When it comes to artificial intelligence, Condé Nast appears to be taking a “if you can't beat them, join them” approach.
This week, Condé Nast announced a partnership with OpenAI, the Microsoft-backed company behind ChatGPT, which will see content from Condé Nast publications like Vogue, Vanity Fair, and GQ appear on OpenAI's platform, including ChatGPT and a prototype version of the upcoming SearchGPT.
In a memo announcing the partnership to Condé Nast staff, CEO Roger Lynch wrote that it was a way to “replace some of the revenue” lost as technology companies “undermined publishers' ability to monetize their content.” He argued that partnering with Open AI would allow Condé Nast to protect and invest in journalism.
In some ways, Condé Nast is learning from past mistakes. Traditional media has been slow to adapt to the internet, ever since the rise of Craigslist classified ads 30 years ago. It was only in the last decade that Condé Nast and its main rival, Hearst, began to seriously invest in websites for their titles. That delay cost publishers dearly. Tech giants like Meta and Google began siphoning off their ad dollars. While media companies tried to use social media and search to their advantage, tech companies were implementing fast-changing strategies (remember the “pivot to video”?), dealing a further blow to their bottom lines.
Ever since ChatGPT was released nearly two years ago, media watchers have had similar visions of AI-generated content replacing traditional journalism (not to mention traditional marketing, traditional social media, and countless other areas). Today, the internet is awash with robot-written articles, Instagram ads, and tweets, but much of that content is messy and riddled with errors.
Things are changing fast: Google's AI-generated summaries scrape text from publications' websites and condense it into short summaries that appear on the results page; startups like Perplexity offer AI-generated search results that don't require clicking links, and OpenAI's SearchGPT will soon join them; publishers are already noticing that this is having a negative impact on their traffic.
Partnering with OpenAI could put Condé Nast ahead of the curve: Proponents would argue that AI isn't going away; it's better to figure out how to use it to its advantage early on and get a cut of the revenue.
But critics may argue that Condé Nast's new partnership is like sleeping with the devil. They believe the deal with the AI search engine will be a turning point for video in the 2020s. Notably, The New York Times sued OpenAI for copyright infringement in December, alleging that the company used The Times' articles to train its own large-scale language model without the paper's consent. This spring, a group of eight daily newspapers owned by Alden Global Capital, including the Chicago Tribune and the New York Daily News, sued OpenAI and Microsoft for the same reasons. The Times' lawsuit in particular is expected to be a watershed moment for the future relationship between AI providers and media companies.
But there's a middle path between the paths taken by Condé Nast and The New York Times. This week, Axios reported that The Washington Post is investing in developing AI tools for its reporters. The paper's chief technology officer, Vineet Khosla, said it wants to build these tools in-house because it will create a “much better product than the generic tools offered by the big tech companies.” The idea is that the best way to beat AI is to provide quality journalism that can't be found in the automated summaries spit out by SearchGPT or Perplexity. It's safe to assume that Condé Nast and The New York Times are also exploring how to use AI, either embracing or publicly battling the tech giants, respectively.
What should we do with AI? That question will be asked for answers in the coming years. Talented people will figure out how to use it to their advantage, but the jury is still out on what that will look like.
News Overview
Fashion, business, economy
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Chanel is buying a stake in MB&F, an independent Swiss watchmaker. The Max Büsser & Friends brand, known for its distinctive designs and innovative movements, is selling a 25% stake to Chanel. The deal is expected to bring stability to the 19-year-old watchmaker as demand drops across the industry after a pandemic-era boom.
Macy's lowered its full-year sales guidance due to weak demand for higher-end items. The company now expects full-year net sales of $22.1 billion to $22.4 billion, up from its previous forecast of $22.3 billion to $22.9 billion. Macy's said the forecast cut was the result of “more selective consumers and an enhanced promotional environment.”
Amer Sports raised its earnings guidance following a strong second-quarter performance. Amer reported revenue of $994 million for the quarter ended July, up 16% from the same period a year ago. The company also credited rising demand in China for driving Arc'teryx's “exceptional growth and profitability.”
Sarah Jessica Parker is shutting down her shoe line. The actress launched the brand in 2013 with George Malkemus III, the fashion executive who brought Manolo Blahnik to prominence in the US. Malkemus had hoped to do the same for Parker's collection. The company's flagship store will remain open until August 25th.
Walmart is selling a $3.74 billion stake in JD.com as it focuses on its China business. The U.S. retail giant plans to step up its focus on China warehouse business Sam's Club after a stake sale that highlighted the fading appeal of China's e-commerce sector. JD.com shares have fallen about 70% from their peak at the start of 2021.
TJ Maxx's parent company raised its full-year profit forecast after a strong second quarter. The company reported net sales of $13.47 billion for the quarter ended Aug. 3, beating analysts' expectations of $13.31 billion. It also maintained the high end of its full-year same-store sales forecast for a 3% increase.
Urban Outfitters shares fell on disappointing sales growth. The company on Wednesday reported that same-store sales at its retail division rose 2%, below the 2.94% average analyst estimate. Same-store sales at its flagship Urban Outfitters brand also fell short of expectations.
Farfetch to shut down e-commerce software services. The luxury online retailer is shutting down Farfetch Platform Solutions, which provides online shopping tools to retailers such as Harrods, as operating costs are eating into Coupang's profits. Coupang, which acquired Farfetch in December last year, reported a net loss of $105 million for the second quarter ended in June.
Miuccia Prada and John Galliano have been named as nominees for the BFC Designer of the Year award, along with Tsemena Kamali, Rick Owens, Peter Mourier and Jonathan Anderson.
Patagonia is giving its U.S. employees the day off in late October for early voting. The outdoor gear retailer has closed its stores, warehouses and offices on Election Day since 2016, but this year is switching to October 29th to allow its roughly 2,000 U.S. employees to vote early and volunteer.
A federal court has blocked the FTC from banning worker non-competition agreements, a major blow to the agency and further dividing the judicial community over the agency's power. The rule is likely to be reviewed on appeal.
Beauty Business
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Estee Lauder is seeing lower-than-expected full-year sales due to weak sales in China. The company said its revenue for the current fiscal year will fall by between 1 percent and rise by 2 percent. The cosmetics giant blamed the drop on continued sluggish sales of prestige beauty products in China.
Coty missed revenue expectations due to cautious retail ordering and the sale of its Lacoste license. Coty's fourth-quarter net sales rose nearly 1% to $1.36 billion, below LSEG's forecast of $1.38 billion. Same-store sales at its luxury division, which includes brands such as Burberry and Gucci, rose 6%.
LVMH-owned Sephora is cutting about 10% of its workforce in China amid deepening difficulties. Sephora China is laying off office and store staff and encouraging others to resign, affecting an estimated 10% of its more than 4,000 employees in the country.
Fresha has raised $31 million from JP Morgan to develop salon robots. With the new funding, Fresha will explore the possibility of developing machine learning and AI robots to perform tasks typically performed by humans in salons. Though it is not yet profitable, Fresha's revenue is expected to grow by 67% in 2023.
people
(Estee Lauder)
Estée Lauder CEO Fabrizio Freda is stepping down. A successor has not yet been named, but the board is “well underway” with its CEO succession plan and is considering internal and external candidates. Freda will lead the company until a successor is named and will remain in an advisory role until 2026.
Longtime FIT president Joyce Brown is stepping down. Brown became FIT's first woman and first Black president in 1998 and is credited with modernizing the university by increasing student diversity and expanding degree programs. FIT will use the academic year to conduct a search for Brown's successor.
Media and Technology
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Condé Nast has partnered with OpenAI. The deal will allow content from Condé Nast publications, including AI chatbot ChatGPT and a prototype version of SearchGPT, to appear on OpenAI's platform. Condé Nast CEO Roger Lynch said the partnership with OpenAI will help drive revenue.
Edited by Yola Mzizi
