Condé Nast Eyes Biz Model Shift as Gourmet Gets New App

With the launch of a new Gourmet brand extension, Condé Nast executives aren’t just trying to wring money out of the beloved erstwhile magazine, but rescue the company from its decades-old reliance on ad revenue.
Chuck Townsend, CEO of Condé Nast, said that because the company depends on advertising for 70 percent of its revenue, the ad recession was a “brutal experience.”
“It’s clear to me that an overt dependence on advertising revenue is overly risky for Condé Nast,” he said after a press conference announcing a new digital app called Gourmet Live.
Townsend said he wants to increase consumer’s contribution to overall revenue by moving over the next 36 months to a model that charges customers based on their use of services.
“I hope to have more on the pay-as-you-go cycle with time, but I have to engineer that,” he said. “I’m about 70 percent on ad revenue. A nice balance would be 50 percent, by growing the consumer portion of that.”
Publishers have been criticized for becoming overly dependent on ad dollars while letting consumers off the payment hook by selling cheap (and unprofitable) subscriptions—a disparity that became all too apparent when the ad recession hit.
“How did we get to that point? Because of the limitless advertising growth potential for the past two decades,” Townsend said. Because of the company’s ad revenue success, he said, “that’s where we’ve put all of our attention.”
With ad page declines of as much as 50 percent at some of its titles last year, the publisher of Vogue and GQ has been pushing hard to find new revenue streams, upending a longstanding reluctance to aggressively license its brands.
Along those lines, since Condé Nast folded Gourmet last fall to the shock and chagrin of fans and advertisers, it has been looking for new ways to trade on the 70-year-old brand about fine living.
On June 22, it announced plans for a fourth-quarter launch of Gourmet Live, a food-centered social media app that will be free to download but ultimately be driven by consumer payments. Condé Nast expects to test pay approaches including subscriptions and virtual currencies popular in the gaming arena.
Gourmet Live was created with help from technology company Activate, which looked at popular services and apps like Foursquare, Scrabble and Pulse for inspiration. Executives there said they expected Gourmet Live to be the first of more Gourmet-branded extensions to come.

Ruth Reichl, Gourmet’s last editor in chief, wasn’t involved in the product’s development.