{"id":18127,"date":"2016-11-18T14:52:00","date_gmt":"2016-11-18T19:52:00","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/the-devil-wears-digital-conde-nast-reinvents-itself\/"},"modified":"2016-11-18T14:59:57","modified_gmt":"2016-11-18T19:59:57","slug":"the-devil-wears-digital-conde-nast-reinvents-itself","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/the-devil-wears-digital-conde-nast-reinvents-itself\/","title":{"rendered":"The Devil Wears Digital: Cond\u00e9 Nast Reinvents Itself"},"content":{"rendered":"<p><strong>How has Cond\u00e9 Nast been impacted?<\/strong><\/p>\n<p>Cond\u00e9 Nast (CN) is no stranger to transformation. The company was founded on reinvention, beginning in 1909 when Cond\u00e9 Montrose Nast bought American weekly <em>Vogue<\/em> and turned it into a monthly magazine. It became an industry leader, priding itself on \u201ccreating excellent, exciting content that is engaging, visually arresting.\u201d<sup>2<\/sup> Its iconic brands include: <em>Vogue<\/em>, <em>Vanity Fair<\/em>, <em>GQ<\/em>, and <em>The New Yorker<\/em>.<sup>3<\/sup> However, the speed and urgency of transformation has increased significantly with the advancement of technology and the rise of digital.<\/p>\n<p>This has posed challenges to CN\u2019s traditional sources of revenue:<\/p>\n<ul>\n<li><strong><strong>Circulation:\u00a0<\/strong><\/strong>The advent of the internet has made consumers accustomed to free online content, particularly through mobile platforms.<sup>4<\/sup> While CN\u2019s brands once dictated style and culture trends by pushing printed content out to consumers, blogs and social media have created star influencers who interact daily with their massive fan bases (Michelle Phan has 9 million YouTube subscribers and 2 million Instagram followers).<sup> 5\u00a0<\/sup>As a result, subscriptions and newsstand sales are in decline. In the US, wholesalers purchased 18.5% fewer magazines in the first six months of 2015, relative to the same period in 2014.<sup>6<\/sup> Brands are responding by cutting subscription prices or increasing newsstand cover prices, though both strategies have had adverse effects on newsstand sales.<sup>7 <\/sup><em>Glamour<\/em>, once seen as a jewel in CN\u2019s portfolio, saw a decrease in circulation of 18.9% for the first six months of 2016.<sup><sup>8\u00a0<\/sup><\/sup>\n<figure id=\"attachment_18269\" aria-describedby=\"caption-attachment-18269\" style=\"width: 300px\" class=\"wp-caption alignright\"><a href=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/newsstand.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-18269 size-medium\" src=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/newsstand-300x202.jpg\" alt=\"newsstand\" width=\"300\" height=\"202\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/newsstand-300x202.jpg 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/newsstand-768x517.jpg 768w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/newsstand.jpg 1024w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/newsstand-600x404.jpg 600w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><figcaption id=\"caption-attachment-18269\" class=\"wp-caption-text\">Source: The New York Times<\/figcaption><\/figure>\n<p><strong><sup><br \/>\n<\/sup><\/strong><\/li>\n<\/ul>\n<ul>\n<li><strong>Advertising:<\/strong> As circulation and readership falls, it becomes less compelling for advertisers to continue reaching consumers through print. Compare the median cost of a single, one-page magazine ad to the web version: $140 per thousand readers versus &lt;$0.50.<sup>4<\/sup> Furthermore, programmatic advertising is unlocking new opportunities that are better targeted and much more easily tracked. Across the industry, publishing revenues have fallen 43% since 2007.<sup>9<\/sup> There are signals that CN is feeling the pressure \u2013 buyers reported that CN publishers are now willing to negotiate rates, which they resisted until recently.<sup>10<\/sup><\/li>\n<\/ul>\n<p><strong>How has Cond\u00e9 Nast responded?<\/strong><\/p>\n<p>In the face of these existential threats, what unique steps has CN taken to adapt?<\/p>\n<ul>\n<li><strong>Seeking alternative revenue sources:<\/strong>\n<ul>\n<li>Entering affiliate marketing through the service Skimlinks. Product mentions in articles become links so readers can click through to purchase. CN then receives a cut of sales.<sup>11<\/sup><\/li>\n<li>CN\u2019s tech-focused brands, led by <em>Wired<\/em>, created a membership program targeting executives who want to stay abreast of trends. For an annual membership at $4,000, they can access events with industry insiders, newsletters, and an online community.<sup>12<\/sup><\/li>\n<li>It\u2019s impossible to address digital transformation without mentioning data. CN launched Spire, combining their massive amounts of consumer data with 1010data\u2019s insights platform, to optimize online advertising campaigns and to offer more value to advertisers.<sup>13<\/sup><\/li>\n<li>They launched 23 Stories to begin offering native advertising, though it had previously resisted, maintaining a separation between their editors and branded content.<sup><sup>3,6,10<\/sup><\/sup><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul>\n<li><strong><strong>Embracing video content:<\/strong><\/strong>\n<figure id=\"attachment_18098\" aria-describedby=\"caption-attachment-18098\" style=\"width: 300px\" class=\"wp-caption alignright\"><a href=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/CNE.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-18098 size-medium\" src=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/CNE-300x169.jpg\" alt=\"cne\" width=\"300\" height=\"169\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/CNE-300x169.jpg 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/CNE-600x338.jpg 600w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/CNE.jpg 652w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><figcaption id=\"caption-attachment-18098\" class=\"wp-caption-text\">Source: AdWeek<\/figcaption><\/figure>\n<ul>\n<li>In 2011, CN launched Cond\u00e9 Nast Entertainment (CN\u00c9) to enter the TV and film business. They realized that several successful projects have developed from their stories (<em>Argo<\/em>, <em>Eat Pray Love<\/em>, and <em>Brokeback Mountain<\/em>), but they didn\u2019t see any profit. By vertically integrating, CN can take the development process into their own hands.<\/li>\n<li>CN\u00c9 has launched \u201cThe Scene,\u201d a social video platform with an app and content relevant to its brand portfolio.<sup>14<\/sup><\/li>\n<li>CN\u00c9 developed a scripted series, <em>Invisible<\/em>, in 360\u00b0 virtual reality. It is launched exclusively for Samsung VR and sponsored by Lexus, which embeds product placement into the content.<sup><sup>15<\/sup><\/sup><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul>\n<li><strong>Restructuring and cutting costs:<\/strong>\n<ul>\n<li>In a massive restructuring, CN is breaking down the silos of its brands. In the past, functions rarely collaborated across publications since they could be considered competitors to one another. Now, teams will be organized by functions (creative, research, copy) shared across brands.<sup>16<\/sup><\/li>\n<li>CN developed PubWorx LLC, a joint venture with competitor Hearst, to consolidate back-office operations (procurement, circulation, and production of print issues) and to achieve economies of scale.<sup>17<\/sup><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><strong>What else could they do?<\/strong><\/p>\n<figure id=\"attachment_18074\" aria-describedby=\"caption-attachment-18074\" style=\"width: 300px\" class=\"wp-caption alignright\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-18074 size-medium\" src=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/TechCrunch-300x225.png\" alt=\"techcrunch\" width=\"300\" height=\"225\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/TechCrunch-300x225.png 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/TechCrunch.png 400w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><figcaption id=\"caption-attachment-18074\" class=\"wp-caption-text\">Source: TechCrunch<\/figcaption><\/figure>\n<p>CN should adapt content for messaging apps, particularly for their international audiences (LINE and WeChat dominate in Asia). The top messaging apps have actually overtaken the top social media apps in monthly active users, so it would be wise for CN to begin integrating content into these products. The Wall Street Journal is already pushing this frontier.<\/p>\n<p>In leaping from print to video, CN overlooked the growing popularity of audio content. Podcasts lend themselves well to CN\u2019s storytelling capabilities, particularly for brands like <em>The New Yorker<\/em> or <em>Vanity Fair<\/em>. Spotify has recently expanded into this area.<sup>18<\/sup><\/p>\n<p>CN is moving in the right direction by embracing storytelling through new platforms and experimenting with alternative revenue sources, but they will need to continue reinventing themselves to maintain their lead.<\/p>\n<p>(789 words)<\/p>\n<p>&nbsp;<\/p>\n<p><strong>Citations<\/strong><\/p>\n<p><sup>1 <\/sup>Bernstein, J. &#8220;James Truman, a Crown Prince in a New Kingdom.&#8221; <em>The New York Times<\/em>, August 18, 2013. August 16, 2013. Accessed November 17, 2016. http:\/\/www.nytimes.com\/2013\/08\/18\/fashion\/james-truman-a-crown-prince-in-a-new-kingdom.html.<\/p>\n<p><sup>2 <\/sup>Heritage | Cond\u00e9 Nast International. Accessed November 17, 2016. http:\/\/www.condenastinternational.com\/heritage\/history\/.<\/p>\n<p><sup>3 <\/sup>About Us | Cond\u00e9 Nast. 2016. Accessed November 17, 2016. http:\/\/www.condenast.com\/about-us\/about-us.<\/p>\n<p><sup>4<\/sup> Abrahamson, D. &#8220;The Future of the Magazine Form: Digital Transformation, Print Continuity.&#8221; <em>The Journal of Magazine and New Media Research<\/em>, Fall 2015, 16, no. 1. Accessed November 17, 2016. http:\/\/www.academia.edu\/21573486\/_The_Future_of_the_Magazine_Form_Digital_Transformation_Print_Continuity_.<\/p>\n<p><sup>5 <\/sup>Entis, L. &#8220;100,000 Subscribers or Bust: What It Takes to Be a YouTube Star.&#8221; <em>Fortune<\/em>, November 1, 2016. Accessed November 17, 2016. http:\/\/fortune.com\/2016\/11\/01\/youtube-star\/.<\/p>\n<p><sup>6<\/sup> Sherman, L. &#8220;What&#8217;s Going On at Cond\u00e9 Nast?&#8221; <em>Business of Fashion<\/em>, December 2, 2015. Accessed November 17, 2016. https:\/\/www.businessoffashion.com\/articles\/intelligence\/whats-going-on-at-conde-nast.<\/p>\n<p><sup>7<\/sup>Vasquez, D. &#8220;What\u2019s Really Killing Magazine Newsstand Sales.&#8221; <em>Media Life Magazine<\/em>, May 3, 2016. Accessed November 17, 2016. http:\/\/www.medialifemagazine.com\/whats-really-killing-magazine-newsstand-sales\/.<\/p>\n<p><sup>8<\/sup> Roberts, L. &#8220;Glamour Supersizes Print and Puts Digital First.&#8221; <em>The Industry<\/em>, November 17, 2016. Accessed November 17, 2016. http:\/\/www.theindustrylondon.com\/glamour-supersizes-print-puts-digital-first\/.<\/p>\n<p><sup>9 <\/sup>Sass, E. \u201cNewspaper, Magazine Revenues Fell in 2015.\u201d <em>MediaPost<\/em>, March 11, 2016. Accessed November 17, 2016. http:\/\/www.mediapost.com\/publications\/article\/271086\/newspaper-magazine-revenues-fell-in-2015.html.<\/p>\n<p><sup>10<\/sup> Moses, L. \u201cOn ad pricing, Cond\u00e9 Nast bows to the reality of digital.\u201d <em>Digiday<\/em>, August 31, 2015. Accessed November 17, 2016. http:\/\/digiday.com\/publishers\/conde-nast-digital-reality\/.<\/p>\n<p><sup>11<\/sup> Li, S. \u201cThere\u2019s money to be made in linking to Amazon.\u201d <em>Los Angeles Times, <\/em>October 24, 2016. Accessed November 18, 2016. http:\/\/www.latimes.com\/business\/la-fi-amazon-affiliate-20161024-snap-story.html.<\/p>\n<p><sup>12<\/sup> Moses, L. \u201cWired, with other Cond\u00e9 Nast tech publications, starts a $4,000-a-year-membership program.\u201d <em>Digiday<\/em>, November 3, 2016. Accessed November 18, 2016. http:\/\/digiday.com\/publishers\/wired-media-group-launches-4000-year-membership-program\/.<\/p>\n<p><sup>13<\/sup> \u201cCond\u00e9 Nast Introduces \u2018Cond\u00e9 Nast Spire,\u2019 A Groundbreaking New Data Offering Harnessing the Company\u2019s One Trillion Monthly Data Points.\u201d <em>Cond\u00e9 Nast<\/em>, Press Release, June 20, 2016. Accessed November 18, 2016. http:\/\/www.condenast.com\/press\/conde-nast-introduces-conde-nast-spire-a-groundbreaking-new-data-offering-harnessing-the-companys-one-trillion-monthly-data-points\/.<\/p>\n<p><sup>14<\/sup> Steel, E. \u201cCond\u00e9 Nast Goes Into Show Business.\u201d <em>Cond\u00e9 Nast<\/em>, April 3, 2016. Accessed November 18, 2016. http:\/\/www.nytimes.com\/interactive\/2016\/04\/04\/business\/media\/conde-nast-film-tv-virtual-reality.html?rref=collection%2Ftimestopic%2FCond%C3%A9%20Nast%20Publications.<\/p>\n<p><sup>15<\/sup> \u201c30 Ninjas and Legendary Director Doug Liman, Cond\u00e9 Nast Entertainment, Jaunt and Samsung Unveil 360\u00b0 VR Series, Invisible.\u201d <em>Cond\u00e9 Nast<\/em>, Press Release, October 21, 2016. Accessed November 18, 2016. http:\/\/www.condenast.com\/press\/30-ninjas-and-legendary-director-doug-liman-conde-nast-entertainment-jaunt-and-samsung-unveil-360-vr-series-invisible\/.<\/p>\n<p><sup>16<\/sup> Guaglione, S. \u201cCond\u00e9 Nast Restructures: Consolidates Art, Copy, Research.\u201d <em>Cond\u00e9 Nast<\/em>, October 21, 2016. Accessed November 18, 2016. http:\/\/www.mediapost.com\/publications\/article\/287371\/conde-nast-restructures-consolidates-art-copy-r.html.<\/p>\n<p><sup>17<\/sup> Trachtenberg, J. \u201cCond\u00e9 Nast, Hearst Form Joint Venture for Print Magazines\u2019 Back-Office Operations.\u201d <em>The Wall Street Journal<\/em>, February 4, 2016. Accessed November 18, 2016. http:\/\/www.wsj.com\/articles\/conde-nast-hearst-form-joint-venture-for-print-magazines-back-office-operations-1454601665.<\/p>\n<p><sup>18 <\/sup>Pang, J. \u201cThe Future of News and Publishing.\u201d <em>TechCrunch, <\/em>February 17, 2016. Accessed November 18, 2016. https:\/\/techcrunch.com\/2016\/02\/17\/the-future-of-news-and-publishing\/.<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>\u201cIt is in some fundamental way over&#8230;I think magazines are going to be somewhat like department stores. They\u2019ll stay in business, but you\u2019ll wonder why, since you get everything in them from other places, usually with a better customer experience.\u201d<\/p>\n<p>\u2013James Truman, former Editorial Director of Cond\u00e9 Nast [1]<\/p>\n","protected":false},"author":2411,"featured_media":18254,"comment_status":"open","ping_status":"closed","template":"","categories":[2542,2086,2555,1123,942],"class_list":["post-18127","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-conde-nast","category-digital-transformation","category-magazines","category-publishing","category-publishing-industry"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/digitization-challenge-2016\/","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The Devil Wears Digital: Cond\u00e9 Nast Reinvents Itself - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/the-devil-wears-digital-conde-nast-reinvents-itself\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Devil Wears Digital: Cond\u00e9 Nast Reinvents Itself - Technology and Operations Management\" \/>\n<meta property=\"og:description\" content=\"\u201cIt is in some fundamental way over...I think magazines are going to be somewhat like department stores. 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