Episode 125

The Math is Mathing

In this episode recorded at the Dotdash Meredith villa in Cannes, Dotdash Meredith CEO Neil Vogel and Axios senior media reporter Sara Fischer discuss the impact AI is set to have on the publishing business.

Skip to topic:

  • 00:00 Introduction
  • 03:04 Challenges and Opportunities in Publishing
  • 05:44 The Role of Algorithms in Media
  • 13:02 AI Deals and Legal Considerations
  • 22:47 AI's Impact on Business: Myth vs. Reality
  • 25:38 The Future of Print and Digital Media
  • 31:36 The Role of Credibility and Relevancy in Content
  • 37:41 Adapting to the Digital Advertising Ecosystem
  • 40:43 The Challenge of Intermediation in Publishing
  • 42:58 Embracing Change and Enjoying the Chaos
Transcript
Brian:

Welcome to a special Cannes edition of the rebooting show.

Brian:

I am Brian Morrissey.

Brian:

Over the next few weeks, I'll have conversations that I had during the week in the south of France.

Brian:

In the following conversation, I ditched my usual recording situation of a darkened room for a poolside villa in the south of France.

Brian:

I am joined By dot dash Meredith CEO, Neil Vogel and Axios senior media reporter, Sarah Fisher, for a wide ranging discussion of the implication of AI's collision with the publishing industry.

Brian:

Neil discusses the deal dot dash Meredith cut with open AI recently, as well as his contention that many companies are using AI as a handy excuse for their own.

Brian:

Poor performance.

Brian:

Sarah provides a good technical point on this, that for many publishers, the nuances of copyright law weaken their hands in negotiations, which make deals an easy choice as opposed to the uncertainty and a definite expense of litigation.

Brian:

I hope you enjoy this conversation.

Brian:

If you do, please be sure to like, and review this podcast.

Brian:

If you have a chance and send me your feedback to bmorrissey@therebooting.com.

Brian:

Now onto my conversation with Neil and Sarah.

Brian:

Thanks for joining.

Brian:

This is a second annual Neil.

Brian:

Is this going to be like a tradition?

Neil:

a tradition?

Neil:

Uh, if I don't get

Brian:

okay, well, let's get into whether you're going to get fired or not.

Brian:

thank you all for coming.

Brian:

I really like Cannes for these little, little intimate events.

Brian:

thank you for having us at your lovely home.

Brian:

Neil,

Brian:

for those who, are listening to the podcast, this is, we're doing this at the Dot Dash Villa, which is in Cannes.

Brian:

It's a little off the cuisette.

Brian:

There's a nice pool here.

Brian:

we've got some rosé.

Brian:

I have not been drinking any.

Brian:

I can't.

Brian:

Can't speak for my guests.

Brian:

Neil did not respond.

Brian:

So, joined by Neil Vogel, the CEO of Dot Dash Meredith and Sarah Fisher, the senior media reporter at Axios, who I will say must read, everyone reads Sarah, but like you are, I think the like sort of must read of doing daily.

Sara:

Ditto to you, Brian.

Sara:

You are also a must read.

Sara:

And a must listen, and a must listen.

Brian:

I do different stuff.

Brian:

but you're like, you know, you you know Exactly what is going on?

Brian:

and so I want to actually start with you

Neil:

Can we touch on the must read thing for a second?

Neil:

Yeah,

Brian:

yeah, go ahead

Neil:

Because I, I, You guys are a must

Brian:

we're gonna

Neil:

We also have here, and this is re No, no, no, this is important because this is gonna be the premise of the whole thing.

Neil:

We pretty much, for our people, also have like a don't read list.

Neil:

Like, these are the I can't tell you that, obviously.

Sara:

Yeah, that's what I want to

Neil:

you should not read this because it is nonsense, and it is not fact based, and it is telling you the wrong things.

Neil:

And, like, There's a woman named Leah Wyer who works for us, who runs People, who always says, The math is not mathing.

Neil:

Meaning, like, what you're saying makes no sense.

Neil:

And there are so many people who write about this industry without doing the work, without understanding what's going on, we end up with these, upside down narratives that, like, the world is ending and everything is horrible, and, like, Everything is not horrible.

Neil:

The world is definitely wiggling, but it's not ending.

Brian:

Okay, I want to get into that because like, and this is my

Brian:

first

Neil:

first question.

Neil:

Rant

Brian:

Okay.

Brian:

Yeah,

Brian:

it was like, but cause someone was, I was talking with someone and they said, Oh, you know, I, I, I went to this session and Sarah was moderating it and it was such a downer.

Brian:

She kept going down all of this list of all of the problems

Brian:

facing the publishing industry.

Brian:

I don't know which one, because you've done a lot of sessions this week.

Sara:

Yeah, but I don't remember.

Sara:

21.

Sara:

21

Brian:

sessions.

Brian:

That's insane.

Brian:

You didn't do prep calls for all 21,

Brian:

did you?

Brian:

Oh my God.

Brian:

what is going on in your view?

Brian:

You're, you're reporting every day on this.

Brian:

Okay.

Brian:

There's, there is, I think, I know what Neil is going for here.

Brian:

There is this negative narrative in, in Neil.

Brian:

Neil, I don't, I think I can expose Neil as the person who called me a negative dude.

Brian:

and I say, I'm just a weather forecaster and it's gonna rain and we're in England.

Brian:

what, what do you see going on right now overall in the publishing industry?

Brian:

Because we keep hearing about extinction narratives and Neil's gonna push back on that.

Sara:

extinction narratives, and Neil's going to back on that.

Sara:

Linear mediums were still converting to digital.

Sara:

So you had expedited growth.

Sara:

Then the pandemic happens.

Sara:

We have volatility for like, you know, three to four years.

Sara:

And this is the first year when I got a lot of analysts forecasts that they said, you know, we're kind of stable now.

Sara:

The difference though, is that we're at like, single mid digit growth.

Sara:

So, what happened was we all built these businesses anticipating growth that was not sustainable, and so then we had to right size our businesses.

Sara:

So in the beginning of the year, it felt doom and gloomy, because we were doing a ton of layoffs and restructurings, and also part of that was because digital ad business slowed growth, linear is not sustainable, negative growth, we had to diversify.

Sara:

And so everyone had to come up with new products, new teams, and that just felt messy.

Sara:

Does it mean that we are extinct?

Sara:

Absolutely not.

Sara:

Challenge is there will, and there was some publishers who were ill equipped to ride some of these changes, but they would have gone out of business anyway.

Sara:

So I actually think the publishing landscape is pretty good.

Sara:

Relatively healthy, but if you're like a traditional publication, obviously it's existential because it's really hard to move your business over and also.

Sara:

The CPMs in the digital business might not be

Sara:

as high as they were.

Sara:

If you're like a cable network, like your best days might be behind you unless you have a really smart digital strategy.

Sara:

So I think the publishing landscape has a lot of bright spots, but you know, there's challenges.

Brian:

Yeah, Neil, talk to me about the math because you're not in the news industry.

Brian:

I think a part of the narrative issue is a lot of parts of the news publishing industry are extraordinarily challenged for a

Brian:

bunch of different

Neil:

for whatever reason, people confuse publishing and media with news.

Sara:

Agree.

Brian:

people writing it are in the news

Sara:

the news

Neil:

Correct.

Neil:

Generally speaking.

Neil:

And there's, right, there's a lot written about and we very, we say over and over again, we don't do news.

Neil:

We don't do politics.

Neil:

We don't do sports.

Neil:

It's not what we do.

Neil:

We do.

Neil:

We've been through this a million times like home, food, tech, travel, health, finance, beauty, style, entertainment.

Neil:

Like that's what we do.

Neil:

Areas of passion and interest.

Neil:

We are double digit revenue growers the last two quarters,

Sara:

right?

Sara:

Which is an

Neil:

Yeah,

Neil:

right.

Neil:

but my, my view is, and it's an extension of what you just said.

Neil:

Everyone is confusing.

Neil:

Challenge businesses and challenged business models with something wrong with the industry There is nothing wrong with the industry like I think and again look past performance is no guarantee of future results But I think we've worked really hard to build loyal audiences around really strong brands Everybody always wants to know what our trick is.

Neil:

Our trick is nothing.

Neil:

Our trick is we just work really hard we make really good stuff and we're very smart about how we monetize it and We're very consistent and we are boring as can be And like every trend that comes up and every article, all the don't read people write about like, Oh my god, scale is terrible.

Neil:

This is wrong.

Neil:

It's, it, no.

Neil:

Pivot to events.

Neil:

Nonsense.

Neil:

No, no, no.

Neil:

Get.

Neil:

Very high quality scale, under high quality brands, deliver real value to advertisers and consumers, and you're good.

Neil:

These have been the rules of media for a hundred years, right?

Neil:

Media companies as far back as you can see, if they're doing a good job, should have 20 30 percent EBITDA margins, and should grow between 5 and 20 percent a year.

Neil:

And those rules are still the same.

Neil:

If you're sentimental and, or don't understand the new way to do it, you can't blame your inability to change or your organizational inertia on something existential in the space.

Neil:

Now there are existential things going on in the space, which I'm sure we're going to talk about, but we're not talking about that.

Neil:

We're talking about like zoom out at how people run these businesses.

Neil:

And, you, you invest money, you expect return.

Neil:

It's very simple.

Sara:

agree with that.

Sara:

And just a thing to add about the distinction between news and non news.

Sara:

There's two things impacting the news industry that are not necessarily impacting the broader publishing industry.

Sara:

One is, there is not a massive trust deficit in, for the most part, non news content.

Sara:

There is a massive trust deficit in news content, and there's massive, people argue me with me on this, but I believe that there is real news avoidance happening in the wake of two major wars.

Sara:

So because of that, you have a little bit of a different challenge and attention.

Sara:

And then the other challenges from a margins perspective, like the news industry has so many opportunities to be optimized with things like AI, but it's still for the most part like really human intensive, like good investigative, good reporting is really human intensive.

Sara:

Whereas I think with a lot of other content creation, you can do that.

Sara:

Do so much more optimizing with things like AI and all this stuff.

Sara:

We are going to get there, the news industry, but for now, we're kind of being a little cautious until, like, the copyright laws ensure that our IP is protected.

Brian:

We've got an awning movie.

Brian:

We had this last year.

Brian:

Am I having like a flashback?

Brian:

I swear to God.

Brian:

We did.

Brian:

That

Neil:

we also got

Neil:

rained on last year,

Brian:

so speaking of rain, AI, like I think when, when we're not AI, I'm sorry, search, because a lot of times it's conflated.

Brian:

there's a lot of changes going on a search.

Brian:

I can remember years ago.

Brian:

I was like, Neil, explain to me, you're dependent on an algorithm.

Brian:

We're seeing, it's, it's gonna keep going.

Brian:

and you said

Neil:

it's

Neil:

This is a very good, like,

Brian:

it's it's better, it's, it's better, to be attached to a very stable algorithm.

Brian:

Now your business has diversified with traffic sources.

Brian:

This was back when you were dot dash.

Brian:

There was not all the, the Meredith properties that came over.

Brian:

But I would think when, when search changes, It, it throws your business into, a bit of a

Brian:

disarray.

Neil:

changes, it, it throws your business into, um, a bit of a disarray.

Neil:

Across industries or a lot of diversity within industries.

Neil:

So we try to be set up so any one algorithm we're not overly exposed to in any way.

Neil:

So if there's, I mean, we've been dealing with Google algorithm for a decade.

Neil:

And if you look at our audience this publicly, our audience just

Neil:

and that's obviously a sizable fair part of it as it is for like everybody on the internet.

Neil:

That being said, I don't think I'm like divulging any state secrets to say Google has gotten significantly less predictable in what they do.

Neil:

Like, the rise in Reddit out of nowhere, like I don't know who made that AI showing up at the top of the page, which is effectively like a giant answer box, but more, but this and that.

Neil:

And the shuffling of the page and all of this and all of the nonsense that they just decide that like, Oh, you're a publisher that does this, but we don't like this, so you can't do it anymore without any sort of warning.

Neil:

Um, it feels somewhat arbitrary.

Neil:

It's not particularly affecting us because I think we're very prepared for, ups and downs.

Neil:

There are also parts of the algorithm, no one ever talks about when the algorithm benefits them.

Neil:

Right, because it does that too.

Neil:

Right.

Neil:

So, we're not complaining about Google we can we can talk AI and their other people with premium publishers people like Axios but It's just the state of the state.

Neil:

Things are moving faster.

Neil:

I would love it if no algorithm and no user ever changed their habits in any way and locked in today.

Neil:

We would just crush it.

Neil:

That's just not the way of the world.

Neil:

And,

Brian:

But how much of your distribution of the people arriving are through me intermediated by an algorithm.

Neil:

Oh.

Neil:

I'm not supposed to answer that for,

Brian:

Okay.

Brian:

50% Is Google another one?

Neil:

I'll tell you, like, like, significantly more than half.

Brian:

Okay.

Brian:

Okay.

Brian:

So like you're, no matter what your business is gonna be at, at the

Brian:

mercy of some kind of

Neil:

every business on the internet, whether you're a publisher, whether you're a travel site, or whether you're a retailer, is 50 percent off.

Neil:

75 percent

Neil:

algorithm

Sara:

And, and, can I just make a note on

Brian:

course.

Sara:

Even for, like, a news based business, which is much less dependent right now on social, I think we're still highly dependent on search.

Sara:

Even other, sort of, intermediaries, where you're going direct to consumer, we're still being impacted by algorithms.

Sara:

I mean, I can't tell you how many times we deal with spam filters in Gmail.

Sara:

We're an email business, you know?

Sara:

It's like you're always gonna be at the whim of other people's platforms to an extent, but if the audience has a direct relationship with you, you'll still, they'll figure out how to get to you.

Sara:

And I think that, and that's the key, right?

Brian:

So which brings me to A.

Brian:

I.

Brian:

Because A.

Brian:

I.

Brian:

Is is gonna affect email to I mean, it's summarizing emails, and, that's inevitable.

Brian:

And Jim Van de Hay has has has written about this as a looming threat, at least, and and adapting the business to to address it in a bunch of different ways.

Brian:

but let's talk about the A.

Brian:

I.

Brian:

I mean, you made a it.

Brian:

You did, you were one of the publishers that really was one of the early deals with OpenAI.

Brian:

So, you want to just like tell us all the terms of it,

Neil:

just like tell us all the terms of it?

Neil:

I work for Barry Diller.

Neil:

He's been very, very upfront about this.

Neil:

We believe our content is incredibly valuable, which it is.

Neil:

Evergreen content, research, health, written by a doctor, blah, blah, blah, all that stuff.

Neil:

We need to be paid for training.

Neil:

And if you're going to use us in your results, we need to be paid.

Neil:

To be cited.

Neil:

We need credit and the credit has to be visible and that has to, the credit has to benefit us.

Neil:

And then we need other stuff.

Neil:

Like we got to escalate as things grow.

Neil:

And what, what I can say about open AI is I think they have a

Neil:

pretty good understanding of the ecosystem.

Neil:

I think they've been an excellent partner.

Neil:

I think they put forth a deal to us that was, look, it made Barry Diller happy and it made me happy.

Neil:

And it made our whole team happy.

Neil:

So we did it.

Neil:

again, I would say as a company, we've been fairly vocal on the need for fair consideration for all the work we do.

Neil:

And, It's a model for things we can do going forward.

Neil:

Now everyone's, you said like, oh this, this is like the Netflix.

Neil:

This is like Netflix where Netflix gave the studios, gave Netflix all their movies and then they lost it.

Neil:

No, they already have our movies, like they

Brian:

Yeah, but Barry was talking about suing, right?

Brian:

Wasn't he,

Brian:

Sarah?

Sara:

that, Well, he was talking about creating a coalition of publishers to work together

Sara:

to create a legal framework.

Sara:

Yeah, well, and part of the reason it didn't work is because publishers just generally have such varied interests.

Sara:

Like for example, a publisher that has You know, really heavily, it's really heavily reliant on search is totally different than a publisher that is really heavily reliant on podcasts.

Sara:

So like, why would there be a carried interest amongst all of them?

Sara:

Like I think the way that I'm thinking about it, and I would welcome your pushback on this Neal, is if you're thinking about working with an AI company, it's like, okay, do we sue?

Sara:

Do we strike a deal?

Sara:

Do we do nothing?

Sara:

Generally speaking.

Sara:

If you're going to sue, how much leverage do you have?

Sara:

There's like two ways you can think about this.

Sara:

There's statutory damages, so I filed registrations with the copyright office.

Sara:

And if you ripped off that work, I actually have a stronger legal case to be compensated for the damages.

Sara:

Then there's actual damages, which I didn't file any sort of, you know, registration that I can point to that you stole the work, but I'm arguing for this, theoretically that these damages are there.

Sara:

That's a much harder legal case.

Sara:

So if you're a publisher, particularly digital publishers.

Sara:

that have not filed as many copyright registrations.

Sara:

You just don't have as much leverage for a deal, or for a lawsuit.

Sara:

Like, a deal might look interesting.

Sara:

And then, what does the size of that deal look like, right?

Sara:

Like, why would OpenAI or any other company want to strike a deal with you?

Sara:

it could be dependent on what they would predict the size of a settlement could be.

Sara:

But I think the third option of just sitting it out completely, I think a lot of people are starting to realize this is a little bit of a scary option because if you sit it out while all of your competitors are experimenting, you know, suddenly, you're at a disadvantage.

Sara:

So it's a, it's a complicated decision for every sort of publisher, but everyone, everyone has to consider at least one of the three

Neil:

you can paint a fairly optimistic picture for publishers.

Neil:

It says if you make quality content that is worthwhile, then you can do these deals like we did across a number of people.

Neil:

That looks like a very good outcome for us.

Neil:

Look, I would much rather

Brian:

long as people don't go to, you know, just get the answers instead of going to the page.

Brian:

Isn't there an

Neil:

Well, again, again, like let's You're, you're making a long leap that says they're going to just take our content, and that's not really how it works, right?

Neil:

I, what we want is we look at the situation, we're like, what do we want the outcome to be?

Neil:

We want a very favorable economic solution with people who have already taken and are using our content, essentially.

Neil:

If we can get to an economic solution.

Neil:

Great, we've gotten to an economic solution with OpenAI, we're talking to a few other people.

Neil:

If we cannot get to an economic solution with you, then we have to weigh all of our options.

Neil:

And I think you're gonna find exactly what Sarah just said.

Neil:

I, I don't think you're going to find publishers sitting on the sidelines and waiting too long to actively do something that has not historically been a good play.

Neil:

Like we say all the time, we want to happen to things, we do not want things to happen to us.

Neil:

You have to be out front of things.

Neil:

And You have to or you're just gonna get, left behind.

Sara:

Yeah, and just a few nuances to consider.

Sara:

So one, Neal's business is very much built on evergreen content.

Sara:

That can be really good for building, your, training your LLM on backlog catalogs.

Sara:

Or you know back catalogs if you are mostly real time content like live news and sports That's got to be a very different type of consideration and deal because the the what you're then doing is you're striking a deal for Your information to be used in an output, not necessarily training the LLM.

Sara:

Okay.

Sara:

This is totally different deals.

Sara:

Then you have to consider the type of content that's valuable for an LLM.

Sara:

I'll give you a weird example.

Sara:

A lot of video companies and news have some interesting leverage because when you are.

Sara:

Sora or any other kind of generative AI video company.

Sara:

You need to train your LLM off of videos of things that sometimes only uniquely exist in news content.

Sara:

Great example of this is a tornado.

Sara:

Any movie you are watching is not a real tornado.

Sara:

Okay, that's a fake tornado.

Sara:

Only footage of real tornadoes is really mostly in news archives.

Sara:

So they want access to that kind of stuff because they need to train their LLMs on the real thing.

Sara:

It's very strange, right?

Sara:

So like, suddenly, oh, another thing with news publishers and video.

Sara:

These archives tend to be offline.

Sara:

They can't be

Sara:

scraped.

Sara:

So people have weird leverage

Sara:

than Spanish language broadcasters.

Sara:

Interesting leverage.

Sara:

They need Spanish language content to train off the LLMs.

Sara:

So each model, each publisher has such wildly different advantages and disadvantages, incentives and disincentives, which is why the Barry Diller Coalition was hard to do.

Sara:

And I think that's why you're going to see these deals evolve so dramatically over time, because we're still in real time figuring out What the parameters here are a good example, the AP struck a deal with, open AI, the AP is a licensing business for decades.

Sara:

There's so used to licensing content.

Sara:

It's not as weird.

Sara:

Sorry guys, everyone's looking at me because the

Brian:

me because the audience is But we're good,

Sara:

But we're good.

Sara:

We're good.

Sara:

but the AP like they've never been in a traffic ad supported business.

Sara:

They've always been about licensing.

Sara:

So striking a licensing deal is like more natural to them.

Sara:

But you know as part of that deal If another publisher, brokers are similar or deal with better terms, like, I think their deal says that they can go back to the drawing board and renegotiate.

Sara:

So I think you're going to have a lot of these, like, optimization clauses to protect people.

Sara:

And no one deal is going to look like the other.

Sara:

And some deals will work out great and other deals won't work out great.

Brian:

So what do you hear in your reporting about why New York Times is really the one prominent that's

Sara:

it's the statutory damages.

Sara:

It's because the, this is my understanding.

Sara:

The way that we file copyright claims in the United States is very cumbersome for digital publications.

Neil:

We do it.

Neil:

We copyright everything.

Neil:

But we're big and we have a lot of capital.

Sara:

Yes, and also you have a lot of print.

Sara:

Print is easy, you just mail it to the copyright office.

Sara:

So, what the Times has done is they've filed millions and millions and millions of registrations.

Sara:

When you go to court, you have something That you can actually point to, to say, they ripped that off of me.

Sara:

And that's a much stronger legal case than trying to argue that, for fair value.

Sara:

So, the Times, I think, believes that they have a very strong legal case to win damages, statutory damages claims in court, which could amount to billions of dollars.

Sara:

And that's why I think they chose to sue.

Neil:

court, which could amount to billions of dollars, and that's I think it should be sued.

Neil:

And we're, we're very close to all these guys making these products and making these properties.

Neil:

and we believe they're honest brokers, being honest, like, every three weeks what is happening there is completely Different like the guys running the biggest AI things have no idea what they're gonna be doing in six weeks They say they do just like I say I do I don't either like we're gonna have to figure this out on the fly You're going to have to have relationships with these businesses.

Neil:

You're gonna have to believe The incentives the contracts the humans are somewhat good actors or

Neil:

it's gonna be bad

Brian:

how is your relationship with open AI different than like, say, a relationship with Google?

Neil:

Google?

Neil:

I'm not sure how to answer that other than saying, like, we don't have a relationship with Google like

Neil:

this in in any way.

Neil:

So, so

Brian:

I mean, is this a positive?

Brian:

Because I mean, I think one of the interesting

Neil:

mean, if our relationship with Google is, like, it's not even a zero, it's like a null

Brian:

you're a partner of Google in some ways.

Brian:

I mean, not like directly, right?

Brian:

because like you and Google, I mean, Google is distributing your content.

Brian:

You are provided.

Brian:

There is a value exchange there.

Neil:

if Google is distributing your

Brian:

and, and, and they said they would say, yeah, and we're going to have a church and state and we're going to say an algorithm, the

Neil:

there's a value exchange there.

Neil:

Right?

Neil:

eat what we eat, then eat us like that.

Neil:

If that is what happens, that's the risk.

Neil:

That's what we have to protect against.

Neil:

That's what why we're doing deals with open AI.

Neil:

So that doesn't happen.

Neil:

Now, that being said, I go back to like the math is nothing.

Neil:

We haven't seen any impact to open AI on our traffic at all.

Neil:

again, they do stuff above the search page.

Neil:

Maybe we're because we're in the links in the box because our stuff's really good.

Neil:

Like, I don't know.

Neil:

I don't know.

Neil:

Like, there's a lot of people blaming AI for things that are not happening.

Neil:

Because it needs to cover.

Neil:

Bad operators are blaming AI for things that aren't happening.

Neil:

nothing's happening with AI yet that's going to affect anybody's business.

Neil:

Google may have made other changes that, if you rely on search, affect your business, but it's not AI yet.

Neil:

And, and, and, and as much as, you know, the, the relationship with Google has to be figured out going forward, and I'm neither positive nor negative on it.

Neil:

We'll see what happens.

Neil:

the, like, The path is, is, is like all to be determined on all of this stuff.

Sara:

just to go back to that, I was, talking to somebody who works at a publisher that struck a deal.

Sara:

They might not have full visibility into every little term, but I think they're pretty read in.

Sara:

One of the things I was asking them about is, Is your metadata, the IP from your metadata, part of your deal?

Sara:

They're like, I have no idea what you're talking about and I doubt it.

Sara:

And I'm like, well, something I recently come across is that when you're a publisher and you publish an article, you tag it with like 12 different tags.

Sara:

So let's say it's Taylor Swift concert.

Sara:

You might tag that Travis Kelsey, Taylor Swift, Barcelona, where the conference concert is, music, fun, social, like all of those tags are actually buyable.

Sara:

Because you're telling a story through the metadata that can be part of training in LLM Have you had that conversation?

Sara:

No because we didn't even realize that that was something valuable to us and I think we're gonna start to learn more about this as We go forward but the the tension is these contracts are like multi year deals.

Sara:

So that's why I think they need to be designed to With like, outs, if you will, or clauses that we can go back to the drawing board as a part of these multi year deals to be flexible because we're all, including the AI companies, like learning new things all the time.

Neil:

That big parts of the deal we did with Opening Eye probably won't work in a year or two, but you just have to believe we're gonna figure it out.

Neil:

'cause we're all adults

Brian:

we're all adults.

Brian:

Do you, do you anticipate licensing to be a much bigger part of your business?

Brian:

I know you have licensing

Neil:

with,

Neil:

I'm not like, not like Better Homes and Gardens at Walmart, which we are, I think the biggest licensing in Walmart.

Neil:

will Southern living at Dillard's.

Neil:

That's good stuff,

Brian:

stuff, too.

Sara:

people who will, I interviewed Linda Yaccarino yesterday and she was saying that right now they're using X data to train Grok,

Sara:

But

Sara:

one day they definitely see a big revenue stream in licensing X data for other LLMs.

Sara:

It's interesting.

Sara:

If you have a ton of data,

Sara:

that could be a really interesting

Brian:

be a

Neil:

Look, cash is cash, you can call it whatever you want.

Neil:

OpenAI is paying us something.

Brian:

call

Neil:

want to call it?

Brian:

you want.

Brian:

It's paying us something.

Brian:

Your business was, yes, you have subscriptions, print subscriptions from, from the Meredith Properties, primarily an advertising business.

Brian:

What I'm saying is like, are you now going to have a licensing business that is growing as the advertising business?

Brian:

Maybe it keeps, let's say it keeps growing because you're doing lots of different things, but that licensing becomes a big line item on most balance sheets of publishers.

Neil:

Yeah, again, I'm not accountant, so I'm not sure exactly where it's going to sit, but yes, that is the goal that that should be for us if we do it right.

Neil:

You know, when we have people, and food and wine, and Southern Living, and Travel and Leisure, and Very Well, and The Spruce, and we have 40 brands.

Neil:

If our brands remain really valuable, and people keep coming to our various properties, and the various places you can get it, from Apple News, to our O& O websites, to this and that, to the other.

Neil:

And, they come to our events, like Food Wine Classic, we just had in Aspen last weekend, which was like a bonkers giant event.

Neil:

This you can make a case.

Neil:

This is a supplemental revenue stream for us in many, many ways, and if it is, I like our future.

Neil:

If it look, you can't be sentimental about how you make money.

Neil:

We we are a we grew again double digits of the last two quarters, and our print business is probably like 1 10th the size of it was 10 years ago.

Neil:

Like our print business will be smaller next year than this year, but we're growing.

Neil:

Yeah.

Neil:

Because you can't be sentimental about the medium.

Neil:

And if we're gonna make money this way, or that way, or the other way, that is great.

Neil:

we are gonna, go to where the money is.

Neil:

Assuming that, you know, we can continue our value proposition with consumers.

Neil:

Like, I don't,

Neil:

sort of like, people are like, Oh my God, this licensing revenue, why is it bad?

Neil:

I don't get it.

Neil:

Like, it's good.

Neil:

It's, it's the world evolving to potentially the next thing.

Neil:

And,

Neil:

We haven't seen any degradation in our core business and all of a sudden we have the beginnings of this other revenue stream So I'm like, oh you can actually be pretty optimistic

Neil:

here

Sara:

England with this other revenue which can actually be pretty optimistic here.

Sara:

So, it's interesting, I don't think that's going to be an issue.

Sara:

The thing people don't

Neil:

deal, it will have obtained enough of your data that they won't need it anymore?

Neil:

Hundreds and hundreds and hundreds and hundreds of times if you have health content.

Neil:

Everything in our health corpus is touched at least once every three months everything We've hundred I don't know how many articles we have a hundred thousand articles and very well everything is written by a medical writer reviewed by a doctor like The amount of work that everyone assumes evergreen content is you write a recipe and you make money forever That's absolutely not how it works.

Neil:

And 70 depending on the time of year of our content spend working on old content New images, new videos.

Neil:

you need a celiac version of this recipe, like all of this stuff.

Neil:

And that is our value and investment.

Neil:

So our belief in our bet.

Neil:

And I think one of the things we got open a I to understand is that there is no set it and forget it in content.

Neil:

There are a lot of evergreen guys that are gone now because they stopped doing this.

Neil:

Like we have never slowed down our investment.

Neil:

And look, I think the reason why we're so out front about, you know, We need to be compensated for the work we do, is because we need to be compensated for the work we do.

Neil:

We do, like, these articles on health cost thousands and thousands of dollars to maintain, if it's an article about, you know, some deep symptom of diabetes that you have a bunch of doctors writing about.

Neil:

it's really hard work.

Neil:

And, so, anyway, it's a very long answer to, I don't think it's going to be an issue.

Brian:

be an issue.

Brian:

When

Brian:

do you expect or do you not expect or you just don't know to see the impact of AI becoming part of the search experience on traffic?

Brian:

Because it seems pretty clear that, you

Brian:

know, zero click searches have gone up, historically with Google, and this will just accelerate that trend.

Brian:

And then if you look at, like, a perplexity, I don't think perplexity's gonna last, but Google's gonna copy perplexity, because it's a, it's a pretty good

Neil:

don't, right now, for those people who like follow Google closely, it's very answer boxy.

Neil:

Right?

Neil:

Remember the answer box?

Neil:

You know, what is Lincoln's birthday?

Neil:

And it tells you we're in a box, right?

Neil:

Okay.

Neil:

But then the answer box started to come to more complicated things and they would summarize it and but you'd still get the link in the answer box.

Neil:

There are links in most of their AI answers, not all but most right now.

Neil:

And it seems to be if people are, you're getting enough clicks in those links that for us, it seems to be like net neutral in some way, I guess it's very hard to track because the pages are changing every day.

Neil:

And, yeah.

Neil:

I, I don't know.

Neil:

I think Google is going to have to make a bunch of decisions around that search page because of you or my dad.

Neil:

That search page is very confusing right now.

Neil:

There's like 19 different things going on.

Neil:

If there's like product galleries going this way and AI at the top and then you just want your listing of links.

Neil:

You can't find there's three of them.

Neil:

And then there's like a reddit thing like I have what's going on.

Neil:

so

Neil:

I think it's all going to have to find its own level.

Sara:

On the reddit thing, I, reddit would tell you that, They see their value on the Google search page as Being real human experience and

Sara:

conversation, which is the of course right which is the opposite of these AI summaries, right?

Sara:

like does this

Sara:

Skincare

Sara:

make my face itch right like you want real people talking about that as opposed to

Neil:

If you want real people talking about that, as opposed to AI talking about it.

Neil:

Individual Redditors that know nothing about nothing, giving skin care advice, ranked ahead of WebMD, and very well, who have doctors, and nurses, and skin care professionals, talking about the exact reason the same thing is happening.

Sara:

happening.

Sara:

Um, actually it's not credibility.

Sara:

Google cares about relevancy to your query.

Sara:

And the reason I say that is because relevancy is not necessarily credibility in the news example.

Sara:

They made big changes in like 2019 to how they arrange news.

Sara:

But what would happen is the New York times or whoever would write a 20, 000 word story.

Sara:

And at the bottom paragraph, it would say, Some revelation.

Sara:

I don't know.

Sara:

This new flower is purple and HuffPo come in and do a 100 word piece with a big headline New flower is purple and when someone would do a search they'd say what color is the new flower Google, from a relevancy perspective, would serve them the HuffPost first, because it was easier for the consumer than the New York Times.

Sara:

Then they shifted the algorithm to put a priority on original reporting.

Sara:

But I'll tell you something, it doesn't provide as relevant, in some cases, of a search experience.

Sara:

So that's actually what they're weighing.

Sara:

It's

Brian:

they're weighing.

Sara:

it's relevancy.

Brian:

they create the incentives, and people respond to the incentives.

Brian:

I mean, you don't like the backstories of the recipe pages, don't blame the publisher.

Brian:

Blame Google.

Sara:

Well,

Sara:

here's the thing, though.

Sara:

Google's incentive is to make it

Sara:

The easiest is possible to serve the consumer and the exactly the consumer does not necessarily want

Sara:

Whatever it is 20 000 word essay.

Sara:

That's what they're going to elevate.

Sara:

And so I don't think this is them saying, You know, this reddit post is more credible than yours I think that that's them saying we're more likely to get someone to click and engage and we can sell ads against it by

Brian:

saying, we're more likely to get someone and engage and we can sell ads against each other.

Sara:

well it was a 60 million dollar deal or something like that?

Brian:

Yeah, I'm just saying they are truly business

Brian:

partners, but

Brian:

yeah, no, it's, it's interesting.

Brian:

so you, let me ask you, do you use perplexity at

Neil:

all?

Neil:

I've used it,

Neil:

yeah.

Neil:

Yeah,

Brian:

What do you think about

Brian:

it?

Neil:

about it?

Neil:

Um, it's definitely

Sara:

you following the Forbes situation?

Brian:

wondering

Brian:

like

Neil:

the Forbes

Sara:

So,

Sara:

Perplexity basically ripped off a Forbes article to do one of their own little AI generated articles.

Sara:

Forbes.

Sara:

I reported this, they basically threatened, did all but threatened real legal action.

Sara:

They give them like 10 days to respond to whatever their queries are.

Sara:

saying like, you, you can't do this anymore.

Sara:

but the thing is about all these AI companies is like, how scared should you really be?

Sara:

Right?

Sara:

Like, do you really believe this legal threat from these publishers?

Sara:

No.

Sara:

I don't think so.

Sara:

He, he, he gave, the CEO responded, and he's like, oh, this is a work in progress.

Sara:

But like, they're not going to stop what they're doing because they got a letter from a publisher.

Brian:

Yeah,

Neil:

I don't know perplexity enough to call them out specifically, but for that ilk, is, the reward is way greater than the risk.

Neil:

So just do it.

Neil:

And,

Sara:

Forgiveness, not

Neil:

yeah, and a lot of it is just like, you know, very,

Neil:

Valley platform mentality.

Neil:

Content is worthless.

Neil:

We're going to provide an algorithm and a system that makes everyone's lives better without regard to where this stuff came from or without regard to where this content came from.

Neil:

And that's going to be a problem.

Brian:

So why do the deal with OpenAI then?

Brian:

I mean, you said that they're, that they're, I mean, won't, won't they just do the same thing that has happened repeatedly?

Brian:

I mean, we used to use this gif of Charlie Brown pulling, getting the football pulled out from

Brian:

under

Neil:

him

Neil:

A

Brian:

times for every story about

Brian:

Facebook and publishing.

Neil:

different

Neil:

saying the right things, acting and doing the right things that are doing fair economic transactions that you believe their intentions and you move forward.

Neil:

And that's what we did.

Neil:

I actually, the opening has been great for us so far.

Neil:

Like I'm, we're super happy with it.

Neil:

anything can go wrong at any time.

Neil:

But, you cannot run a publisher, and again, we're not news, we're not, you cannot be scared.

Neil:

You have to be aggressive.

Neil:

You have to, defend what is yours, and, look, you need brands that get you proprietary audiences that will end up in proprietary data, in quotes, and then you can have a business.

Neil:

And if you can have those three things, you are going to be great.

Neil:

If this is all in service of that.

Brian:

If, if I were to like, you know, bet with you, like, do you expect to be, making most of your money from bringing people to webpages and putting ads in front of them in five years?

Neil:

to webpages

Neil:

and in front of them in five years?

Neil:

Or do you have no idea?

Neil:

Like, saw this thing, and the world is so different 18 months later, I have no idea what's gonna happen 18 months from now.

Neil:

I have no clue.

Neil:

I actually, and this is what you have to get your organization to know, like, I don't care.

Neil:

as long as we're smart and flexible, and we can do this.

Neil:

Figure it out.

Neil:

if the world were just sending people from Google to our web pages at an increasing rate in a fairly good economy, that would be amazing.

Neil:

But that's not what's happening.

Neil:

We still manage to do well in a world where everything's changing.

Neil:

That's your job as a publisher.

Neil:

it's freaking hard.

Neil:

Every day is a battle.

Neil:

You're at war.

Neil:

War is a too strong a word.

Neil:

You're battling somebody.

Neil:

It's not war.

Neil:

You're battling somebody every day for something.

Neil:

And somebody is always trying to take your business or take margin out of your business because they think that they can.

Sara:

You always have to skate to the puck, that's the way I look at it, and the puck is constantly moving and you have to have a low ego and be willing to say, okay, what I've been doing professionally for the past five years, what I've trained myself, what's easy, what's now low margin work because I know what it's like, I can't do it anymore, it doesn't work.

Sara:

And now I have to do this whole other thing.

Sara:

And you have to just get comfortable with doing that.

Sara:

And some of these whole other things, you might not like, but that is the reality of being in this business.

Sara:

If you don't like that, you should not be in this business.

Sara:

And I'll give you a good

Neil:

then you should not be in this business, and I'll give you a good example of that.

Neil:

Yeah, I mean, a good example

Sara:

Yeah, I mean, a good example of that.

Sara:

Right now, I'm I see the digital advertising business as a barbell.

Sara:

I think you either are high impact brand sponsoring a beautiful villa in Cannes,

Sara:

right?

Sara:

Wonder what that looks like.

Sara:

Or, you're just pure efficiency, right?

Sara:

You're a walled garden, and you are helping people click to complete.

Sara:

And everything in the middle is kind of

Sara:

getting bottomed out.

Brian:

Well, I

Brian:

think we are

Sara:

do the both sides of the

Sara:

barbell.

Neil:

I think we are both, but it's

Neil:

We don't have a single

Neil:

brand that's in the middle of that barbell.

Neil:

Every brand's at one end or the

Sara:

You have to go, there's no middle anymore.

Sara:

That middle, that, you know, 20 run of site CPM, like that's getting really hard to compete on because you're not efficient enough and at the same time you're not high impact enough.

Sara:

And so, in terms of skating to the puck, if you don't like moderating events, that's a real big problem for you right now as a content creator because so much energy and momentum is there.

Sara:

If you don't like doing that, you gotta find something that is sponsorable, or we can monetize.

Sara:

Maybe you're amazing at data analysis.

Sara:

Okay, can we put some of your data analysis behind a paywall and we charge new subscriptions?

Sara:

But like, whatever it is, you as a journalist, you as a content creator, have to figure out, like, how can we, how can you skate to a puck that's monetizable?

Sara:

And if you are unwilling to do that, you have a big problem.

Brian:

so I remember when I first started coming to Cannes, it was like all agencies, right?

Brian:

It was about the creative work.

Brian:

It was, it would actually go until Saturday, which is insane.

Brian:

Which is when

Brian:

the

Brian:

like,

Brian:

yeah, the

Brian:

TV

Brian:

commercial at, awards, what they would call film, would,

Brian:

which is, I would always joke, it was like, if your ad agency is calling it a film, you paid too much.

Brian:

but Now, it's like the grocery store chain is like, how front,

Sara:

Retailers financial services companies anyone that has attention will marry that with first party data.

Sara:

And that's that's the winning formula

Brian:

Are you competing with with retail media and is that

Neil:

like

Neil:

We're, I

Neil:

mean, Is that so far it's, it's been, Friend, friend ish.

Neil:

What I would say is, it's a, it's for us, it's another demand source to tap into.

Neil:

But it's also another place that gets between you and your client's money.

Neil:

But by and large, retail media networks for us have been excellent.

Neil:

They're very data driven, they're very smart.

Neil:

There's only like a couple of them that are outscaled enough to matter right now.

Neil:

but, because we're like evergreen that gives us most of our stuff is very high, very intent driven, very performant, and we're the biggest, affiliate referrer to probably every retail in America, I might be off by one or two, so we're very good at commerce, so we tend to do really well with retail media networks, because we kind of understand what makes consumers buy stuff, so we've been happily

Neil:

coexisting with them.

Sara:

But so, to me, the impact of a retail network, and again, the other ones I mentioned, is that they're contributing to the leveling out of the middle of the barbell.

Sara:

Like, they're adding to the efficiency pressure so that it doesn't make sense anymore to be in the middle.

Brian:

Yeah.

Brian:

So final thing is like, I mean, you have a very intermediated business, right?

Brian:

Like I mean, at the end of the day, you're intermediated on the distribution side.

Brian:

You know, you won't give me the figure, but let's just say it's 75 percent because you've got Google that's 50 percent and then a bunch of other algorithms that are intermediating.

Brian:

People are not, most people are not typing verywell.

Brian:

com into their browser

Brian:

like in the morning,

Brian:

People.

Brian:

com,

Brian:

yes.

Brian:

Okay.

Brian:

But, and then on the other side, you're often intermediated from the clients.

Brian:

Right.

Brian:

You've got trade desk, any DSP, you've got agencies like, you know, you came from outside of the publishing world.

Brian:

that, that

Brian:

seems like not ideal.

Neil:

It's not a deal I think we

Neil:

Fundamentally understand better the advertising side of it because you can correlate that with brands like performance data like that stuff we we really can play well with and

Neil:

There is always disintermediation in some form between you and your clients.

Neil:

It could be the agency, it could be the RMN or retail media network.

Neil:

It could be whatever.

Neil:

There's a million people trying to get between you and your money.

Neil:

And you know, you put a dollar into the programmatic universe and you get 50 cents of buying power at the end of your pie.

Neil:

So there's a lot of stuff going on in there, but I think we understand it.

Neil:

We've dealt pretty well with it.

Neil:

I think the disintermediation on the supply side, I don't think it's very different than it's been for the last decade.

Neil:

I just think that you have to be, it's, it's exactly what, Interviews are boring when everyone agrees, but I agree with Sarah.

Neil:

It's, it's what everyone has to understand, you cannot be sentimental and just because you did really,

Neil:

Facebook sends zero visitors to publishers now.

Neil:

None.

Neil:

Zero.

Neil:

For some of our sites, they were 20 percent of our traffic.

Neil:

We're still growing traffic in aggregate year over year.

Neil:

Because you have to know what is next and do what is next.

Neil:

And like,

Neil:

we live in a world, and I think on the ad side, the incentives are a little bit more aligned.

Neil:

Right?

Neil:

Performance, this, brands, this.

Neil:

On, on, other side, on the, on the.

Neil:

Supply side you gotta understand what everyone's incentives are and Facebook's incentives have absolutely nothing to do with the publisher's health and well being zero so knowing that going in the use of to set up your business so you can respond as things change and

Neil:

It's part of why this is like work every day in a struggle every day because something everything feels great and then like Tuesday something

Sara:

You actually have to just enjoy the chaos.

Sara:

Like, that's the only way to make this good, to make this work.

Sara:

I'll tell you a tension that I'm really dealing with.

Sara:

because there's no more Facebook traffic to news, when I was writing, Five six seven years ago the type of content that was going bananas for me was and I would do like a media analysis of Trump or something like that Nowadays like that's so hard.

Sara:

It's still important work civically So I will do it but in terms of monetizing that like heavily trafficked story.

Sara:

There's less business reason to do that.

Sara:

Where is there a business case for me right now?

Sara:

It's like serving my niche B2B marketing and publishing audiences with insights, like charts and analysis on the ad market.

Sara:

That is two very different jobs.

Sara:

Okay.

Sara:

One is me getting on the phone with people in Margaret Wago and the other is me putting my brain in Excel spreadsheets and I have to be completely indifferent to either.

Sara:

And I'm okay with that, but I think a lot of reporters would not be.

Brian:

That's true.

Brian:

awesome.

Brian:

This was awesome.

Brian:

This is

Neil:

I'd say you and I have disagreed a lot about things in the past.

Neil:

Not just like Philadelphia Eagles topics.

Neil:

I'll say this has been, and I, and I really mean this truly, sincerely, the best conversation I've had all week

Neil:

because you guys are informed, level headed, thoughtful,

Neil:

not sensational.

Neil:

Sober?

Neil:

ish,

Neil:

like sober for now, but but like, I wish everybody could think about our business in this way.

Neil:

We'd be in a much.

Neil:

Better

Neil:

place.

Neil:

Like, the math

Neil:

is mathing.

Neil:

Like, it's not that hard.

Neil:

It's not that complicated.

Brian:

I'm either going between the math is mathing for the title, or what is it, enjoy the chaos from Sarah.

Brian:

We'll A B

Neil:

Enjoy the Chaos.

Sara:

I like it too.

Brian:

Awesome.

Brian:

Thank you so much.

Brian:

Thank

Neil:

so

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