Succession Planning and Future Outlook

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It feels good to Geico I'm pretty confident talking into a mic. Hey, I'm doing it right now. but home projects, I second guess everything. Is that noise normal? Is that water damage? And who should I even call? That's where Thumbtat comes in. Uppload a photo or voice note and their AI powered search helps diagnose the issue and match you with the right top rated local pro. Instead of second guessing or searching for hours You get clarity and can hire the right pro with confidence. For your next home project, try Thumb Tack. They know homes. Hire the right pro today Hey everybody, it's Ste Lod. It's conference season. so I'm traveling across the country and around the world a lot more than usual. out this week, but stay tuned for some very special to episodes we have coming up soon, starting on Monday In the meantime, I wanted to share this conversation between my friend Peter Kafka and Konde NastCEO Roger Lynch Peters podcast channels. Lynch has been outspoken about traffic from Google search declining every single year He's said he's now told Teams at Condy Nest to assume that Google traffic will be zero from now on That's what I've been calling Google Zero for several years now. And you might recall that I just asked Google SO andar Pachi about Winch's comments during our recent interview. Tunar has always disagreed with me that Google Hero is real, but I thought you all might be interested to hear Peter and Roger talk about it directly You'll also hear Roger talk about AI, the growing influence of the creator economy and more in this excellent conversation Okay, here's Peter Kafka, interviewing C and ass CEO Roger Lynch on channels Enjoy rom the Vox Media Podcast Network. This is Channels with Peter Kofka. That is me I'm also chief correspondent at businessiness inssider And today we are talking about running the last rememaining magazine emmpire with Konde NA CEO Roger Lynch Except I just looked at the transcript of this chat and Lynch only used the word magazine once These days, he thinks of Konde, which for decades was the world's most prestigious magazine publisher, probablybably still is as a portfolio brand that shows up all kinds of places on the web, obviously. T at movie theaters and at the mega glamorous Met Ball. So in this conversation, we skiip the question. I normally ask magazine people, which is something like, Hey, what the hell is a magazine in twenty twenty six anyways When we move on to other topics like What's it like to be the subject of one of the most popular movies in the world What's it like to run a media business with Google Stop sending you traffic Who's gonna replace Anna Wintor and David Remnick, perhaps the two most influential editors in the world And where is that shortlist Boiler Lynch does not tell me where the list is But you're going to like this interview anyway. Here's me talking to Conde Nas Roger Winch. Roger Lunch, welcome to Channels. Thank you, Peter. Good to see you You are talking to me from LA. very show busy of you Um, Speaking of showbiz, you guys just finished the M Gala I think it's an enormously successful project for you. It is, yes It's showbiz, it is commerce, it's philanthropy. It's a ton of celebrity, some controversy It also seems like the most sort of obvious expression of Condae Nast as a company today. Is that a fair summation I think it's I think it's right and I think it also showcases what we do best, which is cultural moments So You know, events has been a strategy for us as it is for many media companies, but for us, Our events are really around creating cultural moments that really break through the zeitgeist and search algorithms or whatever's happening in sort of the u you know, the headwinds of the media industry Nothing holds back big cultural moments like them at Gala. How do you measure success for a big cultural moment? At some point, you're a business, so you're trying to make money from it. You're also raising money for the Met, but it's a big It's a big dollars and cents event for you as well. Is that the most important thing? Is the reception it gets online most important? How do you measure it Look, you know that event in particular, it's different for each event. For that event in particular, it starts with a event, right? That is a fundraiser And this year was immensely successful for the Costume Institute and the Met and also the inauguration of the Cundium Nest Galleries that that we did the ribbon cutting. for morning of the Metcala From an audience standpoint every year It surpasses our goals. And we finish the m and we go, how can we ever do anything like that. And then it grows another fiftycent or sixty percent the following year. So You know last year, I don't know, we had a little over two billion total video views of the content we produce around the Met. This year it was three point one billion, another fifty something percent increase year over year. Do that tell you you're getting better at making the content? or is there is this audience getting bigger for this stuff? You know, think I think that in the earlier years for me when I joined, I think we had a lot of room to improve in The content that we created around the event itself. The event itself was spectacular how Conde NS covered it and created content around it there was opportunity for improvement on that. And I think you know, we we have I think the team has done a fantastic job really increasing the quality and the creativity of the output around it I think then what compounds on that is that The intrigue around this event just seems to grow every year. And yes, you mentioned this year there's some controversy. That's fine. That'sly could. Let's fll out the controversy. It's Jeff Bezos and his wife Lauren Scianchez, we werere sponsors and curators of the event. This event's always been tied to extreme wealth. You've always had benefactors working with you on this project Were you surprised at the blowback controversy you got from the Bezos's involvement Well, I mean to be clear, their involvement was in support of the Met, the museum and the custom Institute, and the money that they gave went to the museum. So look, I think there's a lot of reasons you can criticize extreme wealth and people will criticize with it but to actually criticize them for donating money to a cultural institution, to me was a bit off base But were you surprised when when you because you're this is going to be a regular feature going forward as long as you're working on this. You're going to have people like the Bezoses who want to be involved and they're going to pone me up a lot of money. Will that give you any pause? like, oh, do I want to deal with this? O are you okay saying, yeah, these things come with with attendant controversy and that's okay That's okay. Well put. Let's o out a little bit and just talk about Kondezident business. You came in in twenty nineteen It' a privately held magazine publisher in twenty nineteen of the future for privately held Magazine companies didn't look great U What's the best way to sum up what you have done during your tenure there? Well, I had the distinct advantage of not knowing anything about the business and not having grown up in the publishing industry So it enabled me to come in and and question everything. and The first thing I questioned was how we were structured We were structured You know, first there' two separate companies. There was an international business with its own CEO and a US business. and they really acted like competitors. in every way possible, including the editors competing with each other There was so much internal competition, we had no time to focus on external Even every country around the world where we operate and we're a very global company operated completely independently from each other And you know what? that, I think was probably a good strategy for many, many decades. It made Condy Nasson into a very large successful G pub whole series of fieifoms and people were proud of the fifom nature. They were. They were very, very protective But you know what I came in and looked at is like, okay, I can understand why in a print magazine business, why that was a successful strategy The world has changed. The opportunity for us going forward is really about connecting with audiences in new and different ways usings technology certainly And also, audiences have changed, maybe in part because of technology, but if you just look at How cosmopolitan people have become in terms of their content consumption when you know, some of the most popular shows you may watch come out of Sweden or Korea Israel, wherever And when I When I first joined, I started looking at the data about where our visitors were coming from each of our websites. And there was something that really struck me, which is You know, wherever you went, around the world and you looked at the date of our websites, about forty percent of the traffic was coming from outside of that country So, you know, my first listening tour three or four weeks into Joining Cody Nast, you know, I'm meeting with editors around the world and I heard, you know, sort of a similar story, which is You know, audiences in Italy only care about Italian culture and content. they don't care about what happens or same as France? And I'd always ask, well, then explain this. You know, why does forty percent of the traffic to the sites here come from outside of the country and the reverse is true, which is we have a huge audience from France or Italy going to our sites elsewhere around the country. It's because they are interested in it and we're just not organized in a way present the content to them way they want to consume. And by the way, some of your employees still tell me that this culture, the former culture is important and by by globalizing things and sort of consolidating brands globally and having shared resources for some of these companies, that you're missing out on what makes a particular title unique and how they do speak to their core audience in whatever whether it's geographic or demographic. and that mushing this stuff together has been a detriment, even though you're going to say it's successful. the first thing I would say is I'll never be someone who just admits that everything we've done is perfect and is right. I think you can always learn and what I told our teams, when we made all the editorial changes now four or five years ago The first thing I told them was asssume we got it wrong Go figure out where we got it wrong and let's make adjustments. But don't assume we got everything right and wait uil You know, we learned a lesson a year from now, figure it out now, figure out what we got wrong, what adjustments we need to make And there'll always be that we'll always be making adjustments to try to figure it out. And some of those adjustments, you know, it's different brand by brand. If you take a brand like Wired you know, technology is more global You, the interests, the factors that influence our lives through technology is more global in nature Something like Vogue There's an element of global fashion, but then local markets, whether it's Japan, China, India very strong local culture or local fashion. So There's not a one size fits all for any of our brands. have to you have to adjust your assumptions based on that brand and the local markets So I do feel like We have largely got it right and you the results have been You know we take our largest brand Vogue. It has grown every year that I've been at the company and its profitability continues to grow. its reach grows It's more successful than it's ever been under my tenure. So overall, the business is profitable, which wasn't always the case. inccreasing profitability.our revenue is basically where it was in twenty twenty one. If you were a public company, people would be very upset with you, but you're not a public company. You're owned by the N House family. is sort of flat revenue and increasing profitability? Is that what they want out of this company I think if you Look at what We have revenue streams that have declined structurally and revenue that has grown and they coming in to the company I came into advertising, print,, subscription, newstand revenues, that was just going to decline. We knew that. And that was by far the majority of the revenue when I joined So the real wasn't to change the trajectory of that because that wasn't going to change It was to develop new revenue streams. at a fast rate so that you can offset the decline that was going to happen in the legacy business And we've done that. And so If you look at our big growth areas, certainly digital subscriptions You know it grew twenty nine percent last year I think they're Not many companies that wouldn't be thrilled to have twenty nine percent growth in digital subscription revenue or events Yeah we we started the conversation today about events. Our events strategy has really paid off. and every year, these big ten poull events grow more than we expect. So if you look at last year, our big temple events last year grew about fifty percent Revenue year on year. huge And these are not small revenue activities for us This year, our events so far are up sixty percent over last year, which was up fifty percent over the year before. So those strategies around leaning into digital subscriptions or our commerce business or our events business has really paid dividends for us But I guess what I'm asking is are your owners okay if you come back to them and say at the end of this year, say, listen, our revenue didn't increase much or we're still where we were in twenty twenty one. We've had some declining businesses, I've replaced them with growing businesses and you the new house family, you get to enjoy X percent more profits. Is that a win for them's be clear, our revenue is growing. Our revenue grew last year and reue Already this year is growing again So we do have a growing revenue. Okay. So's do you think you are going to if if we look at the chart, right? and you're still sort of where you are in twenty twenty you went down from twenty twenty one and now back up to twenty twenty one rates. I guess I'm saying is is the expectation that you're going to surpass where you were at twenty twenty one at some point? or is this sort of the level you're going to be at Oh, no, we're definitely surpassing. Yeah. Our business has got to continue to grow. You think it is reasonable to grow revenue and profit? Definitely. because you know, the trajectory that we had overcome was, again, the majority of the revenue of the company when I joined being print advertising and print subscription newstands as a declining business. It's a small minajority of our revenue today becausecause all of these other revenue areas have been growing and they grow every year. And so now they've surpassed the decline in the tritional business and they're only going to continue to grow. Our revenue will continue to grow because these new streams like digital subscriptions and commerce and events and all of that are growing Double digit rates. And if we go back to twenty nineteen, does this look like the company you imagined? you were taking over and we're going to transform? Is this where you thought you'd end up You know, I knew that we had some big challenges and frankly, that's what attracted me to this. like really big challenges. I like transformation. I like the dots and strategies and then going executing against it The thing I knew is that There was going to be a big messy transformation just in terms of the structure of the company and that And that those changes were going to be cultural as much as they were organizational. and that we were going to need to do a lot of innovation around creating new businesses and revenue streams, but what gave me we had that opportunity was the strength of our brands. And so the number one thing for me when I was considering whether to take this job was and try to understand where our brands becoming more connected with audiences or less. And so I asked for a lot of data on that. I wanted to see bring it principally around digital platforms And what I really quickly realized is they're definitely becoming more connected with audiences. We're growing audiences and And therefore, okay, what we have is really a business model problem that is very solvable waitit wait It is because the traditional line, as you know, for every company going through analog to digital is You're trading your analog dollars for digital dimes, pennies, whatever it is. And so it's a business problem that has really bedeiled just about every media company. That's true, but Peter, when I joined, it's been widely reported that the company was losing money and not a small amount of money. and today we're profitable. Yeah. And when I joined, we were majority print revenue and today we're majority digital But I'm saying is when you said this is a solable business problem, and now you can point back and say, yeah, we solved it. But in twenty nineteen, you had that same level of confidence that we're going to figure this out where most people have not Yes. I did I knew it would be tough, but I knew we'd figure it out Yeah, I mean, most I mean, your peers don't really exist anymore. It used to be Conde Asast and Time Inc and Time Inc doesn't exist. It's been chopped up and renamed a bunch of places. A lot of the most, I think of all the digital brands that were going to challenge the Condeast of the world. I just wrote about basically the end of Buzzfeed yesterday. Vice has gone bankrupt, Vox media makes this podcast is splitting itself up as we talk Um So I guess what I'm saying is you did a good job if you can sit here and say, yeah, we've grown revenue and we've grown profitability while other folks have been falling down. Not really a question, I guess I guess that's a compliment. I'll just say thank you. You're welcome. We'll be right back with Konde Nast, Roger Lynch, but first a word from his sponsor. Support for the show comes from Service Now AI was supposed to handle the parts of the job you hate Instead, it just describes them, suggests what to do about them, and then leaves you to do it That's not help. That's homework ServiceNow's AI specialists are different. They're not a tool. 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Ai slash decoder We're back You mentioned cultural stuff inside the company. I was going back and listening to our twenty twenty one conversation in the pandemic, sort of post George Floyd reckoning. And this was a period where a lot of Comanies and particularly media companies found their staff very upset with management. And you guys had had to let go of a teen vogue editor that you'd hire because the staff didn't want to work with her because of her bad tweets Um When you look back at that time, the sort of pandemic twenty twenty, twenty two era Do you feel like at any point you sort of over corrected to accommodate staff? It seem it seems now The cultural pendulum has swung a lot and a lot of the stuff that people were complaining about in twenty twenty twenty twenty one Art things they would at least voice publicly now, and I'm wondering if you look back in that era and go, maybe I overdid it Well, it really hit us in twenty twenty And it started right around the time when George Floyd was murdered And I knew when I joined that we had a lot of cultural issues to deal with. And You know, one of the first things that did again, because we had all these separate businesses around the world. There was no one company. there was no one even executive team I wanted to try to find some things that I could get This newly What was about to be combined company focused on some global initiatives and it can't be like, we're going to be profitable. We're going to like that's not inspiring. What I found talking to our employees was they were really interested in a couple areas. One, what are we doing on diversity And two, what about sustainability So I thought, great. theseese are really two, really important issues for us to work on. And what we can do is even in advance of changing all the W structures or they, you know, how we do our editorial. I can Create teams from around the world of employees who are really vested in this. advise the companyany and help drive forward progress in these areas So That work resulted in a diversity report and goals that we set in twenty twenty And so we were by the time this hit us, we were already had A lot of work underway And But it it was work that we needed because I think the company you know was not showing up well in these areas. And so do I think we overcrect it? No? I don't think we overcrected it. I think we had a lot of room for improvement. and I think we seize the moment And and so today When you see so many companies abandoning these efforts You know, we just last month published our diversity report again and we showed the progress that we make. And as I stood up in front of our company Last month at our company meeting I said, lookook, this is a core value of the company and it's discouraging to see all these other companies you know, dropping these initiatives, but it only says one thing that it never was a core value. It was a convenience. For us, it's a core value and It is a source of competitive advantage for us now You know, I'll talk to people who run media companies who said they were interested in diversity and now literally can't say that out loud because the FCC might come after them or they might get some other kind of blowback in the Trump two point zero era. And they'll say, this is as important to me as it ever was. I just need to phrase it different I just can't come out and say literally can't say diversity can't say any part of diversity, equity and inclusion Do you have sympathy for the folks who are running media companies who think they're doing the right thing but can't say that out loud Look, I think there's a couple of categories of companies that have backed away from the commitments they made One is companies that are under threat from our own federal government and the FCC I certainly have sympathy for the threats that they face I wish more of them were willing to stand up because I do believe that I the fears that they have Um are overblown terms of what the government can really do There are other companies that just abandoned them because the winds changed. I have no sympathy for them None whatsoever. Do you feel like you can make that assessment from the outside? go, these people never believe that they were just saying it and these people do mean it I think that companies that aren't under the type of political pressure that you mentioned earlier who abandoned these, it just says one thing. It was never really a core value. It was a response to a moment And the thing one of the things I'm most proud of with our company is that we've retained it as a core value and we report on our progress every year and every year we make progress. and we have publicly stated goals and we track ourselves to those goals And I think our employees really appreciate it. And as I said, with fewer and fewer companies doing that puts us in a position of, I think, great competitive advantage. Yeah, I wanted to ask you about this. You brought up this idea that you guys have not been buffeted by the Trump the secondecond Trump administration, like other media companies, and you said, look, you know, we don't have a Warner Brothers deal to get through the FCC. We don't have this issue, we don't have that issue You know, certainly there's an audience people that I work with who like hearing that. But I'm wondering why why you make a point of bringing it up in public. Who is who you've talked about it in a couple different settings. What is What is the point of you saying that out loud Who is the audience for that? The audience is our own employees and our future employees You know, we have a talent brand that is very important to us. And I think if you're a journalist today, I always teller employees O journalists. Right now there's fewer and fewer places where you can practice your best work without being either impacted directly by the government or by the ownership group or whatever This is one of them. That is a source of competitive advantage. In the seven years I've been at the company, not once has our owners, have our owners or our board come to me and said, hey Don't publish this, don't publish that And therefore, not once have I done that to our editors becausecause we have the best editors in the world. and the way to keep the best editors in the world is to stay out of their way and support them And I really believe that that is the key to our success and I'm fortunate that were owned by a family that believes in that too. And so I talk about it publicly because I want people to know, especially journalists who are maybe at places where they don't feel that They have that freedom that Should there be an opportunity to work at Cony Nest, they be welcomed here and they would not be interfered with? Thank you for that. I really was curious about that. And it leads me to this question. And we talked about this a couple times before, but now it's a bigger deal than ever. half of the time half of my show is spent interviewing people like you who run media companies and the other half is spent talking to, we'll just call them creatives. Increasingly, there are people who've left big media companies and created their own business. At the time, was the last few times we talked about this, it was mostly theoretical, but now it's a real thing, and it's happening in a lot of places. And I'm wondering how you think about two different versions of this. One How do you how do you work with someone like an Emily Sunberg, who's been on this show, who has her own center of gravity, but she's very adjacent to a lot of what you guys are doing and very interested in that world what do you do for either Emily or someone like her to say, hey, you're off on your own and you're successful But we think you can work with us. What is what is that pitch like? And the second part of that question is if you haven an Emily Sunberg at Vogue before she becomes Emily Sumberg, how do you keep her there? or how do you keep her at Vanity Fair Look, I think that These new outlets for creatives or journalists is are very good. you know, I mean, this is an industry that's been under pressure. There are a fewer jobs in it than there were five years ago That trend you've seen year after year and so newew outlets and new ways for journalists or creatives be able to develop businesses that can sustain them is only good. For us does? make us think differently about how we how we operate and how we work with with with journalists and creatives We have to be more creative. We have to say Okay, there may be someomebody who's got a sub stack who is you know, in an adjacent field that we can work with in some areas and they'll have their sub stack and it's not necessarily competitive of what we do, but it's not You know, it's not part of our business And that's okay. And so I think you'll probably see us do more of that rather than less of. What does work with them look like? Is that you can freelance for us? I mean could be or they could be writing a column for us as an example And what is the upside for I'll just keep saying Emily Sunberg, but she's a generic stand in here at this point for them who who are produce their own content, get paid well for it, and are profiled in the New York Times. what is Condain Nas giving them by saying, you can now publish in our outlet too Well, look, I think for them For most of them, they may have a substat Let's take someone like Lchlin Cartwright, you know at Vanity Fair. You know, he has Baker, which is his own And he's been on the show Yeah. A publication. Yeah. and it's great. And he does that. It's a limited audience that he'll reach on his own as also working with us at Conde Nass or at Benity Fair gives him access to a much broader reach audience than he would be able to develop just autoone So to me, it's a pretty good model to have where you can have somebody as talented as he is and it as he is. builduilding his own business, but at the same time, collaborating with us in a way that works for both parties And what about the retention idea that, you know, let's say you've got a locklland cart right on Vanity Fair and he goes, oh, wit, I could be making three X what I make if I go off and do my own substack and podcast, etcetera How do you convince them to stick around Or do you say, go off and do your own thing, but we're going to make some arrangement with you? Look, we haven't had a lot of that happen. you know, I think that You know, then The unfortunate case with Substack is there aren't that many that really can make good living doing it. And I think those that do find that also it is hard work.. It is you are constantly having to produce, you are constantly having to think about how you grow your business And for some people, that's exhilarating and can be very successful. and some it's exhausting. And so I think there's a limit as to how many people will be able to do that in a way that really Um ports. you know, their their lifestyle Yeah, There's many more than I thought there were going to be five, six years ago, but it's still a limited universe I think it is But again, that doesn't mean there's not an opportunity for them to do that and to work with us in certain ways We'll be right back, but first a word from a sponsor We all do it You have a night for yourself but don't like the sound of the silence, so you turn on the TV just for the ambiance This's a little trick that helps you feel like you've got company and aren't alone And other insurers well, they may make you feel alone But when you switch to GIico, you've got clas reps available around the clock So whenever you need, you'll have people around to help And let's turn on the washing machine, just for good measure Isn't that soothing? It feels good to have support. It feels good to Gaico. 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Terms and conditions apppply. Need a hiring hero? This is a job for indeed sponsored jobs. me through how you're thinking about platforms these days. In the old days, I would say, what do you think about Facebook? What do you think about Apple News? I'm still curious about that. But I want to hear you talk about Google and the AI companies. It looks like you are What you tell me? because it kind of seems like you're washing your hands at Google, but I'm not sure if that's the case and you're definitely doing deals with the AI companies. And it seems like in all these cases, the platforms have something to offer you and there's a lot of risk of being dependent on the platforms The first thing is start with our audiences. and I've always been a believer in You have to observe what your audience or your customers are doing, and try to craft your business model around that and Audiences are on these platforms. and so it's very important for our our brands to be where our audiences expect them to be. I think TikTok was a great example of that. When TikTok laaunched in the U S, we saw a growth a vogue on TikTok, but not by us. Yes peopleople were producing content under the vogue name, putting it on TikTok. That was a really strong indication that audiences expected Vogue to be on there. And so we jumped in a big way There was no revenue. There was no revenue model that we had for this, but it was important, I felt for us to be there because our audiences expected us to be there. and we'd figure out, you know that's been the history of the internet It starts with engagement and then monetization figures itself out later And that's what's happened with us in TikTok because now we have ways to sell ads around our content and it's become a good business for us So it starts with where do our audiences expect our brands to be Let's make sure we're there Now, your specific questions around AI before we get to AI, though, becausecause it's one thing to say, I want to be on TikTok or in the old days, it's important for me to be on Facebook or pick your place and it makes that makes sense. There's a difference between that and saying I'm going to do a commercial deal where you know, either I'm going to make stuff for the platform and they're going to reward me with traffic or or we don't have a commercial deal, but also they're using all my content and not sending me any traffic. I'm wondering how you think through all that because sure you do have to be there, but you can also end up just sort of building a business for someone else and getting very little in the way back Al a risk. So As I mentioned, starts with the audience. In terms of these platforms, I don't believe that any of these platforms O us an obligation to send us traffic or customers or audience. I also don't believe that they have the right to use our content to come and compete directly with us So You know, if if Google wants to change its search algorithms and and stop sending traffic to publishers as we've all seen. know, the amount of traffic that comes to publishers from search is declineed precipitously That's fine. They can have their business reasons around it. It doesn't give them the right to use our content to then come and compete with us for those audiences. That's the rub there. And so for AI The risk is these AI companies use the content that Our journalists create and use it to compete with our core business model. Now if they want to negotiate with us and enter into license agreements Light, open AI is done or Amazon or Microsoft or Perplexity fine, then we can come to terms on how that will work U those that that Don't do that or Worse, and frankly, in the case of Google, they tie their scraping of AI content to their search scraping So Google's been found to be dominant. in search They don't let you opt out of scraping your content for AI unless youra opt out for search, which is very difficult for a publisher to do. I think that's anti competitive. I think it's wrong that they do that. But look, these companies are also our partners. So we can have disagreements in some area of our business. and strong alignment in other areas, again with Google. Yeah we're one of the largest publishers on YouTube. We have a very, very Good, strong relationship with YouTube, and it's really core to our business and really important for them too And you've said Google search is basically going to go to zero or something close to that for you or be basically stop showing up as referral traffic sooner than later because of the AI summaries they're doing Um Google Discover is this hugely important product for publishers that I think most regular people don't know about. That isn' often as big a deal or bigger than Google seearch. Are you still working to get your stuff showing up on Google Discover? We do get traffic from Google Discover, but it is very different traffic than search Sarch is intent driven traffic Google Discover traffic convert for subscription, doesn't convert for commerce. You may be able to sell a few ads around it, but it is far less important.ak and spell out why it's less important becausecause, you know, when if somebody goes to Google and types vogue shopping recommendations. There is real clear intent with what they're looking for. If they're going to Google to search for something and they see an article promoted that that catches their eye and they click on it It's much less committed. It's great. know we love to get traffic from Google Discover, but that person is much less likely to become a Vogue subscriber or Yorker subscriber or even transact in commerce than someone who shows much more intent through search So it is not a replacement, even though You know, we've seen discover traffic grow as search traffic has declined. That's a bad trade offff. When we get off this call, I'm going to slack some people I work for. I'm going to say, here's what Roger Lynch, the CEO CaignS says about Google Discover traffic. I'll let you know how. I bet you Jim Bankoff agrees one hundred percent with me.. Jim is one of the people I work for at least att least as of today, we're recording this on Tuesday twelve. Did did you were you did you take a look at the Vox Media Podcast Network, which is recording this podcast. It's an asset that is probably going to trade hands very soon. Yeah, I'm not going to comment on that, Peter. Fair enough. I'll take that as a maybe. W with the AI deals, given that you've now gone multiple rounds with different platforms and you've seen all the promise and peril and pitfall What you do what is most important to get out of the AI companies? Is it straight cash? Like you're going to use our stuff, pay us Or it sounds like the referrals aren't really a thing. that most people are not clicking through those footnotes and AI results. What is the best case scenario for you in these AI deals First and foremost It is to have a license arrangement which reflects the fact that this is copyrighted content. You're using our stuff, pay us. Yeah. notot just pay us, but agree to terms on how you're going to use it. just like, you know, when I was in the music industry or We did, you know film and television these licenseed deals You can think about two main components. There's the money, but there's also the use, the grant of rights. How can you use it? and most importantly, how can you not use it So as an example We would never do a deal. with an AI company that says takeake all of our New Yorker content and just show it verbatim to your customers. That wouldn't be in our interest. We would put conditions around it So these the terms of the license deals are just as important as as you know, the money that' generated from them you know we don't think that they will be They will refer traffic anywhere near the rate at which search There's an interesting dynamic that we see. You mentioned, you know that I said search is going to go away You know, we chased it for a number of years and each year we do our budget and we'd say search is going to decline just because we don't know why, but we know there'll be some algorithm change that will cause it to decline Yeah, and each of the last three years or so, We underestimated the decline. And so last year, we said, we're going to take a different approach I told all of our teams, you need to plan your businesses around there being no search. And if you don't have a plan for that, you may not have a business And We took that approach. and I think it was very effective because it caused people to really think about How do we generate audiences that have strong intent and strong engagement As search declineed, we saw our direct audiences grow. I think it was in part the work that we were doing, but I think it was also in part because eople like if think about the example I gave you, I said Vogue shopping recommendations or something like that, you type that in a search algorithm If what you get in return is an AI summary or a bunch of Google links to you know Walmart or whatever they whoever the deal is. That's not a satisfactory outcome. You might just type in to search bar vogue. com and then find it that way. So we've been seeing direct traffic grow dramatically where it's you know, it's the majority source of our traffic now And I think it is you know our teams would like to say, oh, it's because we've done such a great job You know, and I think that is largely true, but I think it is also because people are finding less relevant search results than they used to. And so where they used to use Google in some ways is a navigation tool They're finding that navigation. It's very effective. AI summaries for answering really simple questions but less so for things that involve taste. And this is one of the big things that I've seen in the discussions that we've had with AI companies Three or four years ago when we started negotiating with them It was a bit surreal because We literally One company in particular told us Okay, we need to know how many words you have He's like, o, do the words matter? or just any words Can you tell us how many words you have? Be we pay by the word Okay, is it gonna be a long discussion But we got through it neegotiate these deals. and then as these services answer engines um started to become used more and more, these companies started to realize that Our content was being used in their answers much more significantly So they started coming back to us like, o, okay, we see your content really matters and certain areas. and now there's a whole debate about whether AI has taste or could ever replicate taste. Perfect, right? becausecause that is our core business. Creativity, taste And I think that , I think that creates much more opportunities for us now and how we can work with AI companies What about the worry that even though you're getting paid today, even though you have restrictions and limits around how you can use your work, that inevitably what you're doing is building up these platforms, making them more and more useful. And certainly one of the products they might come out with one day is not their own version of Vogue, but s just things that deliver enough information to people that's tailored the way they want that they really don't have any need to go somewhere else most of the time. and you're essentially build you're building a thing that will put you out of business, which is a recurring issue with all the platforms, but it seems More likely than ever with AI. I think it is more likely than ever with AI. brands that don't have the authority that our top brands have I don't worry about AI putting Vogue or the New Yorker out of business. It just will never replicate brands and what the editorial teams can do. If you have and you mentioned some of the companies that are sort of gone by the wayside I think they were the darlings of these platforms when they were sending them all the traffic and they did a really effective job of you know arbitrage and taking intent driven you know searches or video or whatever and turning it into, you, commerce transactions or ads or things like that. But they were entirely reliant on that traffic continuing. And when that traffic went away, what they didn't have was brands that had the level of authority. frankly, our brands have. And so this is what every publisher tells me is how they're going to survive this is our brands are meaningful. People have relationships with our brand. We're going to create even more direct relationships with our brand. People will come to us because our thing is special. Let's stipulate You said, I think seven of your brands make eighty five percent of your revenue. So seven of your brands all fit in that category.'s How many other publishers do you think are going to make it through this era? How many publishers do you think realistically have brands that resonate with enough people that they can stay afloat on their own without being disaggregated by AI. Well first of all, wouldn' I would want to give the impression that it's only very big brands that can be successful 'cause we have some very small brands Pitch fork You know, it's a it's Less than one percent of GQ It has a height No. we put it under GQ, but it is it has a separate editorial team and operates Um I you know, under its own brand. and has been very successful, It actually has one of the largest direct audiences. and now has a subscription product, which is doing very, very well Like that's a brand that will do well in this era because it has authority It is more niche in its' content area. It's never going to be as big as Vogue but it has a point of view and it has a loyal, dedicated audience. So it's not just Big brand, small brand It really is, does your brand have authority? Does it have connection with audience? that is really deeper than search or discover traffic. Another way of putting my question, what percent of publishers, existing publishers do you think survive this era Well, I mean, we've already seen a lot of damage done today. So you know, of the publishers that are left You know, it's it's it's it's a higher percentage that will survive than it was five years ago. But certainly they're not going to all survive. I think that writing is on the wall, or at least not in the form that they are today. Speaking of the future One day, Anna Wintor and David Remnick will no longer work for you They're not young people. they're very good at what they do and they and your company seems I don't dependent on the leans on their authority in a really meaningful way at the New Yorker and then broadly for Anna Wintour What is the plan when they leave? How are you thinking about who's going to take fill those shoes First of all for People that are in this field, those are the pinnacle jobs. they really are and You're talking about two of the most successful editors ever. So it will be very, very difficult to find people who could ever replace them. But guess what? I'm sure the same was said about Grace Mirabbella when She ran Vogue for several decades before Anna came in or Tina Brown or William Seaan or any of the great editors that have been attached to these brands over many, many, many decades. Have either of them said this is who I want to replace me, just don't tell anyone yet? No, no. I mean, we, you know, we, you know, it's very funny because one of the things I also implemented when I joined was succession planning this it was very clear that this had never been done beforefore I got an acid, it caused people to be very uncomfortable to start talking about who could ever possibly replace them. But, you know, we you always look to have a broad selection of potential people who could fulfill a role, but you never know whether they're going to be available or what the situation is. So you know, and we also work to bring in talent specifically with the idea of succession. So it's something that u We run a really disciplined process every single year. I report it to my board, we spend time going through. We have our editors Wait, so what does that look like? So you run through a process of if David Remnik got hit by a bus today, here's who would replace him Look, the standard process for every company I've run is you have Emergency success are identified You have a list of people who could be ready, you know now or in the next year or two. You have a list that could be three to five years and a list that could be five plus years. So these lists exist. The files exist. They're on your desk as Pam des. They are locked away. And you revise them periodically. We revise them every year. We go through a formal process where we evaluate it every year, And some names are added and some names drop off. And do Anna and David participate in this process They do Okay All right, lets let's find the list people. C and ask Ce and ask M' send them moreuff that one Last question for you, The biggest movie in America, I think, O biggest movie in the world, I think is Devilwars Prada two. It's about Konde Nast. not they don't call it Conde Nast. They don't call it Vogue. It's about your company. It's owned by Disney Do you participate financially? I know you guys did a lot of marketing for it. You had Anna and Merril on the cover of Vogue. Do you participate financially in that movie's success? No, that movie is their movie. It's not our movie. and we have no direct patient in it, but we certainly have a lot of fun with it. and I think Anna and Merril going on the cover of Vogue. And as you may have seen Chloe Our editor of American Vogue had work hard to convince Hannah to do that because that is not who she is was fabulous. and that cover of vogue with the two of them was iconic What I would say is That movie has generated a lot of interest, not just about Vogue, but about Conde Nast So it's been good for our business. It's certainly been good for our business. I know for a while, every publisher and we talked about this said, hey, we make all this amazing, we make great stories, et cetera. These things are often turned into movies and television shows. You really got to lean into that and figure out ways to get these things made either by ourselves or with partners. And for a while During the streaming boom