Lonely Planet Melbourne staff in firing line as publishing company goes digital-first

Iconic Australian travel-book publisher Lonely Planet is reportedly shedding up to a third of its Melbourne head office staff as it shifts its focus to digital offerings.

In a statement, the company said it was making a number of “changes” to its operations “in response to a challenging external environment and to position the company for continued success”.

“Unfortunately, as a result of these changes a number of positions at our offices around the world have the potential to be affected and we are in consultation with individuals whose roles may be impacted.”

SmartCompany understands between 70 and 100 staff will be let go, with most of the cuts coming from the company’s book production department, which focuses on editing and laying out the physical books that have made the company famous.

The reported redundancies are part of a global restructure, and SmartCompany understands there may be 40 new roles created in London.

Lonely Planet’s books have typically driven its editorial content, but the company’s new owners plan to change this, with pieces being published and created primarily for the web, with the books then collating the material first published online.

Starting from 2007, Lonely Planet founders Maureen and Tony Wheeler progressively sold the company to the BBC for $269.2 million. In March this year, the BBC sold the company on to American private company NC2 Communications for $132 million less than it paid for it. The BBC has never revealed if it made any profit on the business.

In an interview with travel news website Skift shortly after the sale, David Houghton, the new chief operating officer of Lonely Planet, revealed NC2 always had its eye on the online parts of Lonely Planet.

“We are incredibly excited about the potential for Lonely Planet’s digital assets,” he said.

“Lonely Planet has always been about helping people get out and see the world, and I think that digital can allow that to happen in ways not possible if you are only operating with printed guidebooks. Digital is such a dynamic space, and it will only become increasingly so as time goes on.

Travel-book sales have declined since hitting a peak in 2008, despite world travel outperforming the global economy since then.

“In 2007, sales were over $125 million in the US for the largest publishers, who make up over 80% of the markets. Five years later it was at $78 million,” Skift co-founder Jason Clampet recently told Crikey.

However, Lonely Planet books have done well during this period, particularly in the United States, where it became the leading travel-book seller in 2012.

“There’s been declining book sales, but I’m optimistic we’re going to see a point where digital will start monetising better, and I think LP is better positioned than most to have the upper hand,” Clampet said.

In Australia, most book publishers are struggling. IBISWorld is expected to see book publishing revenues fall 4.3% this year. It’s one of the five Australian industries most likely to experience difficulties this year, according to IBISWorld analyst Caroline Finch. However digital publishing was one of the five set to rise in importance.

“IBISWorld sees book publishing in Australia facing a number of challenges,” she told SmartCompany.

“It’s a really mature product. People have evaluated how they’ll fit into their lives. Occasionally, there’ll be a big release- like the Twilight series, the Harry Potter series – which boosts consumption, but overall the trends are quite steady. And because of the internet, the Australian book-publishing industry is now facing significant competition from overseas.”

Companies moving to eBooks and other digital publishing are likely to experience growth, she says, but profits will be hard-won in an environment where internet giants like Amazon are moving into the same space.

There are a lot of fixed costs that don’t go away with eBooks for publishers.

“Editing, your promotions budget, things like that are likely to be relatively similar for an eBook and physical books. But eBooks typically sell at a lower unit price.

“I think it’s highly likely that different business models will be needed to cope with the changes.”