Mr. Dadich

Not long after Scott Dadich was appointed executive editor of digital magazine development for all of Condé Nast, “the tops of the mastheads,” as the senior editorial staffs are called, filed into the company’s fourth-floor lecture hall for a series of meetings. Condé’s new iPad king was holding court.

This wasn’t the first time the tastemakers of 4 Times Square had met Mr. Dadich. He’d been shopping “that Wired thing” around the company since it debuted in iTunes’ App Store in May 2010 to considerable fanfare and a flurry of downloads.

But this time, Mr. Dadich faced a few more sets of crossed arms.

Mr. Dadich’s coronation, in August 2010, had come with a big window office on the seventh floor and a mandate to lead the brands that Si Newhouse built into the brave new world of the tablet, a device so shiny and elegant it made Condé’s stable of glossies look dull by comparison. Not surprisingly, Mr. Dadich’s arrival also brought a share of resentment his way in no small part because, even in the pages of this paper, his ascent from Wired, where he had spun a lagging title into ASME gold as creative director, was presented in near-messianic terms.

In a profile of Mr. Dadich in The Observer last August, Evan Smith, his former boss at Texas Monthly, likened Mr. Dadich to a “combination of Jesus and Pelé” before deciding, a moment later, that a comparison to Miles Davis and Frank Lloyd Wright was more apt. Legendary Esquire art director George Lois was, if possible, even more effusive about Condé’s new It Boy, declaring, “With a talent like Scott, magazines will never die.”

Within 4 Times Square, such praise was met with a degree of skepticism, but the breathless optimism among the Condé kingmakers who backed Mr. Dadich was to be expected. It’s hard to find a print dinosaur that doesn’t drool a little, post-recession, over the possibility of wading into a teeming new revenue stream. But Condé Nast felt the pressure more acutely than most. Mr. Newhouse’s puritanical if lavish stewardship of his beloved titles had left the company playing a careful game of wait-and-see through roughly the first three-quarters of the Internet revolution.

Condé’s initial flirtations with the web had been coy and tentative. Rather than sully established titles like Gourmet and Vogue, the company launched new sites, including Epicurious.com and Style.com, as a way of protecting its spoiled progeny from the rough-and-tumble Internet.

While Condé Nast was far from the only media company to find its established business model upended by the web, it appeared to be more paralyzed than most by the shift, perhaps because, in some ways, the rules of online media ran counter to the entire culture of the company. Where Condé Nast had been built on the notion of exclusivity—the idea that its gatekeepers held the keys to a sort of private club, doling out access to readers one glamorous photo spread or finely-turned phrase at a time—the Internet was messy, democratic and fundamentally untamable. Marquee titles like Vanity Fair, Vogue and the New Yorker seemed obsessed with hierarchies. The web obliterated them. Mr. Newhouse’s painstakingly constructed and assiduously policed royal court had come under threat—the villagers were massing at the gates!—and the ambivalence within the company was apparent: every attempt to welcome in the hoi polloi was met with an opposing impulse to head for higher ground on the castle wall.

Former web editors are still baffled by budgets that allowed for a suite to cover the Oscar party at Morton’s but can’t seem to assign to an extra desk for an online editor. Permission was required from the tech side before any print content was posted online. Nine months could crawl by before a request for an RSS feed or comment system on a site made its way through the system. Up until a few years ago, editorial staffers were shackled to a bloated corporate content management system that “forces web editors to spend enormous amounts of time wrangling the system instead of creating content,” according to one insider.

When individual titles began make their own forays into the web, they did so gingerly, slapping up what seemed to be placeholder sites geared mostly to picking up subscriptions. Meanwhile, rivals were popping up everywhere. “The biggest shame was that Vogue wasn’t Net-a-porter,” a former Condé Nast print editor told The Observer. “That was the missed opportunity of the century.”

The iPad, then, promised more than just a do-over. It was a chance for redemption. See what we did there? We’re not extinct! And for all his technical wizardry, Steve Jobs seemed a worthy partner, with his refined aesthetic and affinity for gated communities not unlike the neighborhood Condé Nast had occupied for years. The iPad seemed to promise that, both financially and culturally, the company could resort to its comfy old habits and maybe still survive.

Condé Nast’s digital efforts have been restructured so many times, it’s hard to keep the chronology straight. But call it CondéNet or Condé Nast Digital—as the digital arm has been named at various times—in some ways, it’s the same as it ever was.

IN THE FOURTH FLOOR conference room, Mr. Dadich preached his new gospel with the relentless enthusiasm of a mystical prophet. His crystal ball was showing nothing but iPad. Sales projections for Apple’s magic screenwere thrown around with exuberance. Here’s what we’re doing. Here’s our future.

All that sounded promising enough. But there was a catch: there would be no dedicated hires. Instead, existing art and production staffers from the print side would be responsible for making two iPad layouts (one in portrait and one in landscape, per Mr. Dadich’s vision) on Adobe’s platform. The idea was that since Condé Nast used Adobe’s InDesign and InCopy software to create its magazines, sticking with Adobe would make repurposing content easier. Based in Silicon Valley, Adobe had seen where the business was heading and was building software to get into the tablet game. In fact, the first Wired app was built with a lot of Adobe manpower and then rebuilt when Apple banned the Flash system Adobe had been using from the iPad.

Despite the setbacks Wired had encountered, Mr. Dadich made it all sound simple. “What we’re going to do is have workflow specialists come in, so it’ll be actually less work,” a source recalls him saying.

“I think that’s a terrible idea,” says Khoi Vinh, former NYTimes.com design director and author of the highly regarded design blog Subtraction. (A sign of Mr. Vinh’s influence: he boasts 210,267 Twitter followers to Mr. Dadich’s 3,155.) Mr. Vinh is highly critical of Condé’s print-centric, “magazine replica” approach to the tablet. “It’s like going to a Broadway stage crew, who are very talented at what they’re doing, and saying, ‘Can you help us create the next summer movie blockbuster?’” he told The Observer, adding, “I think it’s a fundamental misunderstanding of the way design works.”

Wall Street Journal director of design technology Erin Sparling felt the same way about retasking print folks to design for the iPads simply because they had used Adobe programs before. “That’s crazy,” Mr. Sparling told The Observer. “The assumption that it’s the same thing, just with a different output, is absolutely wrong. Just tacking it onto employees’ responsibilities seems like a recipe for making all of those employees very sad.”

It’s certainly been a culture shock. Some sources say art departments at titles like Vanity Fair, Glamour, GQ and Allure have had to give up their coveted down weeks between issues—time they once spent visiting museums and dreaming up gorgeous new layouts—in favor of working late on weeknights and weekends to produce pages in Adobe. They’re worried that burnout will turn to a morale problem, if not the makings of a full-scale mutiny.

Two talented digital designers, Chris Gonzalez, director of mobile product management at Condé Nast, and Vince Holleran, who helped create the New Yorker’s iPad app, both recently departed for Gilt Groupe. Anton Ioukhnovets, a former GQ art director, left the magazine last September after seven years for reasons unrelated to the iPad. Nonetheless, he said, “I saw it coming, and I was not interested. I didn’t want to do two jobs for the for the price of one.” He called the iPad “the bane” of his former colleagues’ existence.

In a statement emailed to The Observer, Condé president Bob Sauerberg, said, “From the start, we recognized both the opportunities and the inherent challenges of a new technology and medium. We have been aggressive in our digital development and we know the path to success can be bumpy. We believe in the talents and of our editorial teams to create their own apps—entrusting the design to those who have built our magazines. We are gratified with the way consumers are responding and we are extremely proud of what our teams have accomplished.”

While Condé swells with pride, there’s another aspect of its iPad initiative that baffles outsiders. Why lock in a partnership with Adobe while the market is still shaking out? “You don’t do a biz dev deal to get on the iPad! You just do an app,” said a source familiar with Condé’s digital operations.

“We, like our colleagues across the industry, are collectively inventing a new medium,” Wired’s editor-in-chief Chris Anderson said in another statement emailed to The Observer. “This is an exciting opportunity and our designers both want and deserve to be part of it. Designers come to Wired to innovate; this has the potential to be the most innovative thing we’ve done.”

That said, the transition might be a more natural one for Wired and its gadget-fiend readers. The latest unaudited numbers from the Audit Bureau of Circulation show Wired’s digital downloads capping at an average of 27,369 per month for the six months ending this past December. (For context, its first iPad App got more than 100,000 that month.) GQ’s app has less than half of that, with an average of 12,377 per month for those same six months, and Vanity Fair clocked in at just 9,438. Glamour’s iPad app, which was released in August, had a mere 2,471  monthly average for downloads. Condé seems buoyant about new circulation numbers coming out in August, pointing out that The New Yorker was the top grossing app in the App Store for most of the week after introducing a subscription offer.

Meanwhile, the numbers for the Nook, which requires little more effort than uploading PDFs of pages, are surging, and in some cases surpassing iPad sales.

In addition to dipping a toe into the Nook, Condé Nast is sniffing around Hewlett-Packard’s tablet. In April, AdAge reported that it hit the brakes on plans to deliver iPad editions across all its titles, saying they now need justification before launching an iPad edition. But the rhetoric of redemption remains. In a recent interview for Nieman Journalism Labs, Mr. Dadich was still backing the iTunes newsstand and the “dedicated container” for content that an app provides on an iPad, “where covers are the primary means of purchase and browsing.” To which one commenter replied, “All I see when reading this is an entire organization screaming, ‘WE WANT IT TO BE THE EIGHTIES GODDAMMIT.’”

AFTER THE RUDE AWAKENING of the recession, Condé Nast faced a turning point. It was clear the old model—concentrating on publishing elegant and high-end content and assuming that advertisers would line up for pages—was failing. Mr. Newhouse, who is in his 80s and has never been much for innovation, began increasingly to take a back seat, sources say, leaving a something of a power vacuum at the top of the company.

During the McKinsey era, when the white-shoe consultancy was paid seven figures to help turn things around, Condé Nast’s then-CEO and president, Chuck Townsend, was ready to ask for help. He created a ideas box—grandly named “The Power of Suggestion”—and invited any Condé employee with an idea to benefit the company to submit it. The best idea would be selected once each quarter, and the employee would be awarded a $10,000 bonus. But why, some wondered, would anyone with a truly disruptive idea give it away for $10,000 when they could walk to the Flatiron and get half a million in funding?

Later that year, Mr. Townsend handed over the president’s role to Bob Sauerberg, former group president of consumer marketing. That left Mr. Townsend (an operations-side suit), Mr. Sauerberg (a consumer marketing guy steeped in the world of blow cards and direct mail) and editorial director Tom Wallace (former editor-in-chief of Condé Nast Traveler), as the decision-makers charged with leading Condé to its digital destiny.

Though all had mastered various ins and outs of the print magazine business, at least as it was practiced in the last century, none were digital natives, and the mobile world was even more foreign. “These are not guys with iPhones in their pockets checking-in on Foursquare,” noted one insider.

It wasn’t a surprise, then, that the young Mr Dadich was viewed as something of a savior. “You know what it’s like,” a former employee told The Observer, regarding Mr. Dadich. “You sit in a room, and you don’t know much about a subject, but some person is able to discourse in it. All of a sudden someone says, ‘Wow this guy must be incredible!’ They’re anointed as the new king.”

And minting stars is what Condé Nast has always done best—from promising young designers selected as Anna Wintour’s favorites and aggressively promoted in the pages of Vogue, to internal staffers who find themselves propelled up the masthead. It’s the same model Condé used to promote James Truman, known as the “prince of Condé Nast,” to become the company’s second-ever editorial director.

“But,” the source was quick to point out, “just as in every royal family, the king has a certain time when he’s being fawned over, and then there will be a moment when someone chops off his head.”

It doesn’t appear likely that Mr. Dadich is on his way to the guillotine. But there are certainly those ready to plot a coup. Condé Nast employees described Mr. Dadich as “Tom’s boy,” and wonder if Mr. Wallace, the company’s editorial director, hasn’t developed something of a “mancrush” on his young protege. Many of the sources who spoke to The Observer wondered why, in a city suddenly teeming with venture capitalists, entrepreneurs and coders, a print guy like Mr. Dadich was picked to lead the way in the first place. One told The Observer that, last year, even Adobe requested a different point person better versed in interactive design. But that didn’t stop Condé from flying Mr. Dadich, who didn’t respond directly to an interview request, to Moscow a few months ago to deliver his spiel to the company’s Russian titles.

One source we spoke to said Mr. Sauerberg was busily trying to counter Mr. Wallace’s unwavering faith in Mr. Dadich, a relationship backed by Mr. Townsend. Then again, we heard some staffers blame Mr. Sauerberg for the seemingly short-sighted decision to partner with Adobe, while others pinned it on Mr. Townsend. Whichever view is closer to the truth may be less meaningful, in the long run, than the impression of a company on the edge of obsolescence increasingly falling victim to finger-pointing and internal power struggles.

It is, according to a Wired designer speaking from the magazine's headquarters out in San Francisco, a “snake pit.”

Still, there are signs that things may be changing. A few weeks into Mr. Sauerberg’s tenure, he tapped an unglamorous outsider, Joe Simon, an Indian expat from Viacom, to be the company’s first-ever CTO. It was a move toward what one source called “the way every other sane company in the world works.”

Mr. Simon’s biggest challenge might be finding a way to move beyond the Adobe partnership and a mind-set that looks at the iPad and sees a newsstand, but with virtual stacks of print.

“It’s obvious it wasn’t going to work,” said Mr. Vinh, the former NYTimes.com design director. “It’s only if you’re under the spell of this very traditional print-centric bias that you would ever think that this would work. I don’t know who the executive was that said this is the way we’re going to approach it, but this is not a decision that I would put on my résumé.”

ntiku@observer.com

Last year, after Conde Nast made the surprising decision of closing Gourmet and retaining Bon Ap, Ms. Fairchild was hailed as sort of a forgotten hero at Conde Nast. Apparently, her position as the only editor of a food magazine at Conde Nast will be short-lived.

The news about Ms. Fairchild's departure was lumped into a press release that announced that the magazine, like Architectural Digest, would relocate from the west coast to New York.

"The move of Bon Appétit's editorial headquarters to New York is part of the company's continuing efforts to strategically align our brands for future growth and to enhance efficiencies and coordination by consolidating our assets," said Mr. Townsend, in a typically cold Townsendian statement.

Ms. Fairchild had been editor for 10 years.

This has been a busy season for Conde Nast editorial director Tom Wallace. In the last six months, the company has named new editors at W, Lucky, Architectural Digest, and removed and replaced Patrick McCarthy with Peter Kaplan as the head of Fairchild.

Condé Nast spokeswoman Maurie Perl said the search is only just beginning now. But who will Si Newhouse and Tom Wallace speak to about the job?

The magazine has been struggling, and they need someone to breathe some new life into it.

Here is The Observer's short list of top candidates for the job:

Paul Goldberger

Pros: He knows architecture! He's the architecture critic for The New Yorker; he used to be the dean of Parsons; and he's got a Pulitzer Prize. Above all, we hear he's very close to Victoria Newhouse, Si's wife, who is an architectural historian and very connected to the community. Mrs. Newhouse's vote is probably going to count for a lot in this case.

Cons: There's a question how much he knows about selling a magazine, and how much he knows about decorating. He's wonky, yes, but mostly for architecture.

Margaret Russell

Pros: She has a built a very nice little magazine at Elle Decor. She's young and fresh. Her magazine is very product-focused and very advertiser-friendly. She's definitely one of the hottest talents in shelter today.

Cons: Elle Decor is a very New York–L.A. magazine. The interiors inside Elle Decor are hip and the magazine is very fashiony, but it's not nearly broad enough for a magazine like AD. Ms. Russell would have to prove she can create a new magazine.

Ilse Crawford

Pros: She's a designer and was the founding editor of British Elle Decor. She has an extremely good reputation and is considered a design guru across the pond.

Cons: She's relatively unknown here, and any potential Europeoan import that Mr. Newhouse and Mr. Wallace consider will have to learn about interiors in the U.S.—the learning curve can be steep.

Deborah Needleman

Pros: As the former editor of the now nonexistent Domino, she developed a fun and approachable shelter magazine. It appealed to a very big group people, and it was deeply mourned after it died.

Cons: She's cooking up a project with Huffington Post co-founder Ken Lerer now, and who knows if she wants to return to 4 Times Square? Also, insiders tell us that she doesn't have the best connections within the design community.

Dark Horses

Pilar Viladas, design editor at The Times Magazine: She's very well respected in the architecture community, but a little less well known within the design community, said one shelter magazine source.

Wendy Goodman, interior design editor at New York: She used to work at House & Garden, and Adam Moss scooped her up after Si Newhouse shut down that title in 2007. She knows people, too.

Suzanne Slesin: A former editor at House & Garden as well, along with being a Home editor at The Times, she's a star design writer.

Maurie Perl, a Condé Nast spokeswoman, said that Ms. Rense was traveling today and would not be available to comment. She also said no replacement would be named over the next few days.

"We don't have a replacement," said Ms. Perl. "We're starting a search now. We will find the right successor."

The rumor mill has been churning for over a year that the 81-year-old Ms. Rense was close to retirement. It will be the second time this year that Mr. Newhouse will be able to select a new editor. Earlier this year, Stefano Tonchi was named the editor of W. 

When Ms. Rense took over as editor of the magazine in 1975, it had a circulation of 50,000. Today, the magazine's circulation is over 850,000. Condé Nast purchased the magazine in 1993.

The shelter magazine sector has taken a massive hit over the last few years. After Si Newhouse folded Domino last January, Architectural Digest became the only shelter magazine that Condé Nast has left in its stable (Mr. Newhouse also shut down House & Garden in 2007).

Nevertheless, AD has been hurting.

Last year, Architectural Digest dropped a whopping 49.8 percent in ad pages, according to the Publishers Information Bureau. In the first quarter this year, it dropped 0.8 percent.

Who is going to be tapped to breathe new life into the 90-year-old magazine? It won't be long before Deborah Needleman, the popular editor of the now defunct Domino, will emerge as one of the leading candidates to take over the magazine. (Ms. Needleman told us in March that she was building a commerce shelter Web site with Ken Lerer.)

Tom Wallace, the Condé Nast editorial director, will lead the search for a new editor.

Here is the press release:

PAIGE RENSE NOLAND RETIRES AS EDITOR-IN-CHIEF OF
ARCHITECTURAL DIGEST

NEW YORK, NY, June 3, 2010 - Paige Rense Noland will retire this August from Architectural Digest, the magazine she has edited for almost 40 years and transformed from a niche trade journal into the world's preeminent publication of design.  Ms. Rense Noland's retirement was announced today by S.I. Newhouse, Jr., Chairman of Condé Nast. She will remain on the masthead as Editor Emeritus.
 
"Paige's devotion to Architectural Digest is extraordinary," Mr. Newhouse said.  "For years she has led her readers into a world of the finest architecture and design, inspiring both professions and pastimes. She has created a legendary magazine, and I am personally proud of the standards she has set."
 
Ms. Rense Noland joined Knapp Communications working for Architectural Digest in October 1970 and became Editor-in-Chief in 1975.  While there she also became the founding editor of the magazine known today as Bon Appétit.  Condé Nast purchased Knapp Communications in 1993.  Ms. Rense Noland's vision to remake Architectural Digest in the tradition of European art books with a focus on decorating, decorators, architects and their clients was swiftly embraced, and under her leadership, the magazine's circulation grew from 50,000 to over 850,000 today with a total audience of nearly 5 million.
 
Over the years, Ms. Rense Noland has attracted a host of exclusive, high-profile homes to the pages of Architectural Digest, including an 18-page cover story on the White House of President and Mrs. Ronald Reagan; Gore Vidal in Italy; Truman Capote in Bridgehampton; Julia Child in Cambridge; Robert Redford in New York; and the homes of Anjelica Huston, Diane Keaton, Elton John, and Cher in southern California.
 
In 1990, Ms. Rense Noland introduced the coveted AD 100 list of top international architects and interior designers that is updated and published every few years.  To capture the abundance of exceptional talent and keep up with their avant-garde work, Ms. Rense Noland established additional themed issues, including The Architecture Issue, Before & After, Country Houses, Designers' Own Homes, Exotic Homes Around the World, Hollywood at Home, and People & Places.
 
Upon the announcement of her departure, Ms. Rense Noland said, "I have enjoyed the privilege of editing this great magazine for several decades and now am excited to move on to my next chapter - writing a book that chronicles the remarkable life and career of my late husband, artist Kenneth Noland."
 
In recognition of her contributions to journalism and design, Ms. Rense Noland has received numerous awards, among them: The Museum of Arts & Design Achievement Award (2006); American Academy of Achievement (2000); the Pratt Institute Founders Award (1997); and the Interior Design Hall of Fame (1985).  She has edited 12 books related to Architectural Digest, most recently Hollywood at Home and Private Views, is a frequent lecturer, and has hosted symposiums at the Smithsonian Institute in Washington, D.C. and the Museum of the City of New York, as well as other cultural institutions around the country.  In 2007, she created Open Auditions to discover residential interior design talent.
 
Condé Nast is a division of Advance Publications. In the United States, Condé Nast publishes 18 consumer magazines, two trade publications and 27 websites.

"This is the beginning of a revolution,” said Tom Wallace, Condé Nast editorial director.

The Wired iPad edition, a 500 megabyte file (100 times the size of a typical music file), costs the price as a newsstand copy ($4.99) and features the same advertisers, according to The New York Times. Some "premium" advertisers have paid more to add a multimedia experience to their digital spots.

“We’re extremely happy with the development process and the result,” said Mr. Wallace. “We like the business model. Now, the question is, How does the consumer react?”

The Times says that, with the launch of Wired's app, Condé Nast is trending towards an “author once, publish everywhere” company mantra.

In the first week of October 2007, Mr. Newhouse signed a deal with the real estate developer Douglas Durst to build a new tower for his company over a platform on the West Side rail yards at the southeast corner of 33rd Street and 11th Avenue. The building would be 1.5 million square feet, more than double the 700,000 square feet occupied by the magazine conglomerate at 4 Times Square, a building it shares with the law firm Skadden. It would be a symbol of the company’s dominance in the publishing industry, set apart from midtown, looking down on the competition—big enough to accommodate growth, expansion and more magazines, too.

“We’ve run out of space, and this would be an enormous step forward,” said Mr. Newhouse, in a tired warble, appearing in a promotional video made by Douglas Durst’s team. “We hope to be part of the development of the Hudson Yards project with Durst for the next 100 years,” Mr. Newhouse continued.

But, only weeks after the agreement was signed, the Condé Nast engine buckled. House & Garden, the shelter magazine that Mr. Newhouse had brought back to life in 1996, was abruptly closed. Mere months later, his real estate deal was dead: Mr. Durst hadn’t bid high enough to build a project on the far West Side of Manhattan.

Just a year after he’d contemplated a move, Mr. Newhouse was confronting a dramatically different economic landscape than when he’d been talking to Mr. Durst. The Dow had plummeted. The banks had failed. And even Condé Nast was contracting. Cuts, modest at first, were made: 5 percent of all budgets in October 2008. A few months laster, in March 2009, another 10 percent cut was ordered. The significant closures of Portfolio and Domino followed.

>>READ THE BACK STORY ON THE END OF A CONDE NAST ERA

The prospect of the company growing enough to fill 1.5 million square feet of space, even years from now, seemed unfathomable.

And then finally, inevitably, there was the sudden announcement this summer that McKinsey was coming in to help CEO Chuck Townsend “rethink” the business that Si Newhouse had built for five decades. At the end of the firm’s tour of duty, four more magazines had been axed, including the elite, glossy ur–Condé Nast product Gourmet, and the seemingly promising start-up, Cookie. Over the past week, the “trickle” of layoffs that Mr. Townsend told us to anticipate two weeks ago have been made. By the end of next week, there will have been about 400 layoffs total in October.

One wonders whether the fabulous, powerhouse publisher that Si Newhouse envisioned inhabiting that massive tower on the West Side will remain fundamentally intact. Condé Nast executives say it will, but can it?

WHEN SI NEWHOUSE, who is now 81 years old, went to Condé Nast in the early 1960s, the company was just a small part of the Advance Publications business, which his father had built. The newspaper side of the company was thought to be the more desirable one (Newhouse pere installed his son Donald at the head of it). But Si persevered to build Condé Nast into the force that it became, and in the process changed the magazine world forever.

When the Newhouse’s bought it, the total circulation of Condé Nast magazines was 415,000 and the company was losing money. But, as these stories go, Mr. Newhouse made the most of his opportunity. Under the tutelage of one-time Vogue art director and eventual Condé Nast editorial director Alex Liberman, Si Newhouse learned what to love about magazines—what they looked like, how they felt, how they smelled. He was smitten. Over time, he made readers smitten, too. He also discovered how he could work in business. Instead of hitting cocktail and dinner parties, he poured over spreadsheets and market reports. When something wasn’t working, he called attention to it, and fixed it.

By the early 1970s, Mr. Newhouse became known as a ruthless leader. The moment that circulation and advertising numbers slumped at Vogue, Si Newhouse threw the legendary editor Diana Vreeland right out onto the street. He brought Grace Mirabella in to take it over, but again, by 1988, when numbers were sagging, he dumped her in favor of Anna Wintour. (The move was announced to the world by Liz Smith on Live at Five on Channel 4—Ms. Mirabella didn’t even know she’d been sacked.)

Mr. Newhouse was able to revive Vanity Fair in 1983 because the numbers made sense. He could experiment with editors until he stumbled upon Tina Brown, who changed it entirely.

The magazines looked prettier, glossier, and expenses were let loose, up and through the roof. This was Si Newhouse’s Condé Nast: big budgets, big splashy pictures, the best writers and editors with total creative control who became wealthy celebrities in their own rights. Money poured, and magazines got bigger and bigger and better. No other publisher could compete.

“Si is arguably the most knowledgeable guy in the history of American magazine publishing and global magazine publishing,” said Tom Wallace, Condé Nast’s editorial director. “He is irrefutably the most successful.”

IN THE PAST, when goings did get tough, Si Newhouse could rely on his family’s fortune to keep Condé Nast exactly as he wanted it to be: awash in talent, elite. In 1985, The Columbia Journalism Review described the Newhouse family’s Advance Publications newspaper holdings, which were and continue to be presided over by Si’s brother Donald, as “cash cows in a pasture.” In 1987, in a story about the Newhouses, Fortune said, “It is almost impossible to wreck big monopoly newspapers. About all they will let you do is get richer and richer.”

But one leg of that table has gotten wobbly. The Newark Star-Ledger, the crown jewel of the Newhouse empire, lost $40 million last year. That paper, along with the others, has become a burden rather than a savior.

So can the Condé Nast of the future continue to look like the Condé Nast of the past? The company would say yes, although the confidence in that belief seems better suited to boom times than bust. The printed word will endure. Advertising will return. Profits can be what they were a few years ago.

Perhaps, thanks to the company’s radical scaling back, some of those things will come true. But that doesn’t mean that Condé Nast will return to being the Si-inspired institution that has been so revered. Just look at the past three months: Chuck Townsend has been the star of Condé Nast, the Si whisperer. Having a money guy steal the spotlight is a major shift for a company that has in the past been embodied and defined by superstar creative types like Liberman and James Truman, who was the Condé Nast creative director for most of the ’90s. (Ron Galotti and Steve Florio certainly had their share of attention, but they never owned the spotlight quite the same way.) But these days, the man of the hour—the man closest to Si—is in the executive suite on the 11th floor at 4 Times Square.

“I think when you get hit by the typhoon that Condé Nast got hit by, the first thing you have to do is rely on someone like a Chuck to do what Chuck does,” said one former Condé Nast executive.

When Mr. Townsend hired McKinsey, he didn’t ask for a model on how to figure out the future. He asked how to make 2010 a better year. McKinsey delivered an analysis of the company’s spending, the ratio between edit and ad pages, how it all compares to the wider industry. 

“It was purely a financial decision,” said an insider, about McKinsey’s visit. “It was about efficiency, how your salespeople perform, how your editorial costs run in comparison to other averages. There was nothing strategic about it. It was an analysis of numbers, expenses and revenue—not even how to handle it. There were no specific recommendations.”

Indeed, executives unapologetically said that McKinsey’s analytics were in service of a short-term fix, not a reformed goal.

“The purpose of this is to shape the company to prosper in what we expect will be 2010 revenues,” said Tom Wallace, the editorial director at Condé Nast. “If 2010 repeats ’09, which is a bad year, we’re fine. Even if there’s a double dip. We’re prepared for it. If there’s any improvement at all, we’ll be in extremely good shape.”

But is that enough at this point? What about the grand launches that we’ve associated with Si Newhouse’s Condé Nast? And what about online efforts, which everyone seems to agree are integral to the future of media? (The company announced on Tuesday that GQ will be available for $2.99 on your iPhone starting next month. But even Mr. Wallace conceded to us that a smartphone “is not ideal” for magazine pieces. It’s a start, but nothing like a solution.) Doesn’t Mr. Newhouse need a new whisperer, à la Lieberman or Truman, to take his company into the post-McKinsey era?

“It’s not visionary stuff,” said the former Condé Nast executive of the current state of the company. “It’s about cutting and pulling back and restoring some of the fundamentals. That’s what every company has to do—otherwise they go out of business. One hopes that after that, a new vision can assert itself that is not just about how Chuck thinks. At some point, the company will need a new visionary.”

“THERE IS NO particular global view about what Condé Nast should be,’’ said Mr. Newhouse in an interview in 1989 with The New York Times Magazine. Instead, he said, “thinking pragmatically” is the key to his company. When it comes to starting, buying or revamping a magazine, Mr. Newhouse said then that he does it “if it seems like a good idea at the time.’’

Twenty years and one big giant media retrenchment later, there’s no evidence that Condé Nast has a new strategy. But it remains to be seen how, in this climate, Condé Nast can live at the same altitude it has inhabited for the past 50 years.

“How would you know what’s going to happen in the magazine business?” said Mr. Wallace. “You would look at its vital statistics. You would look at its sources of income from consumers, and from advertisers. And you would look at where you’re finding your circulation. We have no problem with circulation for print magazines.

“We have what we believe is a short-term problem with advertising revenue,” he continued. “That problem seems to be improving. How long will there be print magazines? I don’t know. But for as long as there will be, Condé Nast is well positioned.”

The core belief of Mr. Newhouse’s company—that advertising will return, that everything will be O.K.—is decidedly a risk. One has to wonder if Mr. Newhouse is simply comfortable to look into the next frontier, if this confidence in the old model is born as much from familiarity as from true belief.

“We’re so attached to a great publishing model that served us so well from World War II to September 15, 2008, but what if they don’t know that the model has died?” said Samir Husni, the director of the Magazine Innovation Center at the University of Mississippi. “How many electrical shocks can you send before they see it’s dead?”

But Mr. Wallace fundamentally disagrees.

“The advertising revenue until proven otherwise is cyclical,” said Mr. Wallace. “And if it is proven otherwise, we’ve already adjusted for it.”

The 16 million people—and if you add in The New Yorker, the 20 million people—who read Condé Nast magazines every month, will stay right there, he believes. Along with the advertisers.

“I was the editor of Condé Nast Traveler during the Persian Gulf War. If you may remember, that was the end of travel as we know it. It was shutdown worldwide. It was followed by avian flu, SARS, hurricanes and typhoons and God knows what. There were bankruptcies on a massive scale in the hotel business.

“Travel came back,” he continued. “And Traveler came back. And then we went to September 11, Persian Gulf II. Stuff happens. And every time that happens, there is someone who wants to say it’s the end of the world.”

Si Newhouse, despite everything, still isn’t one of them.

For the famous pragmatic thinker who built the Condé Nast empire, it’s his greatest risk yet.

jkoblin@observer.com

More on Conde Nast:

There's More to Come at Conde Nast, but How Much?

The Gilded Age of Conde Nast Is Over

Ruthie in Wonderland! Ruth Reichl Reflects on Her Time at Conde Nast

“You can do what I did and hide it under the table!” said Ms. Reichl.

Perhaps aided by the rain, it was an intimate affair last night, the final Gourmet party ever. Condé Nast editorial director Tom Wallace was there, as was former Gourmet publisher Nancy Berger Cardone. A couple dozen former Gourmet staffers were present as well. The party was celebrating the new TV series, Gourmet’s Adventures with Ruth, which will air despite the magazine's closure. It’ll be on Channel 13, starting this Sunday, at 3:30pm. Ms. Weist will appear in two episodes.

Ms. Reichl, who has given only two interviews since her magazine folded last week, took a few minutes to talk about Condé Nast with the Observer. She said she would write a book about Condé Nast, and we asked for a small preview.

“It’s a very rarefied world,” she said. “It was a world that most people—I had no idea that this particular world existed. I sort of think of it as ‘Ruthie in Wonderland.’ People are fascinated by the world. It’s a life that is probably coming to an end.”

What would change, we wondered?

“That kind of luxury that we all had is probably a thing of the past. The new business realities have changed the life at Condé Nast. I think print magazines as we know them will cease to exist.”

She said that Si Newhouse broke the news of Gourmet's closing to her, and that he was really quite sad about it.

“The business picture was not good for Gourmet,” she said. “It was a magazine that depended on luxury advertising, unlike many of the epicureans. Most of our competition gets a lot of different kinds of advertising. Our main categories were travel, automotive, financial, jewelry—that all went away. That was just the way that it was. I guess at a certain point the company decided that advertising wasn’t coming back. I wasn’t privy to those discussions.”

“I did not anticipate this, I have to say,” she continued. “I did know that this was bad, but on the other hand our circulation had never been better. The editorial product was a big hit with the readers, and I did not anticipate this.”

Though she has doubts about the future of print magazines, she said that they’ll exist in some other form.

“I do think that there is going to be something that will be very exciting and that will incorporate video, instant shopping,” she said. “I think that the rich experience that is in magazines will likely move to another platform. It won’t be online. It will be what magazines are now, tools for living and inspirational and intellectually rich. I think magazines in that sense won’t be going away.”

When reflecting about her relationship with Si Newhouse and her magazine’s demise, she said, “I think he was very sad about this; I don’t think it was a reflection of me or our relationship. They hired McKinsey to come in and they decided to take McKinsey’s advice.”

A personal invitation from the venerable chairman of Condé Nast was unheard of in Ms. Lipman's world; she was excited.

When she got to his apartment, which is within spitting distance of the United Nations, he answered the door and she was struck by his total lack of pretension: he was wearing a tattered green New Yorker sweatshirt. The apartment was not an Architectural Digest showpiece (though it had a dramatic view of the United Nations building). No servant presented the lunch. Mr. Newhouse simply led her to the dining-room table where they sat down to eat.

Mr. Newhouse started immediately.

“Condé Nast is thinking about starting a business magazine,” he said. “What do you think?”

“Oh my God, yes!” she blurted out in response. “Not only should Condé Nast start this, but Condé Nast is the only company that should be starting this magazine.”

They spent the next two hours talking about a business magazine and what Condé Nast could do. Beautiful photos. Smart stories. A well-paid staff.

She wasn’t offered a job, and she had no immediate intention of leaving the Journal, but when she got out onto the street, she was walking on air. Trying to hail a cab in the rain, she thought to herself, I could be hit by a truck right now and I would die happy.

The conversation meant that much to her. After all, she just had the rapt attention of Si Newhouse—that inscrutable, mysterious, press-shy leader of Condé Nast. She had met him once years before, when she scored an interview with the famously reclusive press baron.

Even in 2005, she barely knew a soul at 4 Times Square—or for that matter, outside of the sometimes almost cultish confines of the Journal. Her resume could have been rendered in a stipple portrait.

She had dreamed since teenhood of an internship at the Journal. Not knowing much about business then was not a barrier to this fantasy: she loved writing, and whenever her father left an extra copy of the Journal laying around, she was awed by the writing in the front-page stories. 

She scored that internship, as a Yale undergraduate, and then got a reporting job there. From a daily column she jumped to the position of Page One editor, and she was involved in the creation of two special sections for the Journal: Weekend Journal and Personal Journal. 

She rose so fast that when the year 2007 started to loom—the year managing editor Paul Steiger would reach his mandatory retirement age of 65—her name was often spoken of in connection with his job.

It wasn't to be, though, because when she got back to her office in the World Financial Center in lower Manhattan, an email from Si was waiting for her.

“Let's do it,” it read.The magazine that resulted from that lunchtime chat closed its doors on Monday, April 27, some four years after that lunch at Mr. Newhouse's, or two years after the first issue of Portfolio, as the magazine was called, printed its first issue.

After 22 years at the Journal, and nearly four years with Condé Nast, Ms. Lipman has found herself not only without a title to edit, but fully without a job. She no longer works for Mr. Newhouse. The story Ms. Lipman told about a dozen staffers on Monday was that the magazine folded because the economy it was built to cover collapsed.

And that’s true, but it isn't the whole story.

WEEKS AFTER MS. LIPMAN WAS HIRED by Condé Nast in 2005, David Carr wrote in The New York Times about Condé’s new project and said, “Given that the company hired Joanne Lipman, the Wall Street Journal’s innovator in chief who helped conceptualize its Personal Journal and Weekend Journal sections, it will be a smart package, if nothing else.”

“Who could resist a chance to take part in the Last Great Magazine Launch?” asked Jim Impoco, who served as Ms. Lipman's No. 2 editor until he was fired in August of 2007. “It was a chance to work with tremendous talent. Working with Robert Priest was like taking a graduate course in magazine art direction.”

Early mock-ups of the magazine's cover obtained by the Observer, made over a year before its launch, displayed the perfect abstract representation of an unbeatable business magazine.

There: an intimate portrait of Rupert and Wendi Murdoch in a deep embrace—Rupert is wearing a black turtleneck, Wendi in a white sweater, the East River churning behind them in the background.

“Murdoch She Wrote” reads the coverline across the bottom of eight different cover designs with eight different titles. Then: “NEWS CORP. CEO’S WIFE HAS BIG PLANS FOR HIS COMPANY—AND THEY DON’T INCLUDE HIS KIDS.”

Wow. Seduction! Sex! Succession! Scandal!

What other imaginary headlines made up the unconscious dream of Portfolio?

“Gucci Gulps: Turmoil at The Fashion House.” “Fast Times at Morgan Stanley: Inside the Sex Harassment Scandal.” “Ipod Killer: Cell Phones Bite Apple.” “Terror Inc.: Corporate America’s Secret Ties to the CIA.” “Private Jets, For the Rest of Us.”

Names being tried out on this cover treatment included SCOOP, with the two O's blacked out to resemble nothing so much as a pair of boobs like the ones in the posters for the movie Amarcord; Advance (Hi, Si!); currency (note punctuation!); the file (once again!); liQuid (OK!); The File; and SPARK.

The make-believe stories were the perfect intersection of business with everything else, as Ms. Lipman liked to say. That is, business was never enough of a topic on its own for a story.

So how could it hold together a magazine?The appeal of these early dream-versions of Portfolio is rather obvious. Condé Nast gets to penetrate a mostly male ad market with a magazine that could sometimes look like a woman's magazine.

But even quite close to the launch, some insiders saw signs of trouble.

During a first interview with Ms. Lipman and a group of editors before the launch, one staffer was trying to get a sense of the magazine.

“None of them could clearly explain what the magazine would be. They just said ‘It’ll be really good, it’ll do what the other magazines don’t do. It’ll be Vanity Fair meets Fortune.’ But none of them had a clear idea or had an inspiring answer. I kept pressing them for a piece in another magazine that ran that they’d like to run and none of them had a good example.

When I asked what would be in the first issue, they were incredibly reticent.”

At the beginning it seemed to have a strange if untested sort of appeal.

Tina Brown, the former queen of Condé Nast (and someone familiar with losing one's magazine), wrote her Portfolio counterspin on the Daily Beast that she was disappointed to see Si Newhouse close down the magazine: “I think I was one of the few media snobs who liked the first Portfolio cover, an arty photograph of the New York skyline by Scott Peterman,” she wrote. “Even though experience told me it was not the kind of cover that would exactly leap off the newsstand, it showed vitality and sophistication. Love it or hate it, at least it wasn’t the usual portrait of some spruced-up suit peering over a high-concept prop that tends to be the solution of choice in publications aimed at the boys’ club sector.”

But Ms. Brown's assessment was rare: Ms. Lipman seldom caught a break for her work on Portfolio. As the magazine was launching, and Mr. Newhouse was lavishing money on her and her staff, bloggers stacked up the books beneath Ms. Lipman so her fall would be that much more dramatic to depict.

In fact, inside Condé Nast, a lot of Portfolio's apologists blame the demise of the magazine on Internet schadenfreude, a sure sign that their faith in the magazine's robustness was never very real to begin with.

Once the magazine was launched, its personality lurched in different directions. At first, only conceptual covers could be used. Then that was scrapped and the majority of the magazine’s cover stars were CEO's in power poses: Tim Geithner, Sumner Redstone ... Dov Charney?

Almost to a person, editors, writers and other staffers who worked with Ms. Lipman on the magazine, instead of rallying around her in her final days and toasting her ambitious and ultimately failed project, blamed many of the magazine's failures on her. Over and over, they cited a lack of vision for the magazine, the lack of a coherent sense of what the thing was as a whole.

“Joanne was never interested in ideas,” said Nancy Hass, who was hired to write the text of the prototype and who later signed a contract (that was eventually dropped) and who is married to Bob Roe, an editor who was fired from the magazine. “She would say things like, ‘Let’s do charticles!’ She wanted lots of those. That’s what she thought was an idea.”

“My criticism is that she didn’t have a strong vision,” said a current staffer. “She might have had a vision, but she didn’t have the courage of her conviction to carry it out. She was always buffeted by the last person she talked to.”

“You’ll hear from one corner of the world it didn’t work out as an editorial product,” said David Carey, a group president at Condé Nast who used to be the magazine’s publisher. “All of our evidence and data and from what we hear say the opposite.”

“The vision of the magazine has been consistent since day one,” Ms. Lipman said. “In fact, since the first meeting I had with Si, we set out to create a magazine with first-class narrative journalism that’s smart, substantive and has some sex appeal. Our DNA all along has been to be counter-intuitive.”

LAST YEAR, MS. LIPMAN WAS DESCRIBING HER halcyon Journal days to an audience at Columbia University.

“So Joe White is this brilliant Pulitzer Prize-winning automotive reporter in Detroit,” she was saying at a lecture, where she also first publicly described her luncheon with Mr. Newhouse. “I said, ‘Joe, what does your brother-in-law want to know?’ And he said, ‘My phone rings every day and everyone has the same question: My kid turned 17 and just got his license and I want to buy him a crappy used car, but I want to make sure it’s safe.’ And I said, ‘Fantastic! Write about it.’ And he did.”

“Similarly, Alexandra Peers, who covered art from a financial perspective, said ‘Everyone calls me and says ‘I want to start collecting art, but I have a really tight budget.’ And I said, ‘Fantastic, write about it.’ And those stories were the germ for what became Weekend Journal.”Now she was going to work for a glossy where news value took a backseat to magazine concepts, packaging, workshopping. Perplexingly, Ms. Lipman often discouraged beat reporting—the underlying product she so successfully packaged and sold to casual readers for the Journal—when she got to Portfolio.

“They were reluctant to ask anyone to pursue a beat,” said one staffer who had been with the magazine before its launch. “Even people with specific backgrounds were discouraged from developing a special area. They kept saying the writers should go with what they’re interested in and what they’re passionate about. It sounded good in theory, but you wound up having very fancy writers who were flailing around and spending their time trying to come up with something.”

When Portfolio did manage to break news, or break a perception about business into the mainstream, the magazine seemed incapable of capitalizing on the success.

A piece written by Jesse Eisinger in the April 2007 issue of Portfolio—headlined The $300 Trillion Time Bomb—was really first on the credit-default swap disaster. In the February 2008, John Cassidy profiled a world in which the government had to engage in massive bailout of the big banks.

“Our coverage has been prescient,” said Ms. Lipman. “In terms of the mission of the magazine, it has served us extremely well. What you have here is the right magazine at a very unfortunate time. The timing was bad—the timing in terms of the economy.”

And that wasn't just a problem for advertising—it became an editorial problem, too. Suddenly the magazine had to chronicle a completely different world, one no prelaunch workshop could have prepared them for, even as the collapse was itself predicted in the pages of Portfolio.

“At first we were all high-end, we were thought leaders,” said a staffer. “Early on, our stories were about the biggest house, the biggest hedge-fund member, or if you can only own one jet, what should you buy? All top luxury brands. Then we had to shift the magazine to: How fucked are we.”

Wouldn’t it be a downer to advertise in a magazine with Bernie Madoff on the cover? Ad pages dropped 60 percent--which readjusted is actually 46 percent after you consider they had one fewer issue—in the quarter and the title (magazine and web site included) lost close to $35 million last year, according to a person familiar with the title's finances.

Perhaps too much had changed since that lunch at Si Newhouse's place. Perhaps Condé Nast was no longer the right place for a business magazine—a magazine where banking is sexy and consumption is both topic and selling point.

“I love the magazine,” said Mr. Wallace, the company’s editorial director. “I think Joanne was the exact right editor for it. I’ve said this publicly already. She eventually surrounded herself with a great team. And she made the magazine that we wanted her to make.”

Perhaps that was the problem:  The magazine with the incredible staff and the luxury publisher and the important topic, after laboring for two years to brew the combination, suddenly found itself operating in high-altitude conditions.

“In the end,” Mr. Impoco said, “it was the big engine that couldn’t.”

• Tom Wallace, editorial director, Condé Nast: “You’re going to have to go a long way on the Internet to compete with the way we produce words and images in the magazines."
• Steve Newhouse, chariman of Advance.net: “What we’re not doing is trying to turn those companion sites into large Web destinations. They’re there to support the magazines.”
• Jonathan Newhouse, head of Condé Nast international: “I think sometimes commentators throw around these assumptions about what is happening to the industry, going the way of newspapers, and I don’t believe it."

Chuck Newhouse, Condé Nast's C.E.O., offered a little more sobriety: The future, he told Perez-Pena, “certainly will require everyone to take a harder look at profitability.”

But that's before he added this: “But we are the top-end publisher and it has served us well and I believe it will stand the test. Painting cheap stripes on Condé Nast and saying we’re going to serve up Condé Nast Lite would be a huge mistake.”

Steve Newhouse offers (pretty unconvincing) speculation that seems to throw water on talk of a Si "succession plan," that Condé Nast will be run by a committee.

Conde Nast editorial director Tom Wallace gave the company's loudest and most forceful public support for Joanne Lipman, the editor of Portfolio. In a story in today's Women's Wear Daily written by Stephanie Smith, Wallace says the following: that the company "love[s]" Joanne Lipman; that she's an "ingenious" editor; that she's absolutely safe in her job; that the company is "extremely pleased" with the magazine.

Here are the choice moments:

• "We love her. She's an ingenious editor and a capable manager. She's produced a magazine that's engaged her audience and won the respect of the industry it covers and the respect of its peers."
• "[Portfolio] was nominated for a National Magazine Award...that ain't nothing."
• As for the people who are counting the days until Lipman's dismissal, Wallace responded: "I hope they can count to a very high number."
• "We're extremely pleased with Portfolio. It is all or more than what we hoped it to be and the same is true of our Web site. The newsstand sales and subscription growth are right where we want them to be, the ad side is tracking to solid growth and the size and performance of the Web site are way beyond what we expected."
• "I don't remember anybody saying Sir Harry Evans [Traveler's then editor in chief] was a weak manager or a poor judge of talent."
• Reports speculated the magazine was losing $5 million a month...Wallace denied the $5 million figure, saying it was too high.