Chapter 1: What unique approach does Sam Reich take in the subscription comedy business?
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Hello and welcome to Decoder. I'm Nilay Patel, editor-in-chief of The Verge, and Decoder is my show about big ideas and other problems. We've got something special for you today. It's my friend Hank Green, longtime YouTuber, science educator, and viral TikTok star, interviewing Dropout CEO Sam Reich.
Hank did this episode as a guest host over the summer while I was out with our new baby, and it's been a fan favorite, bringing together two internet personalities that have known each other for a very long time, and who have a lot of inside knowledge about how the internet, Hollywood, and entertainment all intertwine.
We think it's one of the best episodes of Decoder we put out last year, and it's honestly just a really fun conversation. Okay, here's Hank Green interviewing Dropout CEO Sam Reich.
Sam Reich, you are the founder and CEO of Dropout.
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Chapter 2: How did Dropout evolve from CollegeHumor's legacy?
Welcome to Decoder. Hi. Thank you so much for having me, Hank. I'm flattered to be here. You're doing a very interesting thing in a very different way than I think anybody else in media, which is why I think it's really going to be exciting to talk to you about this stuff and also try and figure out The whys and hows that you can do that.
But to start, usually I don't really tend to go in that much for origin stories. I think they're usually mostly just like a way to sort of make people think that they could imagine that they could learn something from the very particular circumstances that one person experienced, which I think are going to be different from other people's. And also a way for people to toot their own horns.
But can you give me an origin story of Dropout from... the beginning of Dropout. So we don't need to get into like 2006 and college humor and stuff, but just hit me with like, how did Dropout end up in your hands?
Sometimes some people call me the founder of Dropout, which actually is not true. Dropout- Oh, well, I- You beg to differ. I do.
Chapter 3: What challenges does Dropout face in the current media landscape?
Great. I'll take it. Listen, Dropout was a priority that came out of IAC, who was our corporate parent at the time.
So this was who owned CollegeHumor?
This is who owned CollegeHumor. And for years and years, IAC was trying to figure out how we would make not just a lot of money, but a lot, a lot of money. And there was always kind of a – a cynic might call it a get-rich-quick scheme of the time. And it was ad sales, and then social media took a big chomp out of ad sales.
And then it was television, and it turned out television production didn't scale very effectively. And then finally, the idea was let's try going direct to audience. Right.
Yeah. Just go OTT, as they say.
As they say.
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Chapter 4: How does Sam Reich prioritize creative freedom in his business model?
And there was a collection of- I'm not sure exactly what the top we're going over is, but we're going over the top of something.
Yeah. I guess the whole system. It does feel like that phrase makes it feel like we're gambling the house. And in a way, we kind of were. Okay. There was a collection of executives who were very bullish about this within CollegeHumor. I wasn't necessarily one of them. I slowly but surely warmed up to it, imagining that if it didn't work, at least we'd get to create our own cool stuff for a while.
The notion was go direct to audience. There won't be the gatekeepers that there are in Hollywood. We won't have to start over every year like we do in ad sales. That is, by the way, one of the intrinsic benefits of subscription is that you're not starting your business over every year versus ad sales where you have to go out and sell every year, start from zero.
And the things are always changing. Yeah.
Chapter 5: What strategies are used to engage Dropout's audience effectively?
And also, you're not just doing the YouTube thing, where certainly you're selling against views, but also you're selling on these platforms that decide whether or not you get the views that can have their priorities shift in ways that are going to be advantageous or not to your business. And that's always going to be their idea.
That's true. I think that was the sort of meat of our first announcement video, and I think it's really true, where... Avod, as it were, is like what is advertising video on demand? That's a word like you could also just say anyone who is not going subscription. Yeah, that is a business that involves like us, the audience, the platform and the advertiser bounds and all those things. Yeah. Yeah.
It's not even a menage a trois. It's a menage a four.
And everybody knows once you break trois, it's just a mess in there. Somebody's always getting left behind.
That's right. That's right.
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Chapter 6: How does Dropout differentiate itself from traditional media companies?
It's harder for everybody to achieve orgasm. You can decide to keep that in or not. Never break trois. Never break twat.
That's a business rule. Honestly, I like sometimes I look at YouTube and I'm like, oh, my God, their party, the YouTube party that they are having has so many different people at it that they have to satisfy. And that includes like the government, you know, like regulate. Totally. And I'm like, man, I just never want to break twat. I want to have like my my audience.
I want to have my like team there. So like the people who work for the thing, and then I want to have maybe the advertisers or maybe myself.
And you, I mean, you can decide, you know, not to break toi if, for instance, making money isn't important to you or satisfying the YouTube algorithm isn't important to you. You can decide that these aren't priorities.
Yeah.
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Chapter 7: What role does social media play in Dropout's marketing strategy?
Well, I mean, you can't, if you're going to pay people's salaries, you can't decide that money doesn't matter, but... Exactly.
Exactly. This was a big aha moment for me in running a business, realizing that the simpler your business is, arguably, the better it is, or certainly the more effective you can run it.
Yeah, especially at the beginning. Yeah. I mean, businesses get complicated because they have a lot of – because they've succeeded already. And they have opportunities to complexify. But they do not get complicated at the beginning.
Yeah. Yeah, yeah, yeah. I am – Willfully trying to keep our business as uncomplex as possible, and it is hard.
You just added advertising. You did it.
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Chapter 8: What future plans does Sam Reich have for Dropout's growth?
The final episode of Game Changer.
We did not actually add advertising to Dropout. There are fans who are very concerned that it's going to happen. That is not going to happen. There was a sponsorship, though. There was a sponsorship, yes.
That made a lot of sense in place that you would have needed this so that you could fund a high-dollar game show.
Quote-unquote made a lot of sense is an interesting way to put that, but yeah.
As a viewer, it made sense.
Yeah, yeah, yeah, yeah, yeah. So... I warmed up to subscription. Like I warmed up to the idea of going direct to audience means we get to simplify this operation. It means that we get to call the shots. It means that even though budgets will be less, our creative autonomy will be more.
I mean, would budgets definitely be less? Like the thing about, like, obviously per viewer, you're making a lot more money. It's really about the number of people you can convert. And that marketing, was there a lot of discussion about how you would actually market the subscription product? Or was it just like, let's make this available.
We'll pop a bumper on the end of the videos and people will go sign up.
The theory when we launched was that we would be converting YouTube subscribers to paid subscribers for a lot longer than that turned out to work. Oh. Do you know what I mean? Like that well ran dry fast. Yep. Yeah.
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