perks are nice. but the best thing you can give your business is comcast business. comcast business. built for business. cory: netflix is poised to eclipse fox, cbs, nbc, and abc as soon as next year. ♪ cory: one cory johnson in for emily chang, and this is bloomberg west. coming up, plans to make match.com public. plus taylor swift shakes off her , beef with apple. all that ahead on bloomberg west. now to our lead. netflix may be on the brink of a

milestone. netflix viewers will watch more tv than abc, nbc, cbs, and fox by 2016, next year. netflix is up to 62 million subscribers, two hours of video every day, on par with the big networks. the netflix user base continues to grow, but traditional broadcasters are on declined. -- are on the decline. joining us, keith, and our guest host, timothy jones. keith, let me start with you. is this about the potential for netflix, a change in behavior, or this one service? you are not seeing this with hulu. keith: what netflix is doing is leading through great content. you will change the way consumers engage with content. this is not a bad thing for

networks. this is not an awful thing for content makers. it is a way to affirm that those who make great content, consumers will come to it. they will reward you for it. cory: how can this not be bad for networks? keith: it's not bad, because what you are doing is you're putting a premium on good content. house of cards, orange is the new black, hbo has been doing this for some time. this is not a new thing. you have some of the best television we have ever seen in history on television now. the bar is being raised by superior content performance. and now we have another way to deliver it. governor walker: cory: jarrod what do you make of the success netflix has had in terms of the shows, and a lot of them have been good, house of cards, oranges the new lack, daredevil has been well received. jared netflix knows they have to : have great content. that is great and they will continue.

the other thing is the phenomenon in the media marketplace, we are leaving -- living in an untethered universe. netflix was the first to talk to consumers and invite them to watch content in a way that was untraditional. now with the millennial generation leading the pack, and generations the coming up -- gen z behind them, they are in a prime position. cory: my little girls do not know how to run the cable box. but they know how to get netflix. timothy, when you talk to netflix guys, what is interesting is they described a -- they described a technology company. they don't sound like bob iger or somebody in the tv business. it sounds like you are someone who is really thinking about tech. when you look at a technology standpoint what do you see that netflix has an advantage over its competitors?

timothy: one of the things they have done is built a platform for creating great content. it is not just the ability to stream. that is almost commodity. what they have actually built is a creation platform. cory: what do you mean? timohty: what they have done is they have re-architected the content creation industry for television, broadcast. in the background, i don't think it is an accident that we are starting to see great shows coming from netflix. they have assembled a team of great writers, they have built all the technology components before hand to deploy. the way i look at it is they have become this great content factory. the technology aspects of it that we first looked at netflix for are a commodity. they have become a great content house. cory: i don't understand how they have done such a great job of it. abc was the company on tv that couldn't buy a hit and now they have a strong lineup.

you see this over and over again. keith, what are they doing that is right? keith: they have more at-bats. you mentioned marco polo. it wasn't a big success. it was beautifully shot. it didn't quite hit it on the story line. you flip it and look at house of cards, it's a very intriguing story. they have worked hard to deliver solid content, and they are getting high-quality filmmakers, directors, and writers to bring them their best stuff first. they are becoming a first stop. their process from idea to screen is shorter than the networks. that is the opportunity. >> that's absolutely correct. you have heard the expression the harder the work the luckier you get. the more you invest, the luckier you did. netflix is the premium content buyer. the major markets did not spend all their pilot development money. netflix and amazon over

-- that's because of netflix and amazon over investing and buying the content. the hollywood community is clamoring to get in front of netflix that they overpay for content. it is more important to bring the viewers to get subscribers. cory: the content cost is the the thing that worries me. that contingency is so huge, $9 billion in the last quarter. $9.8 billion. that is a minimum cost that is not on a balance sheet. but it's something they are going to have to pay. i own a bunch of camera trucks in hollywood that are so busy. because everybody is working all year long. it's not just about pilot season anymore. are the content costs going to start to hurt netflix? >> when they are buying new stuff, absolutely. they are developing their own originals. when you develop your own

originals you control your content costs. they make smart investments on how they build their stages, how they get actors, they make actors a part of the production, they hold their costs down. they are the head of the game and the future. >> that is exactly it. they are going to get an economy of scale. they are playing a premium. as keith mentioned, eventually they will control the economics. cory: tim jones, presidential innovation fellow. thank you very much. kim is going to stay with us as well as jerod moses. looking for love in all the right places, the stock market a lot of love to be had there. shares of the inner half -- the internet conglomerates hit a 22 year high today. this has been telegraphed into a single business reporting segment 18 months ago. this includes match.com okcupid, and tender. -- tinder.

they put a price tag of $6 billion on the business unit. they are selling less than 10% of the match group and they expect to complete the transaction in the fourth quarter. coming up, the u.s. may be reaching a cyber truce with china, but could this really prevent more reaches? -- breaches? and bad blood between apple and taylor swift is over. she is putting 1989 on apple music, next. ♪

cory: a story we are watching violence on the streets as taxi

drivers protest uber in france. courtney love was caught in the chaos. uber has over one million users in france. uber tells us the company condemns the violence and its service is not illegal in france. we will keep you posted as that story develops. the u.s. may be reaching a cyber -truce with china after high-level meetings in washington. both countries are agreeing for the need for cyber code of conduct. this comes as u.s. officials are saying the chinese government is responsible for the attack on the office of personnel management. the attack may have exposed social security numbers for as many as 18 million government employees. how big of a deal is this?

we have timothy jones back with us. david, let me start with you -- the level of hacking is something companies don't talk about openly, but whenever i get a ceo in front of me, i say how often does your company get tacked? if i get answers it is often daily. david: i don't think you get many answers out of falsely asked them those questions. they don't want to admit. hacks have been happening again and again. i have been watching it over and over again as an investigator. it is an interesting atmosphere. cory: timothy, what is the view -- you've got unique access in this thinking of what is going on and what we are doing, not talking about what china is doing, not talking about -- what is the sense of alarm about china's role in hacking?

timothy: in this context i can only really speak as a private citizen. i look at this as similar to what we saw in the 1970's and 1980's, where -- when you look at the old eastern bloc, both sides are probing each other to understand what each other's capabilities were. i think in this particular case from my own personal perspective that is what is going on. a lot of the recent policy moves have been really aimed at trying to establish a detante which levels were appropriate and which were not. it seems -- cory: it seems a little like more than probing. we saw the sony had arian it changed the game. is that the thing that really gets business concerned about the cost of these things? >> i think since before sony no one had an understanding that an attack could result in such disruption. i think the interesting take

away their -- takeaway there is that every attack we see even by financially motivated attackers could in that way. they choose to steal information or data, and it is lucky they are greedy. cory: is the probing about the beginning of the understandings? one of the things we see is a new level of patience where whoever is doing the hacking they get into a system and stay there for long periods of time figuring out when the weakest operators are on and then poaching what they are trying to poach. >> that's why they -- that's why when you compare it to the security situation between the east and west in the 1970's and in the early days of the 1980's. post-world war ii period there was a mad scramble to get capabilities. no one knew what the other side was capable of. we began to see a shift from tactical intrusions to strategic intrusions. we are seeing the same thing now with security.

moving from tactical, let's say greed-based intrusions to more strategic intrusions. it is a believe that the greatest value is in the long-term, persistent access on -- and the information that comes from that persistent access. therefore there is no need to hurry or grab something and run out the back door. i would expect to see more of this strategic intrusion as part of this probing by both sides of the equation. cory: david, do you feel business can lead the way, the business risk is so great, for both countries, and businesses in both countries, business -- that business people can say, hey knuckleheads, cut it out? >> i think it is going to take more than that. we need to protect her to results -- protect ourselves. china is not playing fair with the u.s.. lots of countries perform hacking operations to gain competitive intel. china is one of the ones focused

on stealing information related to industry. that is what they have to stop. cory: i guess i wonder also, if we both say we won't do it anymore, is that really going to stick? they haven't even severe doing -- they haven't even been doing it in the first place. >> i don't think you're going to get it to stop entirely. what the administration should be focused on is narrowing the scope of the hacks going to government entities, to military type secrets. that is what governments typically do. they need to limit that to keep people from hacking into corporations things of that nature. cory: this is my point of a detente. both sides are going to try to create cyber capabilities, but certain things are going to be perceived as a direct strategic threat to national interest and other intrusions won't be. those ninth -- those lines need to get established.

from my perspective as a private citizen that is what is the discussion is about now. cory: last question. is it important this is happening now? >> yeah, i think it is important is happening now. after everything we have seen the last few weeks it has been a lead up to that. i hope that we will actually get a chance to sit down and find those more detailed laws or rules that are necessary for rules against between the u.s. and china. cory: thank you both. taylor swift is bringing her 1989 album to apple music. she tweeted out the news today saying "this is simply the first time it felt right in my gut to scream -- to stream my album." it's not just taylor -- eminem will be the first on the apple radio station beats one. this photo of the pair was poach it -- posted ahead of the interview. apple is also fixing things with music publishers. the company has agreed to pay

@0.00002 cents per stream during the trial. compared to spotify which pays .006 cents. your mobile wallet, the lowdown from mastercard. and an unexpected water guzzler in the california dropped -- -- drought -- data centers. how many gallons it takes to keep servers running. also, google map goes vertical. look away if you are afraid of heights. climbing street view to a new level. 3000 feet in the air scaling el cap at yosemite. ♪

cory: time for the bwest byte. today's number is 150 8000 -- -- 158,000, the number of olympic swimming pools you can fill with the water needed to keep 800 data centers cool. california has more data centers than any state, not counting in -room with server rooms and local businesses. data centers are the biggest -- are not the biggest water users, that would be the agriculture business. a midsized data center would use between 80 and 130 million gallons of water every year. that's equal to 100 acres of almond trees or three hospitals. the california drought is showing no signs of letting up. does it ever seem as if it is not if but when your data gets stolen?

arizona governor jerome powell called for safer banking systems. what our banks and credit card issuers doing to make that happen? still with me, tim jones in san francisco. welcome to bloomberg west. you guys have got more risk with customer data then probably any other business in the world. how do you stay ahead of the bad guys trying to still -- steal information? >> it's often about layering technology. i'm often asked what is the answer? there is no silver bullet to payment security, but a big step in that is going to move to chip cards in the u.s. within the next couple of months. cory: it will change the rules that merchants have to deal with in terms of who will hold liability when a car gets stolen. >> that is right. on october 1 whoever has not invested in the chip technology

will be responsible for any resulting fraud. if your card has a chip on and -- a chip on it and you use it -- if the merchant terminal is upgraded the card is not, the bank issuer that you got your card from will be responsible for the fraud. i should just note -- the real mission here is to drive the fraud out of the system. the real objective is to have a chip card at a chip terminal and no fraud. cory: right. tim, there is so much innovation in the world of payment. i want to know what you think of this. tim chip cards, it is : interesting we are getting chip card technology years after europe has had the technology. one of my big concerns is that as we are bringing chip cards to market in the u.s., we think it is innovative when in fact in other parts of the world threats have already evolved to deal with chip cards.

i think we need to separate the actual, physical card from the transaction. what i am saying is i think the technology is going to need to evolve for the individual transaction to have some atomic level identifier which can span physical representation. it may be a chip card, some other physical device, it might even be the sim card of your phone, but i'm concerned that we are taking the victory lap on chip cards when the technology is relatively mature. >> yeah. what we said about the move to chip, and you are right, it was about the upgrade to the next generation of payments. it wasn't strictly about putting the chip in cards. it was about establishing this dynamic infrastructure. there is unique data created with every chip transaction. as i said about layering technologies, it is that in concert with other technologies that we will employ as we digitize cards into multiple devices that will create this

heightened level of security. cory: in europe the technological decision was made to go with the chips. in the u.s. it was data analytics, so we can understand if cory is buying gas in san francisco, he is probably not buying doritos in florida. that was a software development. it wasn't as pronounced in europe. it was a combining of the two on both continents. >> it absolutely is. what we saw, but to your point the shifting of fraud. what we saw was that as counterfeit activity increased, 40% of the world's flawed originated here where is only 20% of transactions did. we have to address that disproportionate nature of the counterfeit fraud. we need to come to some you bit

-- we need to come to a ubiquitous global payments system because as global consumers travel into the country and out of the country it is best that we are on a common platform, which is really about the next generation of payments. cory: thank you. one more story -- alibaba's jack ma is on a buying spree. he has purchased 80,000 acres in the adirondack mountains. only $23 million for the upstate property. the land was once owned by a rockefeller air. -- heririr. tomorrow on bloomberg west, i will be here with josh element of greylock partners. we will talk about the meerkat what they are doing with periscope, that is all tomorrow on bloomberg west. have a great evening. ♪

♪ >> from our studios in new york city, this is "charlie rose." charlie: we begin this evening with the latest revelations of overseas spying by the national security agency. documents published by wikileaks show that the n.s.a. eavesdropped on the presidents and senior leaders of france. the white house released a statement saying there was currently no surveillance on the french president's conversations. hollande summoned the country's ambassador to the united states and called two emergency meetings. the white house said that president obama spoke to his counterpart on the phone today.