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PPP Loans to Big Creators

Companies belonging to YouTube creators Jeffree Star and MrBeast as well as the esports organization FaZe Clan all received federal loans intended to help small businesses during the coronavirus pandemic.

The loans were given as part of the Paycheck Protection Program (PPP), which was signed into law under the CARES Act.

Reports about these specific creators were first reported on Wednesday by Mashable, which found the information in a searchable  ProPublica database that tracks all the PPP money that has been doled out.

According to the database, Jeffree Star Cosmetics was approved for a loan ranging from $350,000 to $1 million on May 3. MrBeast YouTube LLC was approved for a loan in the same range about a month earlier on April 14. The PPP application for FaZe Clan Inc was accepted at the end of April, for a loan ranging from $1 to $2 million.

“MrBeast and Jeffree Star’s loans are particularly surprising because both YouTubers have built brands on luxury and extravagance,” Mashable reported. 

“As thousands of small businesses struggle to stay afloat amid continued social distancing restrictions, YouTubers and other online figures are still able to safely churn out content. Immensely successful companies like Jeffree Star’s and FaZe Clan are hardly the brands hurting the most right now.”

Breakdown of Loans

To support those claims, the article goes on to give a more detailed look at the finances of each company and creator.

Staring with MrBeast, whose real name is Jimmy Donaldson, Mashable detailed the frequent and hefty giveaways the creator often holds.

“[He] frequently gives away cash prizes, cars, and most recently, a private island through outlandish stunts,” the outlet reported, noting that he has been described as “YouTube’s viral philanthropist,” and detailing some of his more recent big charitable giveaways.

In June, MrBeast pledged to split a $150,000 donation to organizations supporting racial justice and police reform as well as several small businesses. As for how much PPP money his company got, a representative who talked to Mashable did not say, but the outlet reported MrBeast YouTube LLC received a total of $377,000.

“Multiple sponsors pulled out of projects, our advertising revenue plummeted by 70 percent, and we had numerous finished videos we couldn’t post,” the representative explained to Mashable. “We didn’t have access to testing, so we also had no idea at the time when we would be able to produce new content. We felt this was the best avenue that would help us weather the storm.”

The spokesperson also said that that the company is different from MrBeast’s personal accounts, and added that “all charitable donations, including a $150,000 to Black Lives Matter and $250,000 to SpecialEffect of course did not come from company resources.”

As for Jeffree Star, Mashable points to the wealth he has accumulated from his makeup empire. In 2018, Star was listed on Forbes’ highest-paid YouTubers. That year, he reportedly brought in $18 million and Jeffree Star Cosmetics was worth an estimated $100 million.

The article does note that Star likely took a hit because Morphe cut ties with him, but that happened after he was approved for the loan on May 3.

Regarding FaZe Clan, Mashable reported that the organization is valued at $240 million and ranks fourth on Forbes’ most valuable esports companies. As for how much money they got, the head of communications for the organization confirmed that they had received $1.1 million. 

Notably, the outlet also pointed out that in early April— just a few weeks before they were given that loan— FaZe Clan announced that they had  “closed out a $40 million funding round that also secured an exclusive partnership with NTWRK, an e-commerce platform that also works with Nike and Puma.” 

At the time, FaZe Clan CEO Lee Trink told Forbes that despite the circumstances, “we are fortunate we are in the right industry for a moment like this, when everyone is turning to esports and streaming, and we are positioned to be bigger on the other side of it.”

In a statement to Mashable, Trink defended taking the PPP loan.

“As a growing business, we continued to expand our staff in January. We are grateful for the PPP loan because it has allowed us to retain 100 percent of our employees despite having to reduce our revenue projection by many millions in esports alone due to the pandemic,” he said.

“It has always been our intention to repay the loan in full and we plan to as soon as it is safe to do so.”

Response

Many peopled responded to the news on social media and expressed anger that these companies had received money set aside for small businesses.

Why the fuck did Mr. Beast and Jeffree Star receive a PPP loan meant for small businesses? This is corruption. Meanwhile, actual small businesses are failing left and right.

— Sailor Jupiter ✨ (@strwbrryfld4evr) September 10, 2020

Others also took specific aim at MrBeast, asking why he would take money from the government that had been designated for struggling companies if he had enough personal wealth to be giving away his own money.

“Small businesses desperately applying for PPP loans and shutting down after not receiving it are victims of the actions of Mr. Beast and others like him,” one Twitter user wrote. “He has no right to take govt money and then re-give out to those he deems worthy. That’s simply powerful ppl playing with $$”

Small businesses desperately applying for PPP loans and shutting down after not receiving it are victims of the actions of Mr. Beast and others like him. He has no right to take govt money and then re-give out to those he deems worthy. That's simply powerful ppl playing with $$

— pata pata (@plssucklessthx) September 10, 2020

On the other side, some people also said that MrBeast deserved the loan because he helps people. Others still argued that these companies and creators are not directly to blame and that its really on the government to decide who the loans go to.

From early on, the Trump administration has received significant backlash over its handling of the PPP loan disbursements, specifically in regards to who has received them and who has not.

When the money was first being sent out, massive outrage spread over the fact that Shake Shack received a $10 million PPP loan, which it eventually gave back. Since then, there has also been anger around other big recipients like Ruth’s Chris Steakhouse, Potbelly Sandwich Shop, the Catholic Church, and the Lakers.

Companies owned by wealthy celebrities like Khloe Kardashian, Kanye West, and Reese Witherspoon have also drawn ire for receiving PPP aid.

Problems From the Top

While some have argued that those people never should have applied in the first place, there is also hard evidence showing tons of issues with how this money has been allocated from the top down.

Earlier this month, a House oversight committee concluded that thousands of PPP loans were given to companies that should not have received them. 

According to a report released just last Tuesday by the Select Subcommittee on the Coronavirus Crisis, the Trump administration gave hundreds of loans to companies that did not even fill out complete applications, as well as nearly $100 million to companies that were ineligible for the loans because they had been banned from working with the federal government.

Other studies and reports have found that many large companies got loans before small businesses, who were largely left out of the first round of loan distributions despite needing the money the most. 

For example, economists at the University of Chicago and MIT found that just 15% of companies in the areas “most affected by declines in hours worked and business shutdowns” received PPP funding, but in areas least affected, 30% of companies received PPP funding. 

Even beyond all of that, there are a ton of problems with the data and records of the loans that not only call into question how the program is managed but also how effective it has been in helping companies keep employees on their payroll.

According to a recent report by The Los Angeles Times, out of the roughly 4.9 million loans awarded as of July, over 550,000 approved applications listed zero jobs retained, and over 320,000 left it blank entirely. Seven loans even listed negative jobs retained. 

The Times also reported that many small businesses were approved for loans much bigger than what they actually recieved and that there was no explanation for the discrepancy in the data.

Both Democrats and Republicans have pushed for another round of PPP funding in the next coroanvirus stimulus bill, but without a massive overhaul to the system and increased accountability measures, many are concerned the loans will continue to be improperly allocated.

See what others are saying: (Mashable) (Insider) (The Los Angeles Times)
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