🏴‍☠️ Online piracy returns

Monday, February 5, 2024 by Snacks
"The Last of Us" was the most pirated show last year (FilmMagic/Getty Images)

"The Last of Us" was the most pirated show last year (FilmMagic/Getty Images)

"The Last of Us" was the most pirated show last year (FilmMagic/Getty Images)

"The Last of Us" was the most pirated show last year (FilmMagic/Getty Images)

Last Week’s Market Moves
Dow Jones
38,654 (+1.43%)
S&P 500
4,959 (+1.38%)
15,629 (+1.12%)
$43,184 (+3.28%)

Hey Snackers,

The Wiggles hired their first CEO. The children's-music group is a surprisingly big biz to take over: since 1991, they’ve sold 30M albums and DVDs, plus 8M books — and 30+ years in, they’re still doing arena tours (that rival Coldplay for ticket sales). That’s some yummy, yummy financial salad.

The S&P 500 hit another record high on Friday after Big Tech earnings came in hot. Meta had the largest daily market-cap growth in stock-market history after the company reported. The Fed kept interest rates steady, but hinted that cuts aren’t likely in March. US job growth surged in January, providing more soft-landing optimism.


1. Digital piracy is making waves again, and streamers and record labels should be worried

Re-hoisting the Jolly Roger… Online piracy is on the rise as some stream-fatigued consumers set sail for cheaper content waters. Stealing music, movies, and shows was big in the early 2000s. But even as Netflix and Spotify make content more accessible than ever, piracy is surging. Since 2019, visits to piracy sites are up 13%. That’s got entertainment execs (already struggling with profitability) shivering their timbers.

  • Yo Ho: Piracy costs the US (fyi: the global leader in piracy) ~$30B/year in lost revenue. Meantime, streamers including Disney and Netflix have hiked prices while cracking down on password mooching.

  • Big bounty: The top three US piracy sites have 2M users paying $5 to $10/month to consume illegally hosted content (pirates make $$ from ads too). A Philadelphia man behind a major TV-piracy scheme was sentenced last year to over five years in prison and ordered to forfeit $30M in assets.

  • A swift example: Taylor Swift’s albums were torrented 5M times last year, but the real figure is likely much higher: torrents represent a fraction of music piracy.

Actually, many would download a car… (that PSA didn’t work, btw). Research has shown that people who pirate tend to spend more on legit content than their peers — but turn to piracy when content is unaffordable or too hard to access. Warner Bros.’ “Last of Us” was the most pirated TV show last year, and anime (which tends to drop on piracy sites far earlier than lawful streamers) accounted for 25% of all pirated content. Anti-piracy experts say the streaming industry’s ongoing price hikes will likely lead to $113B in piracy losses by 2027.


Walled gardens can still be pillaged… Spotify (which reports this week) was born from founder Daniel Ek’s desire to create something “better than piracy.” Time’ll tell if streamers’ foray into cheaper ad tiers and bundles can curb the rise of ripping by offering more for less. The threat’s no joke: in the peak Napster and LimeWire era, total revenue from US music sales more than halved.


2. Coming up this week

Up in smoke… Folks are smoking less tobacco, but Big Tobacco’s far from getting stubbed out. Marlboro maker Philip Morris International, which reports Thursday, has leaned into smokeless-nicotine products like vapes and heated tobacco sticks to usher in a “smoke-free” future. Customers are buying it: smoke-free products now account for a third of the company’s sales. A recent boom in nicotine pouches like Zyn have boosted PM’s profit outlook. In its last reported quarter, the biz sold 105M+ Zyn tins — a 66% jump on the year.

Big Macs and burrito bowlsMcDonald’s and Chipotle are expected to serve up hearty earnings this week. In October, the fast-food biggies saw double-digit revenue growth and topped estimates. Both have benefited from price hikes and their beefy mobile-order businesses, as fast-food spending stayed resilient despite #quesoflation. Proof: Chipotle’s looking to hire 19K new workers as it preps for its busiest time of year: “burrito season.”

Zoom out

3. Stories we’re watching

#TikTokMadeMeBuyIt… TikTok really wants #ForYou to shop. The app is reportedly opening live studios for creators to film QVC-style livestreams and testing a feature that could make any post shoppable. It’s estimated that TikTok Shop, launched in September, lost $500M+ last year. But parent co ByteDance said TikTok’s ecomm biz could become as big as Chinese sister app Douyin’s, which raked in $208B in 2022. Social shopping has failed to take off in the US the way it has in China (Meta’s tried), and TikTokers’ initial reaction has been * bombastic side-eye *.

A heated hearing… Bipartisan lawmakers blasted the CEOs of Meta, TikTok, X, Snap, and Discord during a hearing on child safety online. Senators condemned them for not doing enough to prevent child sexual exploitation and contributing to a mental-health crisis. Sen. Lindsey Graham told the CEOs: “You have blood on your hands.” Last year, tech companies flagged a record 36M+ instances of child sexual abuse content. Despite lawsuits, holding social platforms legally accountable is tough because of protections that give them immunity from being liable for users’ posts.

What else we’re Snackin’

  • JRE: Joe Rogan nabbed a fresh deal with Spotify estimated to be worth up to $250M. Unlike his previous Spotify exclusive, the new deal allows the top podcaster to be on other platforms like YouTube.

  • IOUs: The Biden admin said it’ll try to forgive student loans for borrowers experiencing financial hardship. Since SCOTUS struck down Biden’s universal forgiveness plan, the admin has sought narrower cases for nixing debts.

  • TokOff: TikTok said it had removed all songs from artists repped by Universal Music Group (including Taylor Swift, Drake, BTS, and Olivia Rodrigo) after failing to reach a new licensing agreement. The beef was over artist royalties.

Snack Fact of the Day

Harriet Tubman was the first woman to lead a major US military operation

This Week

  • Monday: Earnings expected from Caterpillar, McDonald’s, Estée Lauder, Tyson Foods, and Palantir

  • Tuesday: Annual trade-deficit report. Earnings expected from Eli Lilly, Spotify, Hertz, BP, Toyota, Snap, Ford, Chipotle, Elf Beauty, Amgen, VF Corp, Gilead, H&R Block, and MicroStrategy

  • Wednesday: Earnings expected from Alibaba, Uber, CVS, Roblox, Hilton, and Yum Brands

  • Thursday: Earnings expected from Aurora Cannabis, ConocoPhillips, Cloudflare, Expedia, Philip Morris International, Spirit Airlines, Hershey, Affirm, Take-Two Interactive, and Pinterest

  • Friday: Super Bowl weekend kicks off. Earnings expected from Canopy Growth, Pepsi, and Enbridge

Authors of this Snacks own shares of: CVS, Disney, Eli Lilly, Snap, Uber, and Yum Brands

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