Iran Deadline Looms for an Economy on the Edge

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“The index has since fallen to roughly 46,000,”

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I'm Ed Elson. It is April 7th. Let's check in on yesterday's market vitals. The major indices rode out a volatile trading session to end in the green. Trade has waived between hopes for a ceasefire and fears of escalation from President Trump. Brent proved climbed again above 110 dollars per barrel.

Meanwhile, treasury yields and the dollar were flat. Okay, what else is happening? Trump's deadline for Iran to open the state of Homoos is tonight at 8 p.m. Eastern. So far, both sides have rejected each other's proposals to end the war. President Trump escalated his threats against the country on Sunday and yesterday,

he wanted that the entire country could be "taking out" as early as Tuesday. The conflict has already triggered the largest oil supply disruption in the history of the global market, according to the IEA.

That inflationary pressure gets its first real test on Friday

with the release of the March Consumer Price Index data. We also saw the March Jobs report last Friday which provided a snapshot of where the economy was before the war. The economy added 178,000 jobs and the unemployment rate ticked down to 4.3 per cent. However, the hiring rate fell, the participation rate declined,

and wage growth slowed. Meanwhile, the February numbers were revised from a loss of 92,000 jobs to a loss of 133,000 jobs. A lot there, here to get the state of the economy, we're doing an economic update with Justin Wolfer's professor of public policy economics at the University of Michigan. Justin, great to have you on the show again. We wanted to get your update on the economy now that we're in weeks six of this war. They said it was going to be four weeks or four

“to five weeks. We're now extending beyond that. What do you make of what's happening right now?”

I think the good news is you and I have had a rehearsal for this. We spent all of 2025 saying the president is on edge. The president might be about to do dramatic things that could up and upturn how we think about global commerce. The jobs reports looked weak and then they'd look not quite so weak and we've been on edge and one thing I

could say, it's a little louder than you said, grasshopper, it's not always this way.

There was a time when I'd be able to do a long and serious interview with about the economy, understanding that it would have a shelf life of more than six hours. That's not the world we're in right now. So let me go back and answer your question. I think the jobs report was on a bash with the good news. If you didn't update after that and say the economy's a little more robust than I had feared, then you're not paying attention. Beakily, when you say that we created was

at 178,000 jobs in a month. In the current moment, if that were the true underlying pace of job growth, you would see me greeting from ear to ear. I'm not greeting from ear to ear. There's some underlying weakness there, which is some amount of this was a bunch of folks who are on strike one month on strike the next. That gives you a lot of the healthcare, a bunch of people are out because of bad weather and they're now back because of good weather and that also plausibly

but does suggest that at the very least the economy is running somewhat out. It doesn't look like we're in a recession. Our expectations for the rate of employment growth should be substantially lower because we have no population growth. So the U.S. economy is to some degree, the little engine that

“could, the thing I like to see most is that the unemployment rate, I think we should all keep our”

eye on the unemployment rate, especially right now because looking at employment, only matter is only useful if you know how many jobs we ought to be creating and because of the shock to immigration, how many jobs we need to create is much much less clear. So the unemployment rate sort of tells us how we're doing relative to how we got to do and it's moving roughly sideways. That's certainly not a failing grade. It's not incredible success but you know we're

doing OK coming. So what that says is on the eve of the Iran war, the U.S. economy is doing relatively well better than pessimists and I've been a pessimist over recent months to have expected and not as well as the optimists have burst. Yeah. A couple questions that are coming to mind, the first is and well I'll start with the first question. It's a good place. The revision, we're human getting these down revisions and so I look at the numbers that are coming

out from this employment report. 178,000 jobs added and it seems like the way this always goes is

we all go oh it's not it's not so bad it's actually pretty good and then we come back to it a month later and we learn actually it's like 40 to 50 to 60,000 jobs lower than we originally projected and in fact Jerome Powell told us as much. He was literally telling us in the previous

“fed meeting that we're basically overshooting the jobs added by around I think he said 60,000”

jobs each time. So I guess my first thing I see the number that I'm like well I don't even know if this even matters or if this even means anything because I'm pretty sure that it's going to get revised in the next round. That's the first thing in the second thing is well now this we also have this war with Iran which is kind of a big deal. We have to stop at one

thing. Okay let's go let's go with the first thing. Look so what I don't want you to do is see

revisions and say all none of this matters because what you're looking for is the least bad indicator in a universe of terrible indicators. If it pops you see it that way that's fine by me. It's hard to see through fog. It's hard to measure an economy of the size and scope of the United States. It's even harder when we're in the middle of so much change which and I think this is where you're going with your second question what happens in March? You know what happens

before the war may be much less relevant than what happens after the war we could say the

“sitting with the trade war as well. So it's hard. So you're sailing through fog. What do you do?”

You pull it your flashlight. You think you discover about your flashlight is it helps you see about 12 feet in advance and a lot of really interesting stuff is like 30 or 40 in feet in the future. And that's sort of your point about the revisions which is we have a rough sense that there's not a massive iceberg right there. Do we know that we're not going to run into a couple of penguins on the way? We could. Yeah. They might be there. So even with all the revisions what's true

for any sort of serious analyst at business cycles is if you look at the ups and downs of every other economic indicator payrolls still even with its revisions is timely. Just came out. Extremely reliable. Even though you just described as extremely unreliable that's correct there's some distance between it and the truth. But that distance is shorter, smaller than it is for anything else. And with this extraordinary track record over time and it's the most watched market indicated

not because guys in markets like to do whatever else is doing but because it still has more signal than anything else. So and then I just want to separate one other issue you described. So there's the revisions and the revisions are very large. They're actually separate from what Jay Powell was talking about. Jay Powell where he said payrolls is being over estimated. He's talking about benchmark revisions. So let's nerd out. I know you love to nerd out. Three ways in which each

month we learn more about the past and we go back and revise it. The first is what we think I was

being revisions. We use the word revisions for it which is there's a bunch of firms that didn't send in their form last month telling us how many people were on their payroll. They eventually get round to it. And we figure rather than using statistical extrapolation let's count what they

standard revision. Second thing not many people appreciate the following is also seasonal adjustment

which is a very complicated beast. We update the seasonal adjustment factors every month. And so some of the revisions are further revision. There's a revision to the nonseason adjuster data. That's the new forms that come in. There's also a revision usually pretty slide to the seasonal factors. So how much of it we think is the ups and downs of summer and winter. And then the third thing that happens is what we have at any point in time is as sample

of the population of all firms sending in their forms. But to know what that means for the economy we have to know whether that's a 1% sample or a 2% sample. We have to know what share of the economy is being featured and we also have to make sure that it's represented with small firms and large firms

“and all of that stuff. That's what's called the benchmark revision. The benchmark revision is”

we go to a new universe of firms. And we say, oh this sample we have, how representative is it? Let's rescale things once we know how representative or unrepresentative it is or isn't. The new universe is called the QCEW. It comes from unemployment insurance records. And what we saw through 2024 and early 2025 was that there were fewer firms than we'd implicitly been assuming. And we will get a benchmark revision much later in the year or some distance away from it.

But we see early data from the numbers that are used as an input to that benchmark revision. And that's what Jay Powell is talking about. He says, I'm expecting another revision to come. He's not talking about the monthly revision. He's talking about the annual benchmark. But all matters because it's all is saying what's going on right now probably overstate the extended job growth. But it's not going to get washed out next month. It'll get washed out. It'll get fixed up

in several months with the benchmark revision. Serve that was boring. No, no. It's helpful to understand exactly what goes into this stuff. And it's interesting because

“these things are so important to the cultural conversation and the economic conversation.”

There's a lot of caveats and details that sort of get lost in the complexity of it all. But people should really know about it. I do want to pivot to what's happened with Iran here because what is so interesting is that employment report comes out. Big deal. Very important for someone like you as an economist. But then we also see this message. I'm going to read it verbatim from the president quote Tuesday will be power plant day and bridge day or wrapped up in one in

Iran. There will be nothing like it. Open the fucking straight. You crazy bastards or you'll be living in hell. Just watch, praise be to Allah. President Donald J. Trump. I guess my question for you which one is more important as an economic piece of detail or economic piece of news to you as an economist that tweet or the employment report. The tweet. The tweet for two reasons. One

this tells us something about the future of the war. The war is overwhelmingly the most important.

You can only think going on right now. You don't have to be too much of a careful student of history. To understand that wars have enormous implications for politics, for economics, for geopolitics, for our ability to do business with each other, for our future defense budgets, for those of our allies and our former allies, for our physical situation and factory monetary situation. So the way this war will have direct effects through oil and indirect effects through geopolitics,

defense and all the stuff that I feel somewhat unqualified to open about. The problem of course is the folks who understand that stuff don't understand. You can always very well. We need someone to talk about it. You're the guy. You're as good as we're going to get here. Well, I'm not what I don't understand. I think that's probably the most useful role that I can play. But I think there's

a second thing no less important that we've learned in that tweet. And we saw the same dynamic

actually play out during the trade war. During the trade war, there were some really important moments particularly around liberation day and a half to math, where the market movements were enormous even though what the president was doing was pretty small. And I think what was happening was markets are updating on this fundamental idea of how confident this administration. How much do I trust it to react in a way that defend America's interests to

challenges that come out way? In some of the lunacy around liberation day led to

“self-decelamera. I could trade if you remember that that language and it led to I think it”

out right lack of trust in the administration. When you have a president using, you know, I'm a parent. My kids would be in trouble for that tweet. They'd be in trouble for swearing,

at a moment where what's actually more important is that you both find a path forward towards peace

is inane insane and does not serve America's interests at all. And so what we're learning from that tweet is not just something about the process of this war, but what's going to happen over the four years. How much better do you feel about? I don't know the next thing to come around the corner. What if it's a drought? What if it's an earthquake? What if it's a pandemic? What if it's

“I mean just a productivity slowdown? What if AI does something crazy? Whatever it is?”

How reassured do I feel that the president is going to make smart choices with our enormous military and scientific might in a way that leads to a more productive future? I feel much less confident. There are very real questions about the president's judgment. There are questions about his age. There are questions about his mental security and if not that, then there are questions about his political strategies and his understanding of economics.

So I made that list broad so I can include folks who are somewhat on their conspiracy side, but also at the other end just these are questions of judgment. Do you feel well led? Do you feel confident? Do you think now is a good time to invest in the United States or would you like to see some of these big issues resolved before you're going to lay down millions or billions of dollars on a major investment here? Just before you let you go, I mean the idea is that by Tuesday

evening we have some sort of a deal and some sort of a ceasefire and some capacity this comes to an end or you get a signal that's coming to an end, whatever. That's the idea. I know you're not a geopolitical expert, I know you're not a military strategist, but you are a small person who pays attention to what's happening and pays attention to the implications of what will happen. Do you think that this is going to end anytime soon?

I hope and pray and I'm not even religious. I think the stakes, I think the only smart thing I can say that's moderately informed, that's comes from my expertise is the stakes here are really, really large. I will spend the next 24 hours on the edge of my seat. I am deeply worried. I worry partly because I care about the consequences for the American economy. I worry partly

“because I care about the consequences for the global economy and remember that many of the”

consequences of our actions are being felt two times four times ten times larger in other countries.

And I worry because there are people around the world right now living in fear and we should never

lose sight of that and greatly to ship as about removing that fear, giving us all the capacity for joy and safety and freedom. It's a really, really critical few moments right now for trying to help spread that freedom around the world. Just a small first professor of public policy and economics at the University of Michigan. Just always appreciate your time. Thank you. Please remain. After the break, an update on the AI IPR race. And if you're enjoying the show, please follow our

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Seriously, all of them. It's been $250 on your first campaign on LinkedIn ads and get a free $250 credit for the next one. Just go to LinkedIn.com/scot. That's LinkedIn.com/scot terms and conditions apply. It's today explained. President Trump has not made a coherent case for his war in Iran and last night he said he's not ending it yet. We're going to hit them

where they belong. His ally Tucker Carlson has been making a very coherent case against the war.

“Because it doesn't serve American interests in any conceivable way. And let me just say that if”

it does in some way, serve the interests of the United States, I'd love to hear it. I haven't heard it. On Tuesday, we asked Carlson about his break with Trump and about how the Trump coalition is splintering as some young conservatives abandon the president and embrace something darker. It becomes like all of a sudden like, hey, you kids, why you listen to Elvis Presley and that rock music is bad. Like all of a sudden, Flint has controls the conversation and becomes the

cool kid. And the net effect is to make the Holocaust a joke. Today explained every weekday wherever you get your podcasts. Hi, I'm Renee Brown. And I'm Adam Grant. And we're here to invite you to the Curiosity Shop. A podcast that's a place for listening, wondering, thinking, feeling and questioning.

It's going to be fun. We rarely agree. But we almost never disagree. And we're always learning.

That's true. You can subscribe to the Curiosity Shop on YouTube or follow in your favorite podcast app to automatically receive new episodes every Thursday. We're back with Prof. Markets. Open AI and anthropic are racing towards what could be the largest IPOs in history. The Wall Street Journal obtained confidential financial documents from both companies, giving us the first real side by side look at their books. Both companies are

growing quickly. Open AI has reached $25 billion in annual recurring revenue. Well, anthropic is at $19 billion. But they both share the same problem. The cost of training

these new AI models is devouring their margins. Open AI expects to spend $121 billion on computing

power in 2028. Anthropic plans to spend roughly $30 billion. Meanwhile, there is fresh drama inside open AI. The company's CFO. Sarah Fryer reportedly told colleagues that the company isn't ready to go public this year. And that put her directly at odds with Sam Altman, who was pushing for a listing in Q4 since those comments. He has reportedly cut her out of key investor meetings. Lots to discuss here. Here to discuss the state of the AI IPO race. And he's already

laughing. His poll could draw ski. It's not as important as ski ventures. Poll, thank you for joining us. I guess we'll just start with what's making you laugh right now. You don't remind me of, is there's this great horror movie trope where the, you know, the, the heroin is inside the house

“towards the end of the movie. And she's talking about how, like, you know, what's going on?”

And she feels really threatened. And then, and somebody jumps on the Collins says the calls coming from inside the house get the hell out. This is kind of that, right? I mean, it's literally I, I've been around this stuff for decades to my shame and a, uh, a public, well, a public IPL, an IPL candidate's company CFO saying that we think we should probably not go public. Just doesn't happen, right? The job of the CFO is to say, yes, and this and alternatively, we could be sued for that.

And that's really it. That's all you're supposed to say as a CFO. You really, you've got, like, sort of two options, right? Option three is not, you know, I kind of feels a little bit mad about the IPL thing. That option three doesn't really exist. So this is really unusual and to be someone serious, I mean, the idea that someone would say that at this point in the process and then potentially be cut out of conversations with respect to the book building and putting together the documentation

with respect to the IPL. And that someone happens to be your CFO, which is the primary reporting officer from an SEC standpoint in terms of bringing the company public, is to use the technical term ridiculous. I mean, it's just ridiculous. Well, I mean, just so people know, I mean, you were an engineer, you're a tech equity analyst now you're invested. So that you have seen this world before, I guess the question becomes, if it is ridiculous and I, I happen to agree, yeah, is it because the

CFO is the problem here? Is it because she's doing a job wrong? Or is it because the company is the problem? The company isn't ready to go public. It's in such a bad position that she is actually maybe doing good thing by saying, hey, we really shouldn't do this. She's right, but it doesn't matter, right? The CEO wants to take the company public and your view as the CFO is we should not go

“public, then you're at the wrong company. I mean, it's literally that straightforward, right?”

That you can't have that kind of disconnect. This isn't, you know, providing guidance to Pete Hegsev before he sends troops into Iran and saying, you know, Pete, I'd rather we didn't do this right now. I was like, no, dude, you're fired. Yeah, I'm not, that's not the advice I want right now. Here's the advice I want right now. And the same thing applies in the context of open AI,

Which by the way, to your point, to your point, though, she's not wrong. I mean,

they're all kinds of things that we're just, you know, wacky in the Wall Street Journal article, the accounting treatment of frontier training, the provisions with respect to suspending the Nasdaq requirement to becoming part of the index. All of these things raise all kinds of problems that will all become obvious over the next 12 months. So, you know, the idea that in some sense, this company should not be going public right now is much broader than just, you know,

they're unity, economics, suck, or some such thing like this. It's a much broader problem in that. It's more systemic about the nature of what's going to happen when multiple trillion dollar market capitalization companies come to market in the course of 2026. This is like a economic shock treatment,

“because you have to think about where's the money going to come from that flows into these?”

Well, it's going to come out from a host of other companies who happen to be very liquid-traded and overlap. Well, who are those guys? It's Google, Microsoft, Amazon, and other. So, money is going to flow from those places into these places because in a sense you're being forced to by putting them into the index so quickly because index ETFs must immediately purchase the stock. They don't hold cash. They're not like somebody with a bag of money in the basement. They have

to sell something else to move it over there. So, you're going to see this giant series of tsunamis of cash flows that are going to be wildly disruptive all because this this thing, this behemoth. These three behemoths are coming public this year. So, much there. It's so interesting. Almost your answer to my question is like it's both a problem that the CFO is making a mistake. And also the company is not in the right position. It's like a double whammy of badness.

But in a triple whammy, it's also systemically problematic because of the amount of money is going to cause you can model it out and hedge funds are doing it right now. I mean, one of my side gigs is talking to a lot of some of the larger hedge funds on earth. And they're already looking at this and saying, okay, the outflows from these places are going to do what to their share prices. Okay, that's that's gas to mathematically happen because I have to fund my purchase because

“of this new requirement that they can be in the index very, very quickly. So, what does that mean?”

It's kind of like a giant index rebalancing exercise. It's going to have consequences for one group of companies and consequences for another group as this this great big pile of money solution you'll go swooshing through the economy. So, there's this the high level issues and lower level issues, not least of which is, you know, this bizarre method that they want to use to handle the handle for onto your model expenses. So, there's, you know, it's just the

issues are leading. Tell us a little bit about what you make of the business itself. I mean,

they're just cross $25 billion in ARR. They are the number one AI company they have a ton of

users. I guess it starts to get a little crazy when you look at the valuation $852 billion as of this most recent round. What do you make of the business? What do you make of the business? I mean, yeah, yeah, what do you make of? I guess the valuation, I know, so the fundamental business itself. It's the unit economics or negative, meaning they, you know, they lose money on every unit they sell. That hasn't changed in the way they try to get around that is by excluding

their most their largest, most material and most predictable costs, which is frontier model training. So, the line of pattern is that and this was part of the, the bossry journal piece was let's look at their earnings excluding frontier model training,

“excluding model training. And on that basis, I think it was open. I said in the piece,”

or the implication was in the piece that they'd be cash could be cashflow positive in a very modest way. I think it was in 2029 or something like that if you exclude those costs. But that's ridiculous exercise. Because those are not costs you can exclude because that is a persistent annual expense that they can see in the piece is actually both accelerating and becoming more expensive. And so that's not a cost that's going away. So, excluding it is a fundamental

misunderstanding of the nature of their business. So, to do that, you can, or by doing that, you can make the unit economics appealing. But it's a misnomer because the unit economics are driven by these, the, by the models themselves, by their own admission that if they were to stop spending on models today, subscribers would move somewhere else. Yeah, you're reminding me of just sort of a very simple truth, which I feel like was top of mind. For me, I'm for many others, maybe a few months ago,

which is like, this business actually isn't a good business. When you just look at how it works, as you say, look at the unit economics. And in a way, I've sort of forgotten that over the past couple of months, I think, because there's a lot of other stuff that's happening. Also,

I mean, anthropic has made a pretty incredible push. And we've seen a huge increase in their

area, or recently, especially after what they have with the Pentagon. I mean, I tend to sort of draw a line in the sound between open AI and everything else. But how do you view the AI ecosystem or you as bearish on anthropic, for example, as you seem to be on open AI? I know, but only because

New Yorker piece out there talking about this as well. And I don't see how they're a long-term

survivor here in a bunch of dysfunctional reasons, not just the unit economics, but also the management structure. So, no, not as bearish, but they have the same unit economics problem, which is to say that they're faced with this giant problem of having to train very, very expensive models to more or less stand still, and they're seeing declining returns to training those models, which are largely mass by the emergence of these very effective, so-called orchestration layers like

Claude Code or Codex, which in a sense are like, I often argue, are like, really effective manys, who have to deal with really bratty kids. The bratty kids are the models, the really effective manys are Claude Code and Codex. Most of the value is shifting. If you think about it in operating system terms or shifting towards these orchestration layers, and I sometimes joke that the model company that survives would be the first one to abandon models and just sell orchestration layers

“and things on top, because the models are the problem. That's the capex. That's what's breaking”

the unity economics and anthropic encode and open AI. So, in a weird almost, you know, as a thought experiment, at least we're thinking about, you know, what happens is this realization finally hits hard in these companies are public, and they're probably being really and truly punished for this massive capex. I wouldn't be surprised to see them rapidly shift and just become rappers on other things. How do you think this ultimately all plays out? Because essentially what you're

describing is, yes, this technology is quite incredible and yes, a lot of people are using it,

but from a business perspective, it doesn't make any sense because it's too expensive to operate and to train and to run. And therefore, if we would have played this out over the course of several years, my mind goes to maybe AI just doesn't really happen in the way that we expected, because maybe in some sense the money runs out. I mean, the VCs and the Nvidia's of the world are essentially paying for this right now. Yeah. But I guess what happens 10 years down the line.

Yeah, well, it doesn't mean it's not going to take 10 years. We're feeling we were still lucky is to have it play out of 10 years. For me, it ends up looking kind of like in Thusie as in the lead to rural electrification in the U.S. in the 1920s, where there was this incredible explosion of excitement. It was going to be transformative. It was going to be a growth industry. It was going to be ubiquitous and inside of everything. And it kind of disappeared. Like, you can't really

see it anymore. Electricity until at least the AI explosion of demand for training was kind of

“disappeared into the woodwork. And I think AI will rapidly do the same thing. It'll be almost”

like a utility-like service. And it may be utility-like service that kills us all in terms of into paperclips, but it's still going to be utility-like service. And so in that sense, the valuation according to it will change really rapidly. So Mike, my hunch is it's one of these classic industries that you see kind of a double and then everything just sort of the wheels fall off and everything falls by half or more. And so I think there'll be this incredible retail driven

enthusiasm for these IPOs. It'll cause a huge amount of money sloshing around in the markets, some huge distal occasions, and some of the other names out there. And then eventually these guys are going to gain a punished for their cat backs. And what do they do about it? Do they cut it? Or do they do what I'm suggesting, which is that some of them will actually move to just being pure rapper companies. I have, you know, that's a viable option. Right. What just before

you go here, how do you, something I often think about with the opening eye with them, Thorapic,

“even with something like X-A-I, I'd be fascinated to know how these companies, how these, the shares”

would be performing if they were publicly traded. That's like my always my number one question

whenever I see any news related to opening eye. The valuation keeps going up and up and up, but it almost seems like a fake valuation. It's got a fake valuation. And so you're seeing it already in secondary markets though. In secondary markets and Thorapic is performing much better than opening eye. Demand for opening eye shares in the secondary market, which is to say among people who already hold the shares through various other transactions is already much weaker

than the demand for shares of end-thrapping. Now, some of that's purely valuation driven, but it's also a nice tell about the nature of how institutional investors know there's already feel about the relative merits of the two companies. Yeah. So I assume that, I mean, it sounds like you think the company's going to go public. A lot of retail demand because what are the AI company are you going to invest in? Very exciting. But then one, it's interesting. I companies are doing

really well in people who aren't people who aren't, there's a huge appetite for financial instruments. Just look at what's happened with five or six now, Chinese retail AI, P.O. is the same thing's going to happen here. Yeah, really, really interesting. Okay, Paul Kodroski, managing partner at SK Ventures, Paul that was very, very interesting and we'd love to have you back again soon. In related news, open AI is getting into the podcast game. The AI company just acquired

TBPN, a technology talk show that's become quite popular in Silicon Valley. How much did open AI pay? Well, we don't know as the sum was undisclosed. However, there have been some rumours, according to the financial times, the deal was in the quote, "low hundreds of millions of dollars."

that the company was bought for two hundred million dollars. So we don't know the exact numbers,

but either way, open AI bought a podcast and they paid a lot of money for it. And it is especially a lot of money when you consider the fact that actually this podcast, while it is popular, it isn't that popular. In fact, their live streams, which is how they distribute the program, only received roughly 7,000 views per episode. For context, this show, property markets, reaches roughly a quarter of a million people per episode. So why would open AI pay this much? Why

would they pay what Spotify paid for the Joe Rogan podcast, for example, which was the most popular show in the world at the time? Well, there are a few reasons. Number one, open AI wants influence in the tech community, specifically, and that is a very hard demographic to reach, which TBPN really owns. Number two, they probably wanted some marketing savvy in their organizations, so they paid a premium for that. And most tech commentators have talked about this, but the third

“reason is less discussed. And it is perhaps the most important reason. And that is that open AI”

actually wasn't paying for a podcast per say, what they were paying for was clips. Yes, clips. Those short one-minute videos that you see on social media feed every day, those are actually very important. And they are, in fact, the backbone of TBPN, along with every new media organization on the rise. And here's the secret. While TBPN's live streams average only 7,000 views per episode,

their clips average more than a quarter of a million views. And in addition, unlike most media companies,

this media company sells their ads directly into their clips. They'll say things like, this clip was brought to you by insert large corporation. And that is how they're making their money. That is why they just got bought for $200 million. It is an incredibly smart move. But it also says something about the media environment in which we now find ourselves.

“Think of any rising star in media right now and ask yourself, what do they all have in common?”

How did say Nick Fuentes, the far right white nationalist, become the viral sensation that he now is the guy who is feared and talked about by political leaders on the left and on the right, did he do it with his live stream? No. His show only gets around 20,000 viewers per episode, and it's only available on a platform called Rumble. No, he did it with clips. And that is every day Nick Fuentes clips go viral on X and on Instagram and on TikTok. In fact, one of his most recent

clips received nearly 11 million views in less than two weeks. That is equivalent to the number of

people that fox news reaches over the course of two months. The same goes for the latest Gen Z looks maxing star, Clavicular, he might have heard of. His live stream averages only 16,000 viewers, that's really nothing. But his past 10 clips on TikTok have reached 70 million viewers. That is more than the population of France. Almost every new media sensation has leveraged this format from Hassan Pika to Andrew Tate to Mr. Beast. In fact, it has now created an entirely new economy.

Content creators are now paying agencies to create clips of their content and distribute them across the internet. Andrew Tate, for example, actually pays his community of fans of which there are a hundred thousand to post clips of him. Mr. Beast just launched a clipping platform where he pays clipers to promote his new shows. In fact, one live streamer called Neon actually revealed on his show how much he pays his clipers. Someone asked him how much do you pay all of your clipers each month

“to which he replied. Was anywhere from 750 to like 900 a month? Why? What did they post thing?”

I'll be your cliper with the fun? No, you're doing great. I'll clip you though. A million dollars? No, what spread out around like 400 people? Okay, so there are a lot of people who was like their base pay. Just depends on their views. That's all based on how many views they're getting, but my top guy this month is getting like 170. 170,000 a month. Yeah. So there you have it. Content creators are now paying people nearly a million dollars a month just to create clips, which means

that we have now officially entered into the clip economy. Clips are no longer a secondary medium. They're not promotional material for your main show. No clips are your main show. They are where all the action is happening and increasingly where all the money is being made. So what does this mean

you need to get better at monetizing your clips. Will there be a good thing for society? Will it

“make audiences smarter, more informed? No, quite the opposite. And perhaps we can dig into”

those implications another time. But for now, let's recognize what is happening here. The future

of media, whether we like it or not, is in the clips. Okay, that's it for today. This episode is

“produced by Claire Miller and Allison Weiss, edited by Joel Passenson, and the engineered by Benchman”

Spencer. A video editor is Brad Williams, a research team is Dan Chalon, is about a pencil,

Cristina Donahue, and Mia Salvario, and our social producer is Jake McPherson. Thank you for listening

“to Proftly Markets from Proftly Media. If you liked what you heard, give us a follow. I'm Ed Alson.”

I will see you tomorrow.