, and that's okay. I think that's correct. So, so far, the number two, there are only two vehicles, the Rivian R1S and the Rivian R1T. Curtis sent me this information. I even confirmed it with the Institute of Highway Safety, the IIHS. They confirmed it with me. Only two vehicles.

And that's bad news because, I mean, I guess it's kind of good news for the people driving the vehicles. So what it does, it's so cool. So like you're beaming out light from the headlights and then a car is coming towards you. So the car coming towards you, the headlights will adapt and like basically like black out everything.

the car coming towards you field so they don't see any headlight coming towards them. That's so clever. It's very clever and very neato cool. But like, it's not going to help someone like me that only two kinds of cars, Rivians, which are like at least $75,000 to buy, have this technology. We need all the cars to have this technology and that's going to take like a really super long time. I did remember...

after we recorded last week's show, that when I was living in Ireland writing my book in 2022, I had a rental car which had a few clever little whiz-bang features on it. And one of the clever little whiz-bang features was it had

I guess what you'd call adaptive high beams, that if it noticed a car coming towards you, the beams would automatically turn off. Yes. Is that a thing that's allowed in the United States? I think so, yes. Yeah, we need more of that too. More of that. So that is my number. Also, half of fatal U.S. crashes occur at night.

And three quarters of pedestrian deaths at night. Don't leave your house at night. This is my new issue. Just stay at home watching Netflix instead. And I want to say thank you to all the people who sent me numbers. Please keep the numbers coming. You can send them directly to SlateMoneyAtSlate.com. And then we will fight over them. We'll have thumb fights. But maybe we can, if we get enough, we can have a new feature on the show where we do a reader number every week. Who knows?

Who knows what could happen if we get that audience participation. There's a whole brave new 2025. There's something to look forward to in 2025. Elizabeth. All right. My number is 14, and that's percent. And that's the amount revenue for Hot Wheels line of Mattel toys has got up in the last year.

And there's theories behind this or that, first of all, the target for Hot Wheels now are anyone from the age of two to 72, because now a lot of adults are collecting them from either a place of nostalgia or they're really into car culture.

And so there's this whole new market where people are obsessed with F1 and, you know, the specifics of new cars will go and get Hot Wheels of their favorite cars. And the last thing is, in an inflationary environment, a toy that costs $1.25 is very appealing. It's affordable for everyone. But the best thing that I learned from reading about this is that the inventor of Hot Wheels was Elliot Handler, who was married to Ruth Handler, who invented Barbie. Yes. Wow.

Wow. What a power couple. What a legacy. Toy royalty. Basically. My number is $421 million, which is the number of dollars that Elon Musk's foundation needed to give away in 2023 and didn't. Shocker. Because...

As we all know, foundations need to give away 5% of their assets every year in order to be, you know, non-profits. And to absolutely no one's surprise, his foundation didn't give away 5% of its assets that year. It did give away $100 and some million, which was basically the amount of money it was forced to give away in 2022 and didn't. So it kind of was making up for 2022. Like there's like a one-year rolling forgiveness type thing. So basically between now and the end of the year,

Elon Musk needs to find a way to give away $421 million. Um, but if he's anything like this year, like he was last year, he will do the classic thing of his foundation. We'll give it away to another one of his foundations or his foundation. We'll give it away to his donor advised fund.

And there are basically very few limits on the degree to which foundations can wind up giving away, in sort of inverted commas, money to places where it's still not given away and it's still controlled by the donor. And that is part of this whole concept of philanthropic cakism that I feel like I'm going to be writing about soon. Was it 421 million? Is that a coincidence? Yeah.

That's weird. You know Tesla stock is $420 a share now. It's like the $420 is this meme that refuses to die. What did he give the $100-ish million to? To another one of his foundations, which nominally is in charge of...

educating children near the SpaceX headquarters in West Texas. Oh, there's a big story on that. But they don't seem to have spent very much of any of that money. I think there's like 20 kids who are being educated right now. So, yeah. Meanwhile, he spent... I probably got a giant tax break for doing that. Well, the tax break is a long time ago, right? So the tax break, he took the tax break when he first donated the Tesla stock to the foundation years and years ago.

And then what's happened is that the Tesla stock is appreciated in value. And as the Tesla stock appreciates in value, the 5% of the value obviously goes up. But the other cake is part of all of this is that the foundation didn't sell the Tesla stock when he donated the Tesla stock. So he still controls the Tesla stock. He still votes it. You know, also, you know, my point about tax breaks is more about the community near SpaceX, uh,

him having to do these things that placate the community because they're not super happy about the environmental effects. And, you know, some of the stuff around SpaceX has affected those Texas communities. So some of it is negotiating with the community to say, all right, we're going to invest in the education of people there. So it's kind of it's a business investment as much as it is.

Elon wanting to educate anybody. Oh, absolutely. It's very self-serving. I'm just saying that he doesn't get a tax break from it for spending money on education now because all of that tax break, he already took that tax break when he donated the stock years ago. Yeah, I'm saying probably SpaceX gets some kind of tax break for community investment. Only if they're making investment. And right now, even the foundation doesn't seem to be able to find anything to invest in, let alone SpaceX. But yeah, if SpaceX were to invest in the community, then probably they could find a way of not paying taxes.

What does cakeism mean? Oh, cakeism. Cakeism is this great Boris Johnson philosophy, which is he believes in having his cake and eating it. How else were you supposed to have cake? The idea is that once you've eaten your cake, you don't have it anymore because it's eaten. Oh, you want to hold on to the cake and eat it. I see. But the cake goes bad. I'm sorry. I'm sorry.

Sometimes Emily just has a very overly literal concept of this metaphor. It doesn't make sense if you dive in.

Email us, slatemoneyatslate.com, not only with numbers, but also with alternative metaphors for hakism. And thanks for listening. And thanks to Merritt Jacob and Shana Roth and Jessamyn Molly for producing. And we will be back next week with even more Slate Money.

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Learn more at apu.apus.edu slash military. Happy holidays, everyone. Here at Slate, we take karaoke pretty seriously, especially around this time of year. So for this holiday season, we are bringing that spirit straight to you with a special karaoke-themed episode of What Next Plus.

You heard that right. I'm Mary Harris, the host of What Next? And I've teamed up with Anna Sale of Death, Sex and Money to dive into the joy, chaos and catharsis of karaoke. You're going to hear Slate staffers and friends share their ultimate go-to songs from ballads that bring the house down to anthems for this moment we are living through right now. Plus, you'll get a playlist of barn burners and bops to sing along to at home. Head over to the What Next Plus feed and listen now.