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Mark Zuckerberg's new money

Monetizing the Market: Mark Zuckerberg's pivot to a more privacy-focused Facebook will open up new revenue streams for the company and could radically change the nature of shopping and the relationship between brands and consumers.

• Now that Facebook has shifted to a "digital living room" based on ephemeral, encrypted messaging, the company needs to find new ways to monetize beyond traditional advertising.

• Brands and advertisers will need to find their way into the "living room" by establishing direct relationships with consumers who actively choose to engage with their content.

• This is a departure from Facebook's existing public-facing model, where consumers passively engage with advertising that is targeted at them based on their shared data.

Facebook's privacy-focused monetization strategy is still TBD. But one strategy would see it starting in the public square and shifting to messaging, as Zuckerberg explained in a call with investors last week:

• “The goal would be to have something where you can do discovery through the broader town square-like platforms in Instagram and Facebook, then complete the transactions and follow up with businesses individually and have an ongoing relationship through Messenger and WhatsApp."

• Specifically, you see an Instagram post from Nike or Glossier selling you on a new shoe or lip gloss. Instead of being redirected to a storefront, you're redirected to a private message exchange with the brand's human or automated representative.

• This transaction begins a two-way relationship that's tailored to your interests. Nike or Glossier could start messaging you directly with new products, discounts, events, etc. You're no long a customer; you're a friend.

The big picture: Facebook's shift to privacy isn't a threat to its existing advertising-based business model -- it's an opportunity. Zuckerberg can now capitalize on global commerce by making Facebook the platform for payments, transactions and consumer-brand relationships.

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Bonus: New York Times graphics editor Stuart Thompson offers a handy visual explainer on how targeted advertising works.

• The big picture: "Today’s data providers can receive information from almost every imaginable part of your life."

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What Zuck announced at F8

The New Facebook, via my colleague David Ingram: Mark Zuckerberg rolled out a redesign of the company’s apps and changes to Messenger, WhatsApp and Instagram "that he said would make the services faster, more private and more social."

Highlights from the keynote:

• An all-white redesign that prioritizes stories, groups and events and gets rid of the blue bar that distinguished Facebook from other apps.

• End-to-end encryption for Facebook Messenger.

• Updates to Instagram, including links for products and a "Create Mode" that allows you to share content beyond photos and videos.

• New Oculus VR headsets that retail at $399 each.

• Secret Crush, a dating app that connects users who have both expressed interest in each other.

• Meet New Friends, which connects users with other people who have similar interests.

What Zuck didn't announce, via Ingram: "Any changes to the ways that Facebook collects or uses the personal information that fuels its lucrative online advertising business."

📷 Rally the Market 📷

Quality content: My three favorite Instagram accounts from people I don't know: Dylan Furst (fursty), Emily Arden Wells (gastronomista_) and Joni Sternbach (jstersurf).

• Yours? Email me. Rules: No brands, no one you know.

If you're enjoying the newsletter, share it with friends.

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Tim Cook positive amid drops

Big in the Bay, big on the Street: Apple's quarterly sales and profits have dropped for two consecutive quarters as iPhone sales declined by 17 percent in the last three months to $31 billion.

• But: Apple's services business continues to grow — by 16% in the last quarter — and shares were up after a $75 billion stock buy back.

• And: Apple's results exceeded analysts’ expectations.

What's next, via WSJ's Tripp Mickle: "Tim Cook highlighted glimmers of hope in problem areas including China, where he said customers have reacted positively to Apple’s move to lower iPhone prices and offer financing programs."

• Cook: "We like the direction we’re headed with the iPhone, and our goal now is to pick up the pace."

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Eric Schmidt exits Alphabet

Bidding adieu to Mountain View: Former Google chief-turned-chairman Eric Schmidt will step down from Alphabet's board of directors, ending his nearly twenty-year tenure with the tech giant.

• Diane Greene, the former head of Google’s cloud computing business, will also leave the board. Robin Washington, the chief financial officer at Gilead, a biopharmaceuticals company, will join.

The big picture, via NYT's Daisuke Wakabayashi: "Schmidt, who was Google’s chief executive for a decade until 2011 and then its executive chairman for seven years, oversaw the meteoric rise of Google from a useful search engine into an internet powerhouse."

Market Links

• Jon Steinberg sells Cheddar to Altice for $200 million (WSJ)

• Steve Shannon and a fellow Roku alum launch Tetra TV (Variety)

• Susan Wojcicki addresses YouTube creator concerns (Verge)

• Roger Lynch tries to pitch Condé Nast as primetime TV (AdAge)

• Michael Barbaro's 'Daily' reaches 2 million listeners (MediaPost)

• Jimmy Pitaro shuts down ESPN The Magazine (Variety)

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Is David Zaslav worth $129m?

Talk of Tinseltown: Discovery chief David Zaslav's $129 million annual compensation "has drawn outrage at a time when rising income inequality is gaining traction as a political issue," Variety's Cynthia Littleton reports.

• "Zaslav’s compensation was 1,511 times the average median compensation for employees, which stood at $85,704 last year."

• Critics wonder how "a board of directors with fiduciary responsibility to shareholders" can "justify that kind of largesse."

The big picture: "The subject of CEO remuneration is becoming a target for increasing activism among investor advocates and social-justice activists."

The 2018 Media CEO leaderboard:

• Discovery chief David Zaslav: $129.5 million

• Disney chief Bob Iger: $65.6 million

• NBCUniversal chief Steve Burke: $40.0 million

• Netflix chief Reed Hastings: $36.1 million

• Comcast chief Brian Roberts: $35.0 million

• AT&T chief Randall Stephenson: $29.1 million

• CBS acting chief Joe Ianiello: $27.4 million

• Viacom chief Bob Bakish: $20.0 million

Hall of Fame:

• Former Fox chairman Rupert Murdoch: $49.2 million

• Former CBS chief Les Moonves: $47.1 million

See the full list, plus median employee salaries, here.

Disclosure: NBC News is part of NBCUniversal; Comcast is the parent company of NBCUniversal.

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The Fundraising Circuit: Disney Studios chair Alan Horn will host a fundraiser at his Los Angeles mansion for House Majority Leader Nancy Pelosi and the Democratic Congressional Campaign Committee, per CNBC's Brian Schwartz.

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Obamas unveil Netflix slate

"When they go low" dept.: One year after signing an eight-figure, multiyear deal with Netflix, Barack and Michelle Obama have unveiled their first seven projects for the streaming service.

• Drama Series: “Bloom,” about women and people of color in post-World War II New York; and “The Fifth Risk: Undoing Democracy,” based on the book by Michael Lewis.

• Film Adaptation: “Frederick Douglass: Prophet of Freedom,” based on the Pulitzer Prize-winning biography by David W. Blight.

• Documentaries: “American Factory,” about workers at a Chinese-owned factory in Ohio; and “Crip Camp,” about the disability rights movement.

• Anthology Series: “Overlooked,”about people whose deaths went unreported; and “Listen to Your Vegetables & Eat Your Parents,” a series for preschoolers about food and nutrition.

The big picture: With the possible exception of "The Fifth Risk," which is very much an indictment of the Trump administration, all of the Obamas' projects focus on social, cultural and historical issues rather than contemporary politics.

• Fun debate: Would Netflix chief Reed Hastings get more or less value from the Obamas if they went directly after President Trump?

What next: Oprah talks about her Apple TV+ plans with THR's Lacey Rose: "Apple exposes you to a whole lot more people," she says. "The thing that I'm really, really excited about... is creating the world's largest book club."

See you tomorrow.