Condé Nast CEO Explains Why Human Journalism Wins in the AI Era

0:00Anyway, we have the perfect guy to ask about this. I don't know if he's going to comment on any of this, but we can certainly try and ask him about it. Because we have Roger Lynch, the CEO of Condé Nast, with us here in the TBP in Ultradale. Roger, great to see you again. How are you doing? Nice to see you. I'm all right. 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, and then we can get into all the hot topics in media. Sure. Well, I've been CEO of Cunningham for seven years, but prior to that I spent my whole career really in technology.

0:36And primarily a fantastic guitarist. Thank you very much. That was my life's ambition. That was an incredible performance. It's a little bit of just lore, I guess, but we can get into hobbies and things outside business. But yeah, take us back. What was the first job in media? How did you get to where you were? First job in media. Yeah, maybe that's a good place to start. Well, I mean, it 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.

1:13And 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's crazy.

1:21Roger Lynch:How much demand was there for NFL in Europe at that time? Well, the reason the NFL was interested in it, this is back when Paul Tagliabue was the commissioner. He came over to announce this crazy idea that we had. They were trying to build the NFL in Europe. They're like, I hear people love football over there. Why aren't we making money? Why isn't it our football? I think there was a team called the Amsterdam Admirals at the time. There was a European Football League. that they're trying to promote. And 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 deal.

2:01And 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 or content. Then I ran Pandora, the first company I ran that I didn't start. I loved Pandora.

2:17Roger Lynch:Yeah, Pandora is truly, when I think of it, When I think of magical technology experiences in my childhood, I think of Pandora. I think of being in my garage with my dad. We'd be playing pool, listening to music, or work, tinkering on something. I found so many obscure songs on Pandora. It was amazing. Was there some sort of unique opportunity with Pandora around treating it like a radio station? 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 the time where, because you couldn't play on demand. Yeah, the trade-off, I remember I must have been, I must have been intuitively at the time, I was like, okay, this is a fair trade-off.

2:59Roger Lynch:Like I'm used to going to iTunes and having to pay 99 cents, or I can just kind of like roll the dice. Maybe I'll get my favorite song on Pandora. So I found myself on Pandora a lot. Pandora took advantage of some rights that allowed them, compulsory rights allowed them to stream all of that content and uh but you know one of the trade-offs was you couldn't choose the song yeah yeah and so they did launch a subscription this before long before i joined uh subscription service but we're late for that game they were quite late uh 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 but uh 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.

3:47So we had a team of musicologists 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'd play all the time. And these guys were so, and they were mostly men, were so good. But then we had the data scientists also, and they would take the work that the musicologists did and create their machine learning algorithms 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. So it would be weighted a little bit more, Jordy likes this, John's like this.

4:22And so it creates a personalized experience. And to me, I still listen to Pandora. I also listen to Spotify. But when I want something just to put something on and let it play, I'll go to Pandora because I think those algorithms still outperform. Yeah. I mean, we talked to the new co-CEO of Spotify, but that AI-driven feature, the promptable playlist is just coming to Spotify this year. And I'm sure it's souped up and powerful and stuff, but it is remarkable how long that internet radio thing lasted. These things have long lives. I'm wondering about your view on durability in media generally. It feels like any time that there's some platform shift, there's endless think pieces about legacy media is dead, linear TV is dead, this is dead.

5:14Everyone loves to talk about that. But in your experience, how does the media industry actually change as technology arrives? The media industry has a history of not changing quickly enough. and you can start with the music industry you know music recorded music industry peaked in 1999

5:39Roger Lynch:and then you know Napster and that sales revenue yeah and recorded recorded recorded music yes 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 so vinyl records so that's an interesting trend to talk about. 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.

6:19They said no I don't like that behavior I'm going to 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. That's really good for my business. That was disastrous for the industry. So finally, once they had embraced downloads and then streaming, it started growing again. It's only just gotten back to the size it was in 1999, 27 years later. There's more people and people still like music just as much as they did before. Of course, but they fought it for far too long.

6:55And it's a mistake. Vinyl records, have grown every year for the last 18 years and sales of vinyl records and it was it used to be people my age buying vinyl records and collecting them now there is many people in their 20s buying them as there are people in their 50s or 60s buying them a lot of people in their 20s don't even own a record player yeah they buy the vinyl records there's an interesting trend that we and we see it a bit in our industry too like 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 digital content that is in your pocket and it's all free or free to consume, it becomes less valuable and maybe less authentic to you.

7:39Roger Lynch:Yeah, and there's something that's always been missing from part of the experience of being a music fan to never actually go and trade your dollars. I think people do like to vote with their dollars and express their interests and actually have this physical embodiment of their taste. Well, they're doing it with live music now. That's where the money is gone. The money is, you know, really moved to live. It used to be, you know, in the 90s and 80s and everything, people would go on tour to support their record sales. And now it's the reverse. You release the record so you can go on tour and sell tickets.

8:12And it feels like the in-person events, 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 uh in the heiress tour like that was a key moment that even like the casual fans needed to find yeah so after pandora talk about the the journey into uh condé nass yeah it was um you know we i it wasn't a pandora very long because we sold it to sirius xm yeah and you know i was thinking about what i wanted to do next and i was fortunate enough to be in process in four different companies.

8:55Two were in New York, two in LA. 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. It's like, I know, it's really tough. And then I finally realized on one of these flights that when I'm sitting there, I had all the information, all these companies. Every time I'd go to the Conde Nast information, I wanted to read about that. And And that's literally how I made my decision. That's the most intellectually interesting to me. I'm going to go do that.

9:28But there were a couple of criteria I had for what I did next. One was I still like the intersection of content and technology and distribution models. But non-exclusive content was going to be dominated by big tech companies. You know, music, films, TV, whatever. The stuff that I had been doing had all been non-exclusive. 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.

10:05And, you know, Connie Nass really fit that well. Yeah.

10:07Roger Lynch:Yeah, there is interesting. I mean, we've talked about this a ton because, you know, thinking about all the new categories of media, which we joked about, we put out this really like unhinged market map of media as a joke. And then unfortunately, people, 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-trad media. We're like, we created that category as a joke. 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 how those are evolving.

10:54Roger Lynch:like it just seems like the value of a Vanity Fair or a Vogue or the New Yorker are shockingly durable because we're just, you can make more of these kind of properties, but you need decades, right? 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. You're referring to the trough. What's that? Oh, yeah, yeah, yeah. The trough of social media apps. But yeah, like even, you know, I've also talked about the challenges with Substack around certain stories. Substack, if you're an individual selling a subscription, it will reward people that publish multiple times a week that sell a subscription.

11:46Roger Lynch:And yet there's so many stories that take months to tell. There's great stories out there that you'd want somebody writing, spending a year on it. Seymour Hersh is not going to break the MyLi massacre on such a time. And so there's this opportunity of the value of brands and curators that is maintained. And we're not creating... We are... Again, I would say we're creating new iconic media brands, but it'll take 20, 30 years. 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?

12:27Roger Lynch:And finding those lanes. So I'm curious about how you're thinking about the role of the different brands under Condé Nast and counter-positioning against platforms like traditional social media or Substack. Look, I think you bring up a really good point about Substack in particular, which is it is a great platform for certain creators. Yeah. And if you want to be on that bit of a hamster wheel, meaning, but it may not feel like a hamster wheel to a lot of people. They love to publish content multiple times a week. That's great. It's a great platform for that. If you want to spend six months, 12 months deeply researching something, Substack is not the medium for that.

13:10It won't reward that behavior. The New Yorker is. It really is. And we get rewarded for that by our subscribers. 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. So that when it is published, it is 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.

13:46Roger Lynch:Yeah. Yeah. That said, there's been there's been, you know, we were 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 you weren't feeling this pressure. 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.

14:20Roger Lynch:Right. And a lot of them feel that. And then the hamster wheel thing, I was talking to, you know, really big sub stacker yesterday and they were feeling that they were like, I don't, I don't want to publish every day. Right. But you built a business around that. And then you're sort of like trapped to this business model. So, uh, so anyways, I think we're going to, I've, I've said it, uh, I think in this, in this age of AI and this age of slop, uh, and sort of like ultra fast media, uh, I believe that being a true journalist, being a reporter, being a writer is only going to, I think it was always relatively high status, but I think it will even go up and up and up over, over.

15:01Yeah. Yeah.

15:06Roger Lynch:And fact-finding. It's so essential. And then also, yeah, just spending the time. I mean, we're sort of 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? 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 24, 48 hours that we create it. But there's so much content that I think about, you know, sitting down on a Saturday where I'm like, well, maybe I want to read. I have limited time. Maybe I want to read something that somebody put six months into.

15:44Look, 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 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.

16:22And so don't try to be that. Like I always tell our, you know, We're going to always have human-created content. First of all, I know it's what our audiences expect and want. Secondly, we have no competitive advantage over just creating AI-generated content. That doesn't leverage any of the advantages we have. And so knowing what your advantages are competitive 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 going to be fewer places that can do that because the ones that are more marginal may not survive the changes that are happening.

16:58And, you know, our brands have been really thriving in it.

17:02Roger Lynch: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? 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. Really?

17:39Oh, my God, it was crazy. Wow. There was no technology collaboration. There was no, they competed, literally. I remember literally three weeks into the job, I start traveling, I go to Milan, I'm trying to visit all our different offices. 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. I found out we had seven offices in Milan. Conde Nast, US had an office, Conde Nast, Russia had an office, France had an office, all in Milan, all different offices. Because of course they couldn't be in the same office because they were competitors.

18:14Yeah. So a lot of changes to make in that model. But look, actually, it was a great strategy when the company was a print publication business. It worked by definition. and Coney House 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 how audiences had changed. Audiences moved from, oh, I read my local newspaper or my local content to I want to see what's happening around the world. I want to consume content from Korea or China or Sweden or Israel or wherever. Much more cosmopolitan in their approach to how they consume content.

18:53And so really we use that as a guidepost to say, okay, how should we structure ourselves? And just question everything about how we organize ourselves. And even the culture of the company, which was very, very territorial and fiefdom-based to what it is today, which is much more collaborative. So obviously, plenty of efficiencies across the portfolio geographically. The brands are power law driven, right? You have a few brands that drive the vast majority of the revenue. Have you been in a portfolio expansion period or portfolio contraction period? Is there a benefit to going more focused around the tentpole brands, or do you want to expand further?

19:38How are you seeing the scope of the business? What we find is certainly our largest, most important brands have done very well in this. Vogue is our largest brand. Yeah. Vogue has grown every year I've been at the company. It grows revenue, grows profitability every year. And thank you. It is good news. 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 and Music Brand, very small, 1 % of our revenue.

20:23But it has a very strong, loyal audience in the category that it covers. It's doing very well. And so there's a sort of barbell effect that's happening, at least within our portfolio. And then we have some that are in the middle that are impacted more. Either they don't have as strong authority in the category, or they're a little too broad that they don't go deep enough in a specific way. We were just talking about BuzzFeed and it felt like for a long time it fell into that category of, you know, decent size audience, but ultimately built on a shaky ground of another platform without that really strong core audience that would stick around through thick and thin.

20:59Roger Lynch:How do you think about talent identification going with sort of discovered talent, let's say a writer who's established that already has a following versus somebody who has a lot of potential but maybe hasn't had a breakout moment yet? And then the same thing with executives. Yeah. I think, first of all, for writers, we're a great home for the best journalists in the world. in part because 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.

21:43We're not trying to buy Warner Discovery and need merger approval. And we're owned by a family of Zonkutting Ass for seven decades. that, you know, I've been 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 do their job the best. So that is very attractive to journalists because they know when they come to our company, they're not going to get a call from the CEO or the board or whatever about why did you say those things about this advertiser or whatever it is.

22:16No, 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're recruiting really high potential new journalists into the company as well as the best external. In terms of executives, other than Anna Winter, every other executive has turned over since I joined the company, every single one. And I did most of it immediately, and two reasons. One, if you want to affect culture change, change people.

23:00Change people that don't reflect the culture that you want to have. And when I got to Condé Nast, I felt like this is not the culture. There were great things about the culture, you know, the focus on excellence, really, really deep at the company. But there are other aspects of it, very internally competitive and political that I didn't like. And I just decided I want to create the culture of a company that I want to work in. So let me find people who think similarly about the importance of culture. And then secondly, because we were going from like in the U.S. that had its own CEO as a separate company from the rest of the world.