Condé Nast CEO Roger Lynch on why legacy brand authority is a competitive moat in the AI content era

Speaker 2: We have the perfect guy

Speaker 1: to ask I don't know who's gonna comment on any of this, but we can certainly try and ask him about it because we have Roger Lynch, the CEO of Conde Nast with us here in the TBPN UltraDump. Roger, great to see you again. How are doing? I'm alright. For those I mean, we were hanging out last week, but for those who don't know, introduce yourself. Let's go a little bit back in time, take us on your journey, then we can get into all the hot topics in media.

Speaker 4: Sure. Well, yeah, I've been CEO of Conegas for seven years, but prior to that, I spent my whole career really in technology.

Speaker 1: Yeah. And primarily a fantastic guitarist.

Speaker 4: Thank you very much.

Speaker 1: That was my ambition. That was an incredible performance. It's a little bit of just lore, I guess, but we we we can get into hobbies and and things outside business. But, yeah, take us back. What was the first job in media? How did you get to where you were?

Speaker 4: First job in media?

Speaker 1: Yeah. Maybe that's a good place to start.

Speaker 4: Well, I mean, depends on how you define media. Really, I spent my career at the intersection of technology and media. Sure. So the first company that I ran was a broadband business. It was one of the first broadband businesses in Europe going back to 1999. And literally, one of the first things we did is we did a deal with the NFL to stream live NFL games in 1999. That's crazy. That was Where

Speaker 2: would how much how much demand was there for NFL in Europe at that time?

Speaker 4: Well, the reason the NFL was interested in it, this is back when Paul Teigleboo was the commissioner. He came over to announce this, crazy idea that we had, was they were trying to build the NFL in Europe.

Speaker 2: They had They're like, I hear people love football over there. Why aren't we why aren't we making money?

Speaker 4: Why isn't it our football? They had think there was a team called the Amsterdam Admirals at the time. That's right. There's a European football league Yeah. They're trying to promote. And, you know, broadband was a really interesting technology, and I was really excited to see how it could be used to change how people consume content. And that's why we did that that deal. And then I started an IPTV company, first video on demand IPTV, and then Sling TV, Streamy TV. So always sort of at the intersection of technology and media content. Then I ran Pandora, the first company I ran that I didn't start.

Speaker 1: I loved Pandora.

Speaker 2: Yeah. Pandora Pandora is truly Good. When I think of magical when I think of magical Very much. Yeah. When I think of magical technology experiences in my childhood Yeah. I think of Pandora. I think of being in my garage with my dad, we'd be like Yeah. Playing pool, listening to music

Speaker 1: or Sounds work so mad. Obscure songs on Pandora is amazing. Was there some sort of unique opportunity with Pandora around treating it like a radio station to because it feels like there was some sort of licensing deal on the back end that was not the same as Spotify or iTunes Store at that time where Right.

Speaker 2: Because I remember I must have been I must have been intuitively at the time, was like, okay, this is a fair trade off. Like, I'm used to going to iTunes and having to pay 99¢, or I can just kind of like roll the dice.

Speaker 1: Yeah. Maybe I'll get my

Speaker 2: maybe I'll get my favorite song on Pandora. So I found myself on Pandora a lot.

Speaker 4: Pandora took advantage of some rights that allowed them compulsory rights allowed them to stream all of that content. And but, you know, one of the trade offs was you couldn't choose the song. Yeah. Yep. And so they did launch a subscription. This is before long before I joined.

Speaker 1: Yeah.

Speaker 4: Yeah. Subscription service, but we're late for that game.

Speaker 1: They were

Speaker 4: quite late for that game. By that time, Spotify already had a very strong presence, and some of the other big tech companies were getting into it. Yeah. But you you mentioned AI. I mean, to me, one of the key things with Pandora was the way it combined sort of human taste with AI. Mhmm. So we had a team of musicologists. Mhmm. And one of the you know, you mentioned I've been a guitar player all my life. One of the best parts of that job is they were all fantastic musicians. So we do these company events, and we play all the time. Absolutely.

Speaker 1: These guys

Speaker 4: were so and they were mostly men. We're so good. Yeah. But then we had the data scientists also. Yeah. And they would take the work that the musicologists did and create their machine learning algorithms Yep. Around that. And each of the algorithms, they had I can't remember, 90 or so algorithms. Each one would get tuned for every individual listener. Interesting. So it'd be weighted a little bit more. Jordy likes this. John's like this. And and so it creates a personalized experience. And and to me, you know, I I still listen to Pandora. I also listen to Spotify. Yeah. But when I want something to just put something on and let it play, I'll go to Pandora because I think Yeah. Those algorithms still outperform.

Speaker 1: Yeah. And we I mean, we've talked to this new co CEO of Spotify, but, like, the that AI driven feature, the promptable playlist is just coming to Spotify, like, this year. And I'm sure it's souped up and powerful and stuff, but it is it is remarkable how long that like Internet radio

Speaker 4: Right.

Speaker 1: Like last these things have long these things have long lives. I'm wondering about your view on durability in media generally. It feels like anytime that there's some platform shift, there's endless think pieces about legacy media is dead. Linear TV is dead. This is dead. Everyone loves to talk about that. But in your experience, how does how does the media industry actually change as technology arrives?

Speaker 4: You know, the media industry is has a history of not changing quickly enough. And you can start with the music industry. Yeah. You know, music recorded music industry peaked in 1999. And then, you know, Napster

Speaker 2: And that's sales revenue.

Speaker 4: Yeah. And recorded recorded music industry.

Speaker 2: Yeah. We we found out like last week or the week before that vinyl record sales are like something like 10% of streaming revenue, which sounds

Speaker 4: So vinyl records that's an interesting trend to talk about. But but what the music industry did or didn't do is and this is one of the big mistakes and, you know, like most lessons that you learn, you learn the biggest lessons from your mistakes. What the music industry didn't do is look at how their customers were behaving and say, okay. Let me craft my business around that. Mhmm. They said, no. I don't like that behavior. I'm gonna change the behavior. Let me sue these teenagers in Iowa who are downloading music or sue the ISPs or their parents or whatever so I could change the behavior back because I really like it when they buy CDs. Yeah. That's really good for my business. That was disastrous for the So finally, once they had, you know, embraced, you know, downloads and then streaming, it started growing again. It's only just gotten back to the size it was in 1999.

Speaker 1: That's crazy.

Speaker 4: You know, twenty seven years later.

Speaker 1: There's more people and people still like music just as much as they did before.

Speaker 4: Of course.

Speaker 1: Purely failing.

Speaker 4: Of course. But they fought it for for far too long. Yeah. And it's it's a mistake. Vinyl records have grown every year for the last eighteen years. Exactly. Sales of vinyl records. And it was it used to be people my age buying vinyl records collecting Sure. Now there are as many people in their twenties buying them as there are people in their fifties or sixties buying them. A lot of people in their twenties don't even own a record player. Yeah. They buy the final records. There's an interesting trend that we and we had seen a bit in our industry too, like

Speaker 1: It was bizarre.

Speaker 4: Young people buying physical magazines. Yeah. Yep. It's like, why? Well, I think it's a search for authenticity. I think when you have so much

Speaker 1: I I got the paper right here.

Speaker 4: Digital content that is in your pocket and it's all free or free to consume, it becomes less valuable and and maybe less authentic to you. Mhmm. And so Yeah.

Speaker 2: There's there's something that's always been missing from like part of the the experience of being a music fan to never actually go and trade your dollars. Like I think people do like to vote with their dollars Yeah. And express their interest and actually have this physical embodiment of their of their taste.

Speaker 4: Well, they're doing it with live music now. That's where Yeah. The money has gone. Yeah. The money is, you know, really moved to to live. It used to be, you know, in the nineties and eighties and everything, people would go on tour to support their record sales. And now it's the reverse. Yeah. Release the record so you can go on tour and sell tickets.

Speaker 1: And it feels like the in person event stadiums are getting like, the CapEx is just skyrocketing across the sphere. SoFi Stadium here in Los Angeles. There's, like, more and more ways to draw people in with like ever larger spectacles and these like shelling points where like, did you see Taylor Swift in the Heiress tour? Like that was a key moment that even like the casual fans needed to find.

Speaker 2: Yeah. So after Pandora, talk about the journey into Conde Nast.

Speaker 4: Yeah. It was you know, we I wasn't at Pandora very long because we sold it to SiriusXM.

Speaker 2: Yeah.

Speaker 4: And, you know, I was thinking about what I wanted to do next, I was fortunate enough to be in process in four different companies. Two were in New York, two in LA. We're we're from LA. So LA had a lot of attractions for us. And I was flying back and forth between New York and LA and having trouble deciding what I wanted to do, and my wife was like, usually you're so decisive. I was like, I know. It's really tough. And then I finally realized on one of these flights that when I'm sitting here, had all the information on all these companies. Every time I'd go to the Conde Nast information. I wanted to read about that. Was like Mhmm. And that's how I literally have it made my decision. Mhmm. Like, that's the most intellectually interesting to me. I'm gonna go do that. So and I I But there were a couple criteria I was I had for what I did next. One was I still like the intersection of content and technology and distribution models.

Speaker 5: Yep.

Speaker 4: But nonexclusive content was gonna be dominated by big tech companies. You know, music Sure. Films, TV, whatever. The stuff that I had been doing, it had all been nonexclusive. Like, I wanted to go somewhere where we had our own content, we had our own brands, we could control our distribution more. And so that was certainly one of the criteria, but also still the opportunity to innovate around technology, how you use technology to create new business models, distribution models. And, you know, Conde Nast really fit that well.

Speaker 2: Yeah. Yeah. There is interesting I mean, we've talked about this a ton because, know, thinking about all the new categories of media, which we joked about, we put out this really like unhinged market map of of media as a joke. And then unfortunately, we like called ourselves neo traditional media, which was a joke. And then now people will tell us and be like, you guys are a pioneer of neo neo trad media. We're like, we created that But category as a but something that we've come back to over and over is just the value of these legacy brands that have been built across decades and how, you know, take away like the business models and and how those are evolving. Like, it just seems like the value of a Vanity Fair or a Vogue or the New Yorker are are shockingly durable because we're just, you can make more of these kind of properties but you need decades. Right? And and and so I'm wondering your strategy around kind of how you think about counter positioning these brands against the content that is flowing so freely across

Speaker 1: You're referring to the trough.

Speaker 2: What's that? Oh, yeah. Yeah. Yeah. The trough of social media apps. Yeah. But yeah. But yeah, like even, you know, I I've also talked about the the challenges with Substack around certain stories. Substack, if you're an individual selling a subscription, it wants it will reward people that publish multiple times a week that sell a subscription, and yet there's so many stories that take Months. Months to tell. Year there's great stories out there that you'd want somebody writing spending a year on

Speaker 5: it.

Speaker 1: C. Molde Hirsch is not gonna break the My Lai massacre on

Speaker 4: something.

Speaker 2: And so and so there's this opportunity of like the value of brands and curators that that is maintained. And we're not creating We are Like again, I would say we're creating new iconic media brands but it'll take, you know, twenty, thirty years. Right? It's just you cannot do it overnight. And then how these things can operate as platforms where there are a lot of super talented writers that shouldn't be trying to publish every single week because their calling is to publish maybe once a month or even once a quarter at different points, right, and finding finding those lanes. So I'm curious about how you're thinking about the role of the different brands under Conde Nast and, you know, counter positioning against platforms like traditional social media or or Substack.

Speaker 4: Look, I think you bring up a really good point about Substack in particular, which is it is a great platform for certain creators.

Speaker 2: Yeah.

Speaker 4: And if you are if you wanna be on that bit of a hamster wheel, meaning but it may not feel like a hamster wheel to a lot of people. Like, they they love to publish content multiple times a week. That's great. It's a great platform for that. If you wanna spend six months, twelve months deeply researching something, and Substack is not the medium for that Yeah. It won't reward that behavior. The New Yorker is.

Speaker 2: Yeah. Yeah.

Speaker 4: You know? It really is, and that's and and we get rewarded for that by our subscribers.

Speaker 1: Yeah.

Speaker 4: When we come out with these really deeply researched investigative pieces that, you know, we have a huge army of fact checkers at The New Yorker that comb through every single word in that so that when it is published, it has really, really been thoroughly fact checked. When we publish that, we see the numbers spike on subscriptions. Our subscribers reward us for that type of journalism in a way that I don't think works so well with Substack. Other things work really, really well with Substack.

Speaker 2: Yeah. Yeah, that said, there's been there's been, you know, we cover tech primarily, so we've seen a lot of people from tech leave the sort of like brands or platforms to go to Substack. And some of the some of the times they come out and they're just scooping every single day and it's it's amazing. But more often than not, I'm like, I actually wish that at least a few of you guys would go to one company and I could subscribe to you and Just try to rebundle. Pressure. Oh, yeah. And and I don't actually want like for a lot of people, I'm like, I think you selling ads is a waste of your time. You should just be writing, right? And a lot of them feel that. And then the hamster wheel thing, I I was talking to, you know, a really big substacker yesterday and they were feeling that. They were like, I don't I don't wanna publish every day. Right? But you built a business around that and then you're sort of like trapped to this business model. So so anyways, I think we're gonna I've I've said it. I think in this in this age of AI, in this age of slop, and sort of like ultra fast media, I believe that being a true journalist, being a reporter, being a writer is only gonna I think it was always relatively high status, but I think it will even go up and up and up over And become

Speaker 1: more valuable as a

Speaker 2: people Yeah. Yeah. It's more valuable. It's like we want people that are doing original journalism, fact finding. It's so essential. And then also, yeah, just just spending spending the time. I mean, we're we're sort of a a symptom of the Internet. Right? We make ultra fast content. Right? I don't expect people to watch most of any of the shows from last week. Right? Mhmm. Maybe there's some interviews that are sort of durable, but the majority of the commentary, it's just it comes and goes. Right? We expect people to watch it in the twenty four or forty eight hours that we create it. But there's so much content that I think about, you know, sitting down on a on a Saturday, where I'm like, well, maybe I wanna read. I have limited time. Maybe I wanna read something that somebody puts six months into.

Speaker 1: Mhmm.

Speaker 4: Look, I think it's important to know what you're good at and take advantage of that and not try to be something that you're not good at. And you guys are really good at exactly what you just described, and so you've made the most of that, and you've attracted a really important audience, and it's really worked for you in a business model. For us, to try to chase that would be to move away from what we're really good at and try to become something different. And I agree with you. I think where, you know, with with the amount of AI generated content or low quality content that is being flooded into the market, that only, I think, accrues to the benefit of companies that can really stand out from that. And so don't try to be that. Like, I always tell our you know, we're we're gonna always have human created content. First of all, I think it's what our I know it's what our audiences expect and want. Secondly, we have no competitive advantage over just creating AI generated content. There is that doesn't leverage any of the advantages we have. And so knowing what your advantages are competitive and and and really building upon that, I think, is always important in any business. And for the industry changes that are happening right now, I think there's real value in it because, unfortunately, there's gonna be fewer places that can do that because the ones that are more marginal may not survive the changes that are happening. And our brands have been really thriving in it.

Speaker 2: What is how do you compare your philosophy of running like a house of brands versus, let's say, an LVMH? Is there similarities, differences? What is the philosophy?

Speaker 4: Yeah. I mean, you know, when I first joined, I spent a lot of time talking to those companies to try to understand how they were organized, because one of the things I had to figure out is what I wanted to do with the way we were structured, because we were structured very differently. We were really a loose collection of companies all around the world. Every country operated entirely independently from every other country.

Speaker 1: Wait. Really? Oh, my God.

Speaker 4: It was crazy. Wow. There was no technology Okay. Collaboration. There was no they competed. Yeah. Literally. I remember literally three weeks into the job, I start traveling. I go to Milan. Yeah. You know, I'm trying to visit all our different offices. And I get a call from my assistant, like, you know, some of the team in Milan is upset you're not visiting. I'm like, I'm in the office. I'm here visiting them.

Speaker 1: The wrong office.

Speaker 4: I found out we had seven offices

Speaker 1: in Milan.

Speaker 4: Conde Nast US had an office. Conde Nast Russia had an office. France had an office. In Milan. All different offices. Because, of course, they couldn't be in the same office because they were competitors.

Speaker 1: Yeah. So a

Speaker 4: lot of changes to make Yeah. In that model. But but look, actually, it was a great strategy Mhmm. When the company was a print publication business. Mhmm. It worked by definition. Carnass became a very big, successful company following that strategy. But it was not the right strategy for the Internet age and the digital age and, you know, how and how audiences had changed. Audiences moved from, oh, I read my local, newspaper, my local content, to I wanna see what's happening around the world. I wanna consume content from Korea or China or Sweden or Israel or wherever. Yeah. Much more cosmopolitan in their approach to how they consume content. And so really, we use that as a guidepost to say, okay, how should we structure ourselves? Mhmm. And just, you know, question everything about, you know, how we organize ourselves. And even the culture of the company, was very, very territorial and fiefdom based to to what it is today, is much more collaborative.

Speaker 1: So obviously, of efficiencies across the portfolio geographically. The brands are power law driven. Right? You have a few brands that drive the the vast majority of the revenue. Have you been in a portfolio expansion period or portfolio contraction period? Is there benefit to going more focused around the the tent pole brands? Or do you wanna expand further? How are you seeing like the

Speaker 4: What we find is

Speaker 1: scope for the business.

Speaker 4: You know, certainly our largest, most important brands have done very well in this. Yeah. You know, like Vogue is our largest brand.

Speaker 5: Yeah.

Speaker 4: Vogue has grown every year I've been at the company. It grows revenue, grows profitability every year.

Speaker 1: Good news. Good news right

Speaker 4: It is good news. And and you know, The New Yorker also. The New Yorker just had its most successful year ever by a long shot. Those brands, whatever's happening with search algorithms or AI, they seem to just be able to rise above it. Sure. We have smaller niche brands, Pitchfork, a music brand, very small. It's 1% of our

Speaker 1: revenue. Sure.

Speaker 4: But it has a very strong loyal audience in the category that it covers. It's doing very well. And so there's this sort of barbell effect that's happening, at least within our portfolio. And then we have some that are in the middle that that are impacted more. Either they don't have a strong authority in the category or they're a little too broad that they don't go deep enough in a specific category.

Speaker 1: Were just talking about BuzzFeed and it felt like for a long time it fell into that category of, you know, decent sized audience, but ultimately built on the shaky ground of another platform without that really strong core audience that would stick around through thick and thin. How

Speaker 2: do you think about talent identification going with sort of discovered talent? Let's say a writer who's established that's that already has a a, you know, following versus somebody who, you know, has a lot potential but maybe hasn't had a breakout moment yet, and then the same thing with executives.

Speaker 4: Yeah. I think, you know, first of all, for writers, we're a great home for the best journalists in the world.

Speaker 5: Mhmm.

Speaker 4: In part because, yeah, I wouldn't have thought this was a necessary competitive advantage several years ago, but it is today, which is that we're not impacted by political influence. We're not under the FCC's thumb. We don't have licenses that they need. We're not trying to buy Warner Discovery and need Sure. Merger approval. And so and we're owned by a family of his own cutting ass for seven decades. Yeah. That, you know, I've at the company now seven years, and not once have they ever called to interfere with anything we do. Therefore, I don't need to do that with our editors. We can just hire the best editors and stay out of their way and let them let them do their job their best. So that is very attractive to journalists, cause they know when they come to our company, they're not gonna get a call from the CEO or the board or whatever about why'd you say those things about this advertiser or whatever No. It The journalism comes first and will always come first. So that helps us attract very established writers, but at the same time, we also are a great place for people earlier in their career to learn because they can learn from the best. So we always try to make sure that we are recruiting really high potential new journalists into the company as well as, you know, the best external. In terms of executives, you know, other than Anna Winter, every other executive has turned over since I joined the company. Every single one.

Speaker 2: Wow.

Speaker 4: And I did most of it immediately. And and two reasons. One, if you want to effect culture change, change people. Change people that that that that don't reflect the culture that that you want to have. And when I got to Conde Nast, I felt like this is not the culture of there were great things about the culture. You know, the the focus on excellence really, really deep at the company. But there are other aspects of it, very internally competitive and political that I that I didn't like, and I just decided I'm gonna I wanna create the culture of a company that I wanna work in, so let me find people who think similarly about about the importance of culture. And then secondly, because, you know, we were going from like in The US, that was a had its own CEO, was a separate company from the rest of the world, it was very focused on The US market. I wanted people who had much more global perspective and global experience. And so the skill set I wanted to be broader than than what the company had traditionally had.

Speaker 9: Mhmm.

Speaker 2: Probably 2018, this idea of like content to commerce incredibly popular. And even by the time we were starting this show

Speaker 1: You're thinking New Yorker protein powder.

Speaker 2: When's it coming? Yeah. Love that. But even when we were starting this show, a lot of people said, wow, you have this audience of, you know, entrepreneurs. Why don't you build your own software and, you know, spin out software companies or develop stuff internally? And we said, what with what hours in the day are we gonna do that and why why would we deserve to win over a team that is, you know, entirely dedicated to a certain problem? Where has content to commerce worked within Conde Nast, and where have you experimented or avoided it?

Speaker 4: Mhmm. You know, the if if you think about from an advertiser perspective, the reason advertisers have always come to Conde Nast is the influence that we have with audiences. Mhmm. Right? That that, you know, whether it's fashion or travel or home, you know, it's Yeah. It's it's the influence that we have. Now, you know, that that was very, very true in the print era. It's very true today. But they also have many more avenues to reach audiences than than they used to. So for us, when we look at commerce, we think that ability to influence audiences certainly exists even more than before because of how much larger our our reach is. And so we can use that, maybe not to create the New Yorker protein powder, but to sell fashion, to sell travel. Good. So we've been investing in commerce, but not creating our own products per se. Partnerships. Yeah. In partnerships. And that that also has grown every year. Okay. We we announced it'll be launching soon an initiative we announced last year called Vet, which is really at the intersection of, you know, certainly e commerce growth, social commerce in particular, and the creator economy. And so what Veth is, you know, we have relationships with all the luxury fashion companies. We're using those relationships, creating a marketplace commerce platform that then creators can use to connect with their audiences. Mhmm. And so we'll be working with initially a small number of of real taste makers in fashion

Speaker 1: Mhmm.

Speaker 4: And then using the relationships and the technology we've built to create this creator marketplace called Vet.

Speaker 1: How do you think about journalists becoming influencers? Can be great, develop their own audience, and then that draws more people into their stories when they do have something to publish. Double edged sword because if they leave, they have an audience that might sign up on day one. They might say something that doesn't necessarily represent the views of the publication. There's sort of, you know, some some organizations have gone back and forth on it either saying everyone needs to be posting on Instagram every day to you can never post on Instagram any day. How have you toyed with that or dealt with that tension throughout your career?

Speaker 4: You know, because we have, as you said, a house of brands, our brands are very different. So, you know, a journalist for The New Yorker may be very different than a journalist for Vogue Yeah. In their approach to that question. So, you know, we don't have hard and fast rules that we

Speaker 1: would So no one size fits all.

Speaker 4: Definitely not one size fits all. But we do know that, you know, journalists that are able to build profiles for themselves tend to be good for business. So we certainly support that.

Speaker 1: Got it. I want to talk about events. Yeah. Are events more power law driven? Do you want to, like, raise the long tail of events, do more events, and try and elevate to something where there's a Met Gala happening every week or something. I don't know. Where does the event strategy go?

Speaker 4: Events for us are one of the fastest growing parts of our business. Interesting. But not because we're just doing more and more events. Okay. We're actually doing fewer events

Speaker 5: Okay.

Speaker 4: Than when I started. We're doing fewer events, but we're focusing on events that really are what we call cultural moments. Met Gala's a great example of

Speaker 1: that.

Speaker 4: Yeah. Met Gala was last week you know, last Monday. Yeah. You know, in the first seven days, I just saw the numbers last night, we had 3,100,000,000 video views of the content we created.

Speaker 1: Yeah. That's remarkable.

Speaker 4: It is. It was up, I don't know, 60% over last year.

Speaker 1: And isn't a lot of this, like, off the record too?

Speaker 2: Or or,

Speaker 1: like, there aren't necessarily I've I've never seen, like you can't just livestream it. You can't watch what happens inside or, like, there aren't, like, microphones on the dinner tables.

Speaker 4: We do a livestream of the red carpet.

Speaker 1: Yeah. Yeah. Yeah. Exactly. So it's it's even limiting in terms of what you're sharing.

Speaker 4: Livestream had 200,000,000 to view it.

Speaker 2: That's amazing. Wild.

Speaker 4: So it it every year we do the Met Gala

Speaker 1: Yeah.

Speaker 4: It just grows at a level that's hard to believe, and we finish it and we go, oh my god, how are we ever gonna exceed that next year? Then it grows 65% again the next year.

Speaker 1: Wow.

Speaker 4: And it was the same thing for the Oscar party, Oscar party this year. 65% growth year over year. Remarkable. So I think we found a playbook

Speaker 1: Yeah.

Speaker 4: On that. But it's not a playbook where you can say, oh, great. Let's just do one a week. Yeah. You can't create cultural moments like

Speaker 5: that.

Speaker 4: What you can do what we found is doing fewer and doing them at very high quality

Speaker 2: Sure.

Speaker 4: And make them global events. Like, the Met Gala is a global phenomenon now Yeah. In a way that it wasn't, you know, seven years ago when I joined. It was an important, very important, you know, event that people in The US knew about and, you know, people in the fashion community around the world knew.

Speaker 1: Yeah.

Speaker 4: But by bringing the company together into one organization, now all of our brands globally promote it and promote the livestream and the content from it, And that's really helped elevate it to become now a global cultural moment.

Speaker 1: Yeah. Interesting.

Speaker 2: Help me I don't know how much you'll be able to say here, but help me understand why BuzzFeed is worth something like a 120,000,000.

Speaker 1: No. $2.40. That is about half the company for one point.

Speaker 2: Oh, half the company. Yeah. $2.40. What's the Revenue bull is declining. Decent, you know, run rating 60,000,000 a year of losses. I would guess an aging audience. Do have any idea where the where the value is?

Speaker 4: Well, look, the the only thing I read about that is there was like $20,000,000 going into it. I understand it.

Speaker 1: I thought it was a 120.

Speaker 4: There's a valuation of that, but there's Oh,

Speaker 5: a lot

Speaker 4: of that. I you guys may have read

Speaker 1: about that. Okay. Yeah. Yeah.

Speaker 4: But look. I can't speak

Speaker 1: Sure.

Speaker 4: Specifics of that business. That that was a business that did very well. They were very innovative around a different era, the Internet. And you could take search traffic and social media traffic and turn it into commerce dollars or other things.

Speaker 1: Yeah.

Speaker 4: That era is gone.

Speaker 1: Why? Why? Yeah. What killed that era? Like, people are still spending time on social media. They're still searching on Google, and yet publishers have not been able to monetize traffic or generate traffic is

Speaker 2: like I I look at BuzzFeed as like, you know, I I look at Conde Nast

Speaker 1: Mhmm.

Speaker 2: As like luxury media.

Speaker 5: Mhmm.

Speaker 2: That is what that that's my personal view on it. It's like this is the LVMH of media. Mhmm. And BuzzFeed was like a fast fashion.

Speaker 1: Just say you've never been to the BuzzFeed Gala.

Speaker 4: But think think about it's really interesting. We we did this for a board meeting about six months ago. Mhmm. Took a snapshot of search results from, I don't know, seven or eight years ago.

Speaker 1: Okay.

Speaker 4: And what you saw were, you know, a few sponsored links

Speaker 1: Mhmm.

Speaker 4: And then the 10 blue, you know

Speaker 1: the Yeah. Traditional search page.

Speaker 5: Yep.

Speaker 4: Do the same search term today. You get an AI overview. Yep. Then you get rows and rows and rows of commerce links.

Speaker 5: Yep.

Speaker 4: And then you

Speaker 2: get sponsored stuff. Somebody last week was saying, how is search revenue up? I was like, have you have you done a search recently? Yeah. And I got all I basically got to go to the second page to get an organic result.

Speaker 4: It's been good for Google.

Speaker 1: Yeah. It's been great.

Speaker 2: It's been great. Great for business.

Speaker 4: If you're a publisher, you've you've Okay. Launched that if you were if you had a business

Speaker 9: Yeah.

Speaker 4: That relied on that Yep. To arbitrage that traffic to sell whatever

Speaker 1: Mhmm.

Speaker 4: That business got very, very difficult.

Speaker 1: Yeah. Yeah. Yeah.

Speaker 4: So, you know, and look, the changes in search traffic have certainly impacted our business Mhmm. But not to the point that we haven't been able to grow our revenues and grow our profitability Yeah. But it's a headwind. Yeah. You know, last year so, you know, each of the last three years, we would do our budgets, and we put some forecasts in of search traffic declining. You know, why? Just because we'd seen the pattern of algorithm changes, and generally, those algorithm changes were negative. Mhmm. They had negative impacts. So we're gonna forecast it be to be down, and then every year, it was down more than we forecast.

Speaker 1: Yeah.

Speaker 4: So last year, I told our teams, assume there's no search. Mhmm. You have to have your businesses planned Mhmm. As if search is zero. Mhmm. We don't expect it to be zero.

Speaker 1: Yeah.

Speaker 4: But we, you know

Speaker 1: Don't bank on it.

Speaker 4: We expect it to be a single digit percentage of our traffic.

Speaker 2: Mhmm.

Speaker 4: Very low. So we started working on plans for each of our brands around that. And some of the brands we looked at said, they don't really have a good plan for that.

Speaker 1: Yeah.

Speaker 4: So we're gonna reprioritize on the ones that do. And but if you don't have those paths forward, and if you don't have really strong authoritative brands or brands that have very strong niche in certain areas or direct audiences, then you're just gonna be fighting that all the way down.

Speaker 1: Talk about subscriptions, bundles, subscription pricing in a time when we have little spurts of inflation here and there. How important has that been? How resilient has the subscriber model been? What are you seeing there?

Speaker 4: You know, it's it's a it's a very important part of our revenue stream. Mhmm. But, you know, our digital subscriptions grew 29% last year revenue.

Speaker 1: Oh, wow.

Speaker 4: And, you know, they're growing double digit percentages this year. So it's a really important growth area of our business. Yeah. We're launching more digital subscriptions Mhmm. For more brand like Pitchfork, small brand, just launched a subscription earlier this year. Tatler, another small brand in The UK, launched it. But, you know, our big brands, The New Yorker, you know, very, very strong growth. Mhmm. Vogue is showing incredible growth in digital subscriptions. Mhmm. So that's that's an area that's important to us. Mhmm. And we think we've built up some really good capabilities both on the technology side, but then also on just the people capability side too.

Speaker 1: Yeah. And then do subscribers get stuck in a mentality of I pay a certain amount and they're resistant to a price adjustment in a time of inflation? Or is there some You price elasticity

Speaker 4: know, we have we have raised prices on subscriptions fairly materially over the last couple of years.

Speaker 1: Okay.

Speaker 4: And, you know, each year we think, okay, we're raising the price. Yeah. We're gonna the retention is gonna go down, and actually the retention has gone gotten better every single year. Yep. So the elasticity looks pretty good

Speaker 1: That's good. For us so far.

Speaker 2: Yeah. In some ways, you know, and the biggest fans of independent creators on on Substack and other newsletter platforms. Like, we we really we have a lot of them on the show. We subscribe to a lot of them. But in some in some ways, they're helping your your guys' like pricing dynamic and Oh, yeah. They're like, well, I want $20 a month for my newsletter that publishes, you know, twice a week And I just kinda like write what I'm thinking. And you guys are like, well, we're gonna give you, you know, all these stories and all of this like video and images and and, you know, these deeply researched stories. And so your product or subscription for one of the brands starts to look like incredible value. Because you're like, the alternative, my dollars are gonna go way less far with an independent creator in terms of volume of stories. Now you don't get the same dynamic that they have which people just like to support independent writers and content creators. That's a part of it. It's just you enjoy saying putting, you know, kind of helping somebody be in business. But I think that's an interesting dynamic.

Speaker 1: Can you talk about the further niche ification of media? Architectural Digest, The New Yorker, these are already not niche publications, but they have category Vogue, GQ. Right? There's a there's a theme to the to the product. And what we've been tracking over the last couple of years is that the Internet native media properties, the creators have been able to find even smaller niches. So we've talked to someone who just does, you know, car reviews or just does the

Speaker 2: Car dealership.

Speaker 1: Car dealer the car dealership guy was a good example of like that that would not be a national magazine, but he's made a business work there. And I'm wondering if there's opportunity for more niching or if there's value in not over niching a product and how you're thinking about because you see all these niches and you think, maybe there's a roll up strategy or maybe there's some sort of, you know, synergy between them, but that's already sort of playing out on the platform in the sense that,

Speaker 5: like Mhmm.

Speaker 1: YouTube is making money from both Doug Dumero reviewing every car and the car dealership guy talking about the dealer side of the automotive industry. And these are separate from an automotive magazine that might sort of in previous era address both sides.

Speaker 4: Mhmm. You know, I think where publications can get hurt is if they're caught in the middle. Sure. If you if you try to be too broad Mhmm. Too large of an audience Mhmm. This is not the era for that.

Speaker 1: Yeah. You know, five years ago, maybe that worked, but

Speaker 4: not today. You either need to be large and authoritative in a big category.

Speaker 2: Mhmm. Yep.

Speaker 4: Vogue is a good example.

Speaker 2: Or architectural digest. Yes.

Speaker 4: Or a Connie Ash Traveler would be another one. Or you need to be really nailing a specific niche where you have a loyal audience that's willing to pay.

Speaker 1: Mhmm.

Speaker 4: And and and, you know, ad supported only? Tough. That's that's if if you are if you have a brand where you're investing in the journalism, you have to make significant investments in journalism, supporting that just with advertising is is a tough place to be. But if you've got, you know, really content that people are willing to pay for Mhmm. Then But to do that, don't get caught in the middle. Yeah. That makes sense. Place to be.

Speaker 2: The devil wears Prada's The devil wears Prada two, box office hit. Do you expect that to be a pretty major catalyst for for Vogue?

Speaker 4: You know, it's it's actually it's actually been a catalyst for Conde Nast,

Speaker 5: broadly.

Speaker 4: You know, the obviously, the movie is, you know, based on Anna Wintour, and the company is based on Conde Nast. And but, you know, I was I was talking to our chief revenue officer a couple weeks ago, and, like, you know, we had a really good first quarter. We exceeded budget, and second quarter was looking strong. And I asked her, like, you know, what's driving the strength? And she stopped for a minute and she said, the movie. I was like, what? Wow. Like, that's driving even other brands. I think there's just more interest in Condie Nast in general. Now, I think it's more than just that, but, you know, I think the movie has created a lot of intrigue, and and it's been fun.

Speaker 1: I imagine it's good for hiring, but can you zoom out and talk a little bit about the hiring pipeline? There's so much uncertainty in the job market. Should you become a software engineer? Are there gonna be no software engineers? AI can write stuff, but can't really do investigative journalism, but there's still a lot of anxiety. Like, how are you seeing the next crop of great journalists develop right now? Yeah. Or advice that you give to, like, new grads who wanna work at CogniNast?

Speaker 4: Well, you know, we we hire journalists and we hire software engineers. Yeah. Course. And it's it's it's different.

Speaker 1: And everything in between, business and finance and legal. Sure.

Speaker 4: Look. You know, I I remember my mom growing up, she always said, there's always room at the top. Right? And that was good advice. Like, if you can be That's a great best of what you're doing, there's always gonna be room for you. That's remarkable. Moms have the best.

Speaker 9: So good.

Speaker 4: So for us, you know, journalists who really excel Yeah. I think they'll always have a home. Mhmm. You know, in terms of software engineers, you know, we we brought in a new head of product and technology

Speaker 1: Mhmm.

Speaker 4: Really fortuitously in December. And December was really you guys covered this Yeah. Very well. Moment. A step function change.

Speaker 1: Yep.

Speaker 4: And so when he started, you know, I told him, you need to question everything we do. Mhmm. Start with a blank sheet of paper, rethink everything that we're doing, how we do it, and how we can use AI. And the first thing he did is he started some small pilots. Three or four people on a team, eliminating certain roles that would have been on a much bigger team Mhmm. To create new products. And we he ran the pilot six or eight weeks, and, like, there was enough information already where he said, okay, let's go make big changes now. Mhmm. And so we just, you know, last month made big changes in that in that org really centered around how we use AI at the core of not our content, but how we develop technology and products. Mhmm. So, you know, the the result of that is there there were whole departments that we no longer needed. Mhmm. Like, we used to have a it might be a team of 10 or 12 people on a big project. When you have that big of a team, you need a technical project manager. Mhmm. You need QA engineers. You need, you know, product analysts and all these other things. Well, we just redesigned it and said, actually, you have a product manager and they're going to be the product analyst also. Mhmm. Maybe there's a designer and there's an engineer and we're going to have AI create the software and also do the QA of it. And so these teams that were 10 or 12 people became three or four people, they moved at three times the speed. Mhmm. So what does that mean if you're a software engineer? It means there's going be fewer jobs for entry, without a doubt. Mhmm. Fewer jobs for now. But, like, if you're a product manager, you can do things that you could never do before because you could actually create the code yourself

Speaker 2: Yep.

Speaker 4: Using AI.

Speaker 2: Well, And Conde Nast is a unique company because you guys don't sell technology. You sell content. And so you want to make great technology to serve the content, but it's not the core. Not the thing that you sell. Whereas, yeah, we've we've noticed something is that we basically we hired a full time software engineer Mhmm. Early in the company, Tyler, sitting over there. Hey, Tyler. And we're we're the kind of employer that never would have hired a software engineer historically because it for a small podcast at the time, why would you why would

Speaker 1: Build software.

Speaker 2: Yeah. Why would you build custom software? And so there's job creation happening by companies that never made sense to hire software engineers but now they can.

Speaker 5: Mhmm.

Speaker 1: Yeah. Cool. How are you thinking about I I imagine that at almost all the publications, there's essentially no AI doing writing or or creative work. But how have you had to confront anything on the advertising side? Like, imagine if I flip over the back of the New Yorker, I'm sure I've seen a three d render of a watch at some point. Will I be seeing an AI render of a watch? Very Does that matter? Does anyone care?

Speaker 4: It matters. What you know, last June Yeah. There was an ad that was run-in Vogue Print Magazine, and the ad used an AI generated model.

Speaker 1: That's right.

Speaker 4: And it blew up. Yeah. But people who are angry, they were angry a little bit at the advertiser. Yeah. They're mostly angry at Vogue. Interesting. And I loved it. I thought it was fantastic because it reaffirmed what I had hoped was gonna be the case, which is our audiences want human generated content.

Speaker 1: Yeah.

Speaker 4: They wanna know what they're reading and seeing is real and not AI generated. Interesting. So to me, that was a really important indicator of, frankly, our future

Speaker 8: Mhmm.

Speaker 4: That our future strategy about using AI in many, many places to drive efficiency, to reach audiences faster, speed up the velocity of what we do, all to enable us to invest more in human generated content. That that was a really

Speaker 2: Especially clothing is really interesting. There's a slippery slope where, let's say you generate, you know, you have a a real piece of clothing and you say put this on this, you know, even if it's a real model, but put this on this model. And then what happens if like, you know, you could just prompt it and say make make it fit like slightly different. It's like, well then now you're that's not the product that you're selling. Selling a product that doesn't really exist anywhere. So there's certain certain certain categories that I think will Yeah. And just yeah. It'll be a brand decision and I think ultimately that that is why that is why I think Yeah. Lots your brands will will endure because there will be plenty that make the opposite decision. We're going to lean into it but there's always there's always room at each end of the barbell.

Speaker 1: Yep. So lots of care with regard to AI advertising. Zooming out, are are ads a bug or a feature if I open up a copy of Vogue?

Speaker 4: Well, in a print magazine,

Speaker 1: it's Yeah.

Speaker 4: Absolutely a feature.

Speaker 1: I think so.

Speaker 4: Yeah. Without a doubt. I think for for digital, it can be both. Sure. You know, programmatic display ads may be more of a bug than a feature. Yeah. You know, real

Speaker 1: Yeah. High Because it quality

Speaker 2: disrupt it's just it really it's mostly the visual disruption of like I'm reading this like beautiful I actually like it integrated sort of a native ad from the publisher that was, you know, considered. But anything that becomes, you know, display ads, just the

Speaker 4: So our biggest advertising category is branded content. Yeah. And it's it's great because it it it leverages a big competitive advantage we have. Sure. Our brands, our audiences, but our creativity. Yeah. And so, that's a that to me is a is a really great place to be in our business Mhmm. And to see the growth of that every year. You know, of course, we have display ads. We have print ads, some of which can be branded content. A lot of video, video ads. Yeah.

Speaker 1: Yeah. Anything else, Jordy?

Speaker 2: No. This was fantastic. This was fantastic. Really glad so much. This work.

Speaker 1: We'll we'll wrap the show right now. Leave us five stars on Apple Podcasts and Spotify. Sign up for our newsletter, tbpn.com. We will see you tomorrow at 11AM Pacific. Sharp. Goodbye.