FT launches a new consulting arm focused on helping businesses use consumer data

As more and more news businesses turn to paywalls and subscriptions, The Financial Times looks like an early model and success story — a few months ago the organization announced that it’s passed 1 million paying readers, with digital subscribers accounting for more than three-fourths of its circulation.

Now The FT is looking to share some of what it’s learned (and further diversify its business) by launching a new consulting unit called FT Strategies.

Chief Data Officer Tom Betts told me that The FT built a lot of the technology behind its subscription efforts. At first, the team assumed that it might be able to build a business selling that technology to other publishers. After all, Vox Media and The Washington Post are both trying to do something similar with their content management systems.

So it was surprising to hear Betts say that FT Strategy is actually “a pure consulting business.”

Asked whether The FT might eventually start selling a tech product as well, he replied, “Never say never about the technology dimension, but I think as we did our market research and started talking to customers and looking more at the technological landscape out there, we realized that over the years, many of the elements of the technology we have built have become commoditized.”

That doesn’t mean there’s a technology stack that publishers can buy off-the-shelf that can meet all their needs (there’s at least one startup called The News Project trying to piece that stack together).

But Betts argued, “Even if you go and buy best-of-breed technology, that doesn’t mean you can assembly it in the right way to make it useful and meaningful to scale and grow direct-to-consumer revenues. And most importantly it doesn’t mean that you know how to operate it with teams and how to actually use it to successfully scale and grow your business.”

That’s precisely what FT Strategies is trying to provide. In fact, Betts said the company has already been quietly testing out the idea in beta and built up a customer list that includes Bonnier, The Business of Fashion, Penguin Random House and the V&A — so not just news companies, but also a book publisher and an art and design museum.

“I believe that the capabilities that we’e built, clearly they are salient to other news publishers, but I believe that they span far beyond that,” Betts explained.

He went on to argue that FT Strategies could potentially work with any company that’s “either facing disruption as the news media industry has” or that’s in a sector that’s part of the broader direct-to-consumer trend — basically, any company that needs help figuring out “how do we market to individuals, how do we build relationships to individuals, how do we leverage those relationships both so that the consumers have the most positive and engaging experience with our products and to maximize revenue.”

As for whether any of these business might be leery about giving another company — and, in some cases, a competitor — access to their customer data, Betts said that philosophically, the FT believes that “a healthy paid content ecosystem is good for the FT and it’s good for all the publishers that participate in it.”

More concretely, he said his team is “very clear internally about having the Chinese walls and professional standards for FT Strategy that ensures the right levels of confidentiality of clients’ data [so] their confidential information doesn’t leak back into the core operation.”

Daily Crunch: We review the Pixel 4

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 9am Pacific, you can subscribe here.

1. Pixel 4 review: Google ups its camera game

Brian Heater was impressed by the improvements in Google’s latest smartphone, including camera upgrades and the Recorder app.

However, he also argued that the Pixel 4 doesn’t exactly address what Google wants the Pixel to be, moving forward, especially after the Pixel 3a it was confirmed that consumers were looking for something cheaper.

2. NordVPN confirms it was hacked

The admission comes after rumors that the company had been breached, and what first emerged was that NordVPN had left an expired internal private key exposed, potentially allowing anyone to spin out their own servers imitating NordVPN.

3. Netflix to raise $2 billion in debt to fund more content spending

Despite a relatively strong earnings report last week, Netflix isn’t out of the woods just yet. Disney+ and Apple+ launch next month, and there’s more competition on the way.

4. Commercetools raises $145M from Insight for Shopify-style e-commerce APIs for large enterprises

The funding comes at the same time as commercetools is getting spun out by REWE, a German retail and tourist services giant that acquired the startup in 2015.

5. The Surface Pro 7 is a competent upgrade with USB-C, refreshed processors, but little else that’s new

The Pro 7, which is going on sale today, is a competent upgrade that gives Surface Pro users exactly what they want — even if it sticks to a tried and tested formula.

6. IPOs are the beginning, not the end

At Disrupt SF, PagerDuty’s Jennifer Tejada argued that an IPO “is part of the beginning of a long journey for a durable company that you want to build a legacy around.” (Extra Crunch membership required.)

7. This week’s TechCrunch podcasts

The Equity team talks to Greylock’s Sarah Guo about the future of software-as-a-service products, while Original Content has a review of “El Camino,” the new “Breaking Bad” movie on Netflix.

Digital ad spend reached $57.9B in the first half of 2019, but growth has slowed (IAB report)

During the first six months of 2019, advertisers spent $57.9 billion on U.S. digital advertising, according to the latest report prepared by PwC for the Interactive Advertising Bureau (an online advertising trade group).

That’s a 17% increase compared to the same period in 2018, and the most spending IAB has ever seen in the first half of the year.

However, PwC’s David Silverman noted that it’s actually “a touch lower” compared to the second six months of last year, marking the first time we haven’t seen continual growth since 2009.

Silverman suggested that one factor contributing to this is slowing growth in mobile and social advertising. To be clear, both sectors are up year-over-year: Mobile ads grew 29% to $30.9 billion, while social media spending increased 26% to $16.5 billion.

But he said, “Those sectors of the industry are likely maturing” — so we’re not seeing the growth levels that we have in recent years.

IAB report

Meanwhile, the IAB’s senior vice president of research and analytics Sue Hogan noted that the dropoff between the end of 2018 and beginning of 2019 amounts to “a rounding error” (in fact, the report puts spending during both periods at $57.9 billion).

Overall, she argued that every category remains “healthy,” and that the big story is the growth in video advertising, which was up 36% to $9.5 billion.

The report also includes numbers around revenue concentration, specifically the amount of ad spend going to the top 10 digital ad companies. It doesn’t name specific companies (Google and Facebook are widely seen as the two giants dominating this space), but it says that revenue concentration in the top 10 has fluctuated between 69% and 77% over the past decade.

During the second quarter of 2019, revenue concentration remained at the top end of that range, specifically 76%. Meanwhile, companies 11 through 25 only accounted for 7%.

Original Content podcast: ‘El Camino’ provides a quiet coda to ‘Breaking Bad’

When a TV show gets turned into a movie, it often represents a big change of pace, with a standalone plot, a bigger budget, all made for a bigger (or at least more casual) audience.

“El Camino: A Breaking Bad Story” — which premiered a week ago on Netflix —doesn’t take that approach at all.

Far from telling a new story or serving as jumping on-point for new viewers, “El Camino” functions more like a two-hour epilogue to the existing show. It appears to have been made exclusively for existing “Breaking Bad” fans who were wondering about what happened to Aaron Paul’s character Jessie Pinkman after the series finale.

As we acknowledge in the latest episode of the Original Content podcast, Jordan is the only regular OC host who’s actually seen the entirety of “Breaking Bad.” And she was reasonably satisfied with the film, feeling that it had some of the same strengths as “Breaking Bad” — though it didn’t quite capture the strong character development and elaborate plotting that made the series great.

Darrell, meanwhile, gets a chance to explain why he’s so resistant to “Breaking Bad,” and why nothing in “El Camino” changed his mind.

In addition to our review, we discuss Netflix’s latest earnings, in which which the streamer reported better-than-expected profits, despite still-sluggish subscriber growth in the United States.

You can listen in the player below, subscribe using Apple Podcasts or find us in your podcast player of choice. If you like the show, please let us know by leaving a review on Apple. You can also send us feedback directly. (Or suggest shows and movies for us to review!)

And if you want to skip ahead, here’s how the episode breaks down:

0:00 Intro
2:12 Netflix Q3 earnings
16:06 “El Camino” reviews (spoilers for “Breaking Bad” but not “El Camino”)
38:20 “El Camino” spoiler discussion

Tilting Point acquires game monetization startup Gondola

Tilting Point announced yesterday that it has acquired Gondola, a company that aims to increase to improve game monetization by optimizing in-game offers and video ads.

Tilting Point CEO Kevin Segalla described his company’s model as “progressive publishing” — usually, mobile game developers starting working with Tilting Point because they need help with user acquisition, and then develop a deeper publishing relationship over time.

“With a select group of our development partners, we’ll acquire an IP, and we’ll … have them take the engine that they already have and create a whole new game,” Segalla said. “It’s really a dual effort between us and the developer.”

To accomplish all this, the company has built artificial intelligence tools to improve user acquisition. But the other side of that equation, in Segalla’s view, is increasing the lifetime value of the users acquired.

“At the end of the day, scaling a game boils down to two simple things, [cost per install] and LTV,” he said. “Strong developers are working to improve the LTV of their players, but there’s a lot of low-hanging fruit that with the right toolset you can use to improve the lifetime values. That’s what Gondola is about … We’ve been following for years, and we said, ‘Let’s bring this in-house.'”

Gondola currently offers four modules: Target Optimization (choosing the best offer for a player), Rewarded Video Ad Optimization (choosing the right amount of virtual currency to reward a player for watching a video ad), Store Optimization (choosing the right store items to show a player) and Currency Optimization (choosing the best virtual currency amounts for offers and promotions).

The financial terms of the acquisition — Tilting Point’s first — were not disclosed. As part of the deal, Gondola CTO André Cohen is joining Tilting Point as its head of data science, while his co-founder and CEO Niklas Herriger remains involved as an executive advisor.

Daily Crunch: Zuckerberg has thoughts on free speech

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 9am Pacific, you can subscribe here.

1. Zuckerberg on Chinese censorship: Is that the internet we want?

The Facebook CEO spoke yesterday at Georgetown University, sharing his thoughts on speech and “how we might address the challenges that more voice and the internet introduce, and the major threats to free expression around the world.”

Among his arguments: China is exporting its social values, political ads are an important part of free expression and the definition of dangerous speech must be kept in check.

2. Atlassian acquires Code Barrel, makers of Automation for Jira

Sydney-based Code Barrel was founded by two of the first engineers who built Jira at Atlassian, Nick Menere and Andreas Knecht. With this acquisition, they are returning to Atlassian after four years in startup land.

3. Swarm gets green light from FCC for its 150-satellite constellation

Swarm Technologies aims to connect smart devices around the world with a low-bandwidth but ever-present network provided by satellites — and it just got approval from the FCC to do so. Apparently the agency is no longer worried that Swarm’s sandwich-sized satellites are too small to be tracked.

4. Nintendo Switch hits another sales milestone

Nintendo’s North American Switch unit sales have already surpassed the lifetime worldwide unit sales of the Wii U. The company announced Thursday that they had sold 15 million units of the popular handheld console in North America.

5. HBO Max scores all 21 Studio Ghibli films

WarnerMedia has been on a shopping spree for its HBO Max service. It bought the rights to “Friends” and “The Big Bang Theory,” and now it’s using its outsized checkbook to bring beloved Japanese animation group Studio Ghibli’s films onto the web exclusively on its platform for U.S. subscribers.

6. Volvo creates a dedicated business for autonomous industrial and commercial transport

The vehicle-maker has already been active in putting autonomous technology to work in various industries, with self-driving projects at quarries and mines, and in the busy port located at Gothenburg, Sweden.

7. How Unity built the world’s most popular game engine

Unity’s growth is a case study of Clayton Christensen’s theory of disruptive innovation. While other game engines targeted the big AAA game makers at the top of the console and PC markets, Unity went after independent developers with a less robust product that was better suited to their needs and budget. (Extra Crunch membership required.)

YellowHeart allows musicians and concert organizers to take more control of resold tickets

YellowHeart is trying to solve a problem that should be familiar to anyone who’s ever tried to buy a ticket to a popular concert: Those tickets will often get snatched up by scalpers, who then resell them at a much higher price.

In fact, the startup’s CEO, Josh Katz, said he founded the company because he’s a music “megafan” himself, and he was “just tired of getting ripped off by scalpers.” At the same time, he said this isn’t just a problem for concertgoers. Instead, he painted it as a “lose-lose for the fan and the artist,” because the musicians aren’t sharing in the profits from the marked-up tickets, either.

So YellowHeart can allow a musician, concert venue or other “event initiator” to set up rules for how their tickets are resold. Katz said he’s hoping that some brave artists will simply say that tickets can’t be sold at a marked-up price, but he predicted that many more will set-price ceilings and dictate that any resale profits are then split between the seller, the artist and/or a charity of the artist’s choosing.

“No matter where the tickets are sold, they have to abide by those rules,” Katz added. That’s because the ticket sales run a public blockchain, and “all transactions go through YellowHeart, all the revenue flows through YellowHeart.”

The plan is to launch the ticketing platform in the second quarter of next year. Katz said users should be able to sell their tickets on any marketplace that works with YellowHeart’s smart contracts — but he also acknowledged that it will take some time to bring partners on-board and for those integrations to go live.

Katz argued that the blockchain approach has other benefits, like the fact that each ticket will have “a unique key that is tied to a user’s identity and sits in their virtual wallet,” which should eliminate forgery. (The ticketing process, by the way, will be “fully digital end-to-end,” except that venues will have the option to print tickets at the box office.)

Katz has a background in the music industry, having previously founded El Media Group, which creates custom playlists for hotels, restaurants and other clients. He founded YellowHeart with The Chainsmokers, along with their manager Adam Alpert, who’s also CEO of Disruptor Records.

“With The Chainsmokers, we’ve been outspoken about the issue of scalpers for years, and are excited to partner with YellowHeart to provide a smart and effective solution that gives control back to artists and fans,” Alpert said in a statement.

And Katz suggested that YellowHeart’s platform could eventually be used in any other kind of event ticketing.

“I am anticipating this being a great platform for sports and theater as well,” he said. “Myself and Adam and Drew [Taggart] and Alex [Pall of The Chainsmokers] come out of music, so that’s where we’re starting.”

The Information will launch Ticker, a tech news app that costs $29 per year

Since it was founded by journalist Jessica Lessin in 2013, The Information has stood out in the tech news landscape for its focus on an ad-free, subscription-driven business model (a focus that seems increasingly prescient).

Now, the upcoming launch of an app called Ticker suggests that the company is looking to expand its audience while maintaining that subscription model.

The Information describes Ticker as its first consumer app. The assumption is that anyone who’s currently paying the $399 annual fee for an Information subscription needs it for their job — whether they’re an investor, entrepreneur or some other professional in the tech industry.

The new app, meanwhile, is designed for anyone who might be interested in keeping up-to-date with the latest tech news, and it’s priced much more affordably, at $29 per year. (Information subscribers will get access as well.)

The Information ticker app

Apparently the app was inspired by the Briefing section of The Information website, which offers quick summaries (often drawn from reporting by other publications) of major tech news.

Ticker, meanwhile, will include a section called Today with summaries of the day’s tech headlines — similar to Briefing, but written for a consumer audience. It will also include a calendar highlighting upcoming IPOs, conferences and other events that readers might want to know about. (Not included: The Information’s full articles and original reporting.)

“More and more, we’ve been hearing from readers who don’t have a business reason to follow tech but are finding it more and more central to their lives,” Lessin said in a statement. “We are launching Ticker for them — giving them access to the best summaries of the most significant news, written by our team at The Information.”

The company plans to launch Ticker later this fall. In the meantime, you can sign up here.

Netflix Q3 earnings exceed estimates, despite disappointing US subscriber growth

Netflix’s Q3 financial report has given the company’s stock a boost in after-hours trading, with profits significantly exceeding analyst expectations.

The streaming giant reported revenue of $5.24 billion revenue, up 31% year-over-year and more-or-less in line with predictions of $5.25 billion. More impressively, it reported GAAP earnings of $1.47 per share, compared to analyst estimates of $1.05 per share.

Subscriber growth, meanwhile, was a mixed bag. Netflix reported 500,000 paid net additions of in the United States, falling far short of its forecast of 800,000. Conversely, international growth exceeded expectations, with 6.3 million net adds compared to a forecast of 6.2 million.

U.S. subscriber growth looks particularly weak when you compare it to 2018 — Netflix has only seen 2.1 million net additions domestically in the first nine months of 2019, compared to 4.1 million in the same period of 2018. Netflix’s investor letter seems to blame this on price hikes earlier this year.

“Since our US price increase earlier this year, retention has not yet fully returned on a sustained basis to pre-price-change levels, which has led to slower US membership growth,” the company says. “On a member base of more than 60m, very small movements in churn can have a meaningful impact on paid net adds.”

The company also noted that its average revenue per user is up 16.5% year-over-year in the US. (I assume it can thank to those same price hikes.)

Overall, Netflix said it now has more than 158 million members. It’s projecting 26.7 million net adds for the entirety of 2019, down from 28.6 million net adds last year.

“While we had previously expected 2019 paid net adds to be up year over year, our current forecast reflects several factors including less precision in our ability to forecast the impact of our Q4 content slate, which consists of several new big IP launches (as opposed to returning seasons), the minor elevated churn in response to some price changes, and new forthcoming competition,” Netflix says.

Netflix’s stock is up 7.6% in after-hours trading (as of 4:39pm Eastern).

However, those subscriber numbers are certainly going to provide more fuel to skeptics. For example, eMarketer analyst Eric Haggstrom said in a statement that “the fact that Netflix has shown disappointing growth without the new competition present, is a negative omen for Netflix in 2020 and beyond.”

The investor letter also includes an extended discussion of that competition, acknowledging the upcoming launch of Disney+ and Apple+ next month, and HBO Max and Peacock next year.

“Many are focused on the ‘streaming wars,’ but we’ve been competing with streamers (Amazon, YouTube, Hulu) as well as linear TV for over a decade,” the letter says. It goes on to acknowledge that these upcoming launches will be “noisy” and could create “some modest headwind in our near-term growth,” but it adds, “In the long-term, though, we expect we’ll continue to grow nicely given the strength of our service and the large market opportunity.”

Updating

Shonda Rhimes signs podcast deal iHeartMedia

Shondaland, the production company founded by “Scandal” and “Grey’s Anatomy” creator Shonda Rhimes, has signed a deal to create a new slate of podcasts for iHeartRadio over the next three years.

As part of the deal, Shondaland is launching a new division called Shondaland Audio, with executive Sandie Bailey in charge of day-to-day operations. Rhimes will be involved as well, overseeing the development of the new podcasts.

While Shondaland is known for its TV shows, it has already been moving into podcasting with Katie’s Crib, a show about motherhood from actress Katie Lowes. (The announcement says new episodes of Katie’s Crib will be part of the Shondaland Audio slate.)

This partnership seems particularly noteworthy since Rhimes helped to kick off the current wave of huge streaming deals for content creators when she signed with Netflix two years ago. There haven’t been quite as many eyebrow-raising deals in the podcasting world — but the Obamas did sign with Spotify a few months ago.

“Podcasting continues to see tremendous growth and I’m excited to partner with iHeartMedia as Shondaland expands its storytelling journey into this medium which has seemed to usher in a unique sense of boldness, intimacy and connection,” Rhimes said in a statement. “With iHeartMedia we aim to share stories that are engaging, insightful, and reflect a robust world-view while staying true to the authentic storytelling voice that has become synonymous with Shondaland.”

iHeartRadio’s parent company iHeartMedia has also shown a growing interest in podcasting, most notably with the acquisition of HowStuffWorks last year. And it’s also starting to play podcasts on its terrestrial radio stations.