YouTube's triskaidekaphobia

MARKETS

• U.S. markets: The S&P 500 fell for a fourth-straight day. Financial names led the dip into the red, and marijuana stocks had one of their worst days ever.
• It wasn't all bad: Tech stocks pushed the Nasdaq higher (h/t Amazon and Apple, up 1.4% and 0.6%, respectively).

SOCIAL MEDIA

YouTube’s Unlucky Number 13

Friends, Romans, creators...lend Susan Wojcicki your memes.

The YouTube CEO told content creators yesterday they should take up arms (well, figuratively speaking) against a proposed European copyright rule called Article 13, but nicknamed the "meme ban."

Article 13—which is headed to a vote in January—aims to create legal repercussions for digital platforms that host unlicensed content.

Here's what Wojcicki told creators...

• "This legislation poses a threat to both your livelihood and your ability to share your voice with the world." Oh, and it threatens "hundreds of thousands of jobs."

What Article 13 means for YouTube

It'll have the burden of preventing copyrighted content from being uploaded to its platform and shared by creators.

Remember, YouTube (along with Facebook and Twitter) was built in a world where it assumed virtually no liability for what users posted. Article 13 means new filtering responsibilities.

• It also means higher costs...and YouTube has already invested upwards of $60 million into its Content ID system.

Let's poll the room

Who's for it: Some in the music industry (ahem, Sir Paul McCartney) support the legislation. How about some context:

• To earn U.S. minimum wage, an artist needs 610,465 streams on Spotify per month...
• ... and Spotify pays between 0.6 cents and 0.84 cents per stream. YouTube pays an effective stream rate of just 0.21 cents to rights holders.

Who's against it: A giant group including Tim Berners-Lee, inventor of the World Wide Web, wrote, "Article 13 takes an unprecedented step towards the transformation of the Internet from an open platform for sharing and innovation, into a tool for the automated surveillance and control of its users."

The bottom line

In today's "creator economy," expression often takes the form of samples and remixes that use music/pictures/videos that might be considered copyrighted material. Article 13 could blur the lines between potentially viral memes and copyright violations for YouTubers in Europe.

REAL ESTATE

Amazon’s Search for HQ2 Sparks Real Estate Speculation

The question on every real estate investor's mind: Does Jeff Bezos prefer Georgetown Cupcake or Philly cheesesteaks?

Since Amazon said last year it would fork over $5 billion (and create up to 50,000 jobs) building a second HQ, real estate investors have hustled to get in on what could be the next Silicon Valley-level opportunity (aka significant tech job growth).

Here's the thing about Bezos's tour de office space. It's been so public that it's essentially outlined target markets for real estate buyers to stalk, per the WSJ.

• Take JBG Smith Properties. It's a real estate investment trust that owns a bunch of commercial space in Northern Virginia—considered a top choice for HQ2. JBG shares are up 17% in the last year. The Vanguard Real Estate ETF? Up just 1%.

And sales price growth on residential properties in 10 of Amazon's short-listed counties climbed 7% YoY in July...compared to just a 4% gain back in July 2017, per Realtor.com.

So what's next? Bezos said he'll make up his mind before year-end. Odds favor bigger cities, but we wouldn't completely count out the dark horses.

WORLD

McKinsey Under the Microscope

McKinsey & Co. prepared a report that could have played a role in Saudi Arabia's bid to silence the kingdom's dissidents online, per a NYT investigation. Wondering how a 92-year-old consulting firm got here?

The timeline: In 2015, McKinsey highlighted three Twitter users driving a largely negative conversation about Saudi Arabia's economic austerity measures. Of those three users, one's account was shut down, one was arrested, and one said his brothers were arrested and his cellphone hacked by Saudi government officials.

McKinsey tweeted a response saying it was "horrified by the possibility, however remote, that [the report] could have been misused in any way."

Why this matters: With Saudi Arabia's Future Investment Initiative beginning today (albeit light on attendees), the international uproar over the death of journalist Jamal Khashoggi is putting a spotlight on all who do (or are even perceived to do) business with the kingdom.

And for McKinsey..."Being tied to another scandal-tainted government endeavor may cause further financial and reputational harm," the NYT wrote.

• Don't forget—the firm was already criticized for its role in a South African government corruption scandal earlier this year, plus it came under scrutiny from its own employees for doing more than $20 million in consulting for Immigration and Customs Enforcement.

C-SUITE

In Silicon Valley, the Exit's That Way

It's not just your company: Even at Silicon Valley's towering tech giants, departing execs become prime material for water cooler gossip and hushed lunch conversations.

At Facebook (+0.47%)...Oculus co-founder Brendan Iribe is leaving the company (remember, Oculus was a VR startup Facebook acquired in 2014).

• The question going around the office: Is Facebook doing enough to mantain good relationships with the founders of its (extremely valuable) acquistions? WhatsApp co-founder Jan Koum left in April, and Instagram's co-founders resigned last month.

And at Uber...top dealmaker Cameron Poetzscher is out. Poetzscher was known for being the ride-hailer's Masayoshi Son whisperer, leading the charge to secure SoftBank's $9.3 billion deal with Uber.

• The questions going around the office: Was this in any way related to past allegations of sexual misconduct? And should Uber be worried about high exec turnover going into a proposed 2019 IPO?

SPORTS

The Brew's World Series Preview

Tonight, the scrappy, blue-collar Boston Red Sox will face off against the Hollywood stars of the Los Angeles Dodgers in baseball's World Series.

Except...not really. As we preview the matchup, let's get rid of the tired cliches and offer some fresh perspectives on the regional economies of Boston and LA.
Boston

When you think of a Boston-area worker in 2018, you might want to picture a scientist in a lab coat instead of Mark Wahlberg. The city (and Cambridge's Kendall Square especially) is a global hub for biotech. Per WBUR, "Eighteen of the top 20 drug companies now have a major presence" in Boston.

Los Angeles

Sure, Hollywood gets all the headlines. But did you know that LA is a manufacturing powerhouse? The region is the largest industrial center in the nation, with a particular strength in aerospace and defense.

Prediction: Boston's a great team, but the city—and Harvard in particular—has had trouble retaining talent.

We expect stars Mookie Betts and Chris Sale to follow in Bill Gates and Mark Zuckerberg's footsteps by dropping out midway through the series to work on their startups, leaving the Sox's roster depleted. Dodgers in 6.

WHAT ELSE IS BREWING

• Netflix (-0.94%) is tapping the debt markets to raise $2 billion. It seems to be growth-at-all-costs for the streamer.
• Amazon Web Services CEO Andy Jassy has followed Apple chief Tim Cook's lead, saying Bloomberg's report about a Chinese supply chain hack was "wrong."
• Richard Branson is stepping down as chairman of Virgin Hyperloop (the supersonic transport system). He says it needs a more actively involved leader.
• KKR-owned Japanese car parts manufacturer Calsonic Kansei has agreed to buy Fiat Chrysler's Magneti Marelli high-tech parts unit for $7.1 billion.
• Skyword, an enterprise content marketing platform, is merging with marketing analytics company TrackMaven.

BREAKROOM

From the Crew
Yesterday, we wrote a story on Prop C (a proposed tax hike on large businesses to help fund homeless services in San Francisco) and then asked you to what extent companies are responsible for addressing local socioeconomic issues. We were blown away by the thoughtfulness and sheer number of responses. Here are a couple interesting takes...

• "There's a myth in modern America that the only responsibility companies have is to their bottom line and their shareholders...We all have a responsibility to those around us, and harnessing the resources of prosperous companies and individuals is the only viable way to address problems at the necessary scale to make real change."
• "These issues should be a community priority, and pinning the tab on businesses is the easiest way to avoid having to re-evaluate how empathetic our governance system can be. Asking for more money without a demonstrable need, or plan for it is irresponsible, at best."

Brain Teaser
A number has 5 digits.

1. The first and the third digits are the same, all others are
2. The highest digit is 7 and the lowest is 1.
3. The third digit is twice as much as the fourth.
4. The second digit is higher than the fifth.
5. The sum of the five digits is 23.

What is the number?

(Answer located at bottom of newsletter)

Breakroom Answers