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The Digital Revolution

Speaker Transcripts

Satisfying the Thirst for Information
Rob Flynn, Lonely Planet Publications

Satisfying the thirst for information content and that's what I am going to talk to you about today. There are obviously technological issues involved and I'll touch on those as I move through my presentation. I'm going to talk about travel content and, specifically, what I'd like to talk to you about is how one small or medium sized company who have been dealing in analogue products for a quarter of a century has jumped halfway across the chasm to becoming a digital company and I think that's an issue that most of us are facing these days. I want to talk to you about some of the processes Lonely Planet went through and where we're up to and how it's changed our business and our business model. This year marks the 25th anniversary of the founding of Lonely Planet. For the first 20 years of our company's history we believed that we were in the guide book publishing business. Everything we did revolved around print. We knew everything there was to know about designing, typesetting, laying out, pre-press, plate making, paper sources and stocks, 4-colour separations, in position bonding, binding, stitching, cutting etc.

These were the words we used on a daily basis. We knew how to publish, market and sell books in Australia, the US, Europe, North America, Latin America and the Middle East and have spent years and millions of dollars building distribution channels, training reps, creating point of sale materials, attending trade shows and building our list of titles. Ironically it was at a book fair in 1993 where we saw the Web demonstrated for the first time and felt the ground shifting subtly but sickeningly beneath our feet. It turns out that I think we were wrong in our rather cosy assumption that we knew what business we were in. We were wrong. In fact we were in the travel information business not the guide book publishing business. The fact that our business was dominated by print for 20 years was merely an historical accident and history really has caught up with us and is catching up very, very fast indeed. Now as you all know, travel is near the top of the list of Web preoccupations. Already there are literally tens of thousands of Web pages devoted to travel. These are produced by national, state and local tourist authorities, airlines, travel operators, travel publishers, travel writers and individual travellers and the problem for us is that all that travel information is being distributed free and we have been in the habit of charging for our travel information. On line, you can find destination guides, travel logs, personal journals, newsgroups, train timetables, airline schedules, interactive language translators etc.

The Web is becoming, or perhaps now is, a major information resource for independent travellers and for those who want to know more than they can find in the glossy brochures that probably most of you produce. Travel booking engines like Travelocity and Expedia are now writing tens of millions of dollars of business a month and although not profitably yet, I think the general direction is very, very clear indeed. I guess that's not surprising given that the global nature of the Internet lends itself to travel and it's demographic profile, comprising students, academics, business people, digitally aware middle classes are those most inclined to travel and they are the ones who have money to travel as well and are inclined to find new and better ways to organise their lives. I believe that anyone who is in travel, specifically travel information, and isn't doing business on the Web right now is doomed to the dustbin of history. I think it's beyond doubt that the Web or something like it, whether it's interactive television or some other platform that hasn't yet been invented will dominate information delivery by the middle of the next century. Like other companies in the information business, we need to ensure that our brand makes the leap from being a print company to being a digital company and that's basically the process we are going through at the moment.

So our prime objective of working on the Web at the moment is to make sure that we do bridge that chasm. So we're in the process of re-engineering our business to become Web-centric and to make our brand a Web brand. When I use the word Web, I'm talking about interactive services in general. The Web is just the platform du jour and I'm sure that's going to change in the future. Of course, re-engineering your business to work around the Web is a course that is much more radical than most of us would like to take. But I think it's the only sane response for a company like ours where our main competitors are no longer those traditional guidebook publishing companies, but software developers, airline reservation services and media conglomerates who have never been in that business before. These are the people who are now staking a claim in what was for many years a very cosy and well known marketplace.

Just a little background, Lonely Planet's core business consists of the harvesting, treatment and distribution of travel information. That's the way I like to look at it. We've been publishing travel guides for 25 years and we currently sell about 4 million books a year. We've got 200 staff and 4 offices around the world and 100 travel writers working for us at any one time. For many years, we've used global networks like the Internet, Compuserve and America On Line to move our product around the globe, between authors and editors, between editors and publishers and between publishers and printers. So we're pretty used to using networks.

When we first saw the Web in 1993, we immediately began to explore the Internet as a potential publishing market. We started our first Web site about three years ago and today our site receives around about one million visitors a month, we generate about 50 million file requests and ship about 160 gigabytes of information to travellers every month. We also provide travel destination information for the travel channels of Yahoo, Travelocity, Virgin Net, America On Line and a couple of dozen other Web sites which is becoming an increasingly important part of our business.

So three years down the track, how do we see things? Like many publishers, we prefer to work in digital materials. All our researchers submit their manuscripts in digital form. Increasingly our authors are submitting their manuscripts via FTP over the Internet. Our maps and graphics are generated with computer software. Everything on page layout is done on computers. We even deliver the laid out book to our printer on disk or a cartridge of some sort rather than a traditional paper route. In essence, almost all of our intellectual property begins life and is stored in digital format. When we create a new title or update an existing one, we begin by creating a piece of software or soft book, if you like. We then have our printers convert it into tens of thousands of paperback copies so that our knowledge of a destination can be distributed globally, sold and carried by travellers in their luggage as portable travel guides. The entire process works reasonably well and I expect it will continue to do so. But paper based travel guides have some very real limitations and I think the development of interactive digital services provides glimpses of possible solutions to some of these major limitations. And of course adding brand new opportunities. I'd like to say at the outset that in the immediate future, I don't see the Web or other interactive digital services replacing guide books or print as a way of carrying, storing and shipping travel information. Books are very convenient. Our education department has been using these, training us how to use this technology. These new digital publishing technologies enable us to produce new types of products and services for travellers, potential travellers and armchair travellers and to reach brand new markets.

What we are developing now is what we call digital interactive travel guides and what we are finding is that they not only complement our existing range of travel information products but introduce us to a whole new market, a whole new generation of travellers and cyber travellers who simply don't use books. If you think about it, there's no logical link between somebody travelling and somebody going to the book store. The two activities are quite distinct and we sell our travel information only to those travellers who decide to go to the book store and purchase one of our products. This technology enables us to create travel guides that are more up to date, more informative and easier and more enjoyable to use.

So in the context of travel information, three factors are of particular importance. The information should be rich, it should be useful and it should be accurate. These goals are particularly difficult to achieve using print technology but it turns out that by publishing on the Web, we can move some way to making our products much richer, much more useful and much more accurate. For example, in terms of richness, we can breathe life into text by using modern media. We can use interactive maps, we can use slide shows, we can use video, we can use audio, we can use other ways of presenting information and giving information to people, rather than just the written word. We can customise information to suit the individual requirements. At the moment when we produce a guide book, we try and produce a guide book that suits the general traveller, our idea of what the Lonely Planet traveller is. But, of course, if you take a 500 page guide book to a destination, really only 100 pages of the book will be of use to you and you are carrying the other 400 pages someone else will find useful. On the other hand, we can't put all the information we have, all the information the traveller wants, into our books because it would make them bigger and bigger and bigger. But with digital medium, we can provide access to all our information and allow our customers to choose which parts are relevant to them. And the third thing we can do on line which we can't do in print is to perpetually update our guide books.

As you know, travel information dates very, very rapidly. A lot of information is extremely volatile, especially things to do with prices and telephone numbers and those kind of things. And the bane of a travel publishers life is to keep information up to date. Our books are out of date by the time they arrive on the shelf in the book store because it takes roughly nine to twelve months from the time we have a researcher in the field until we can make that information available to the traveller. But on line, we have a way of giving people updated information as it occurs. Finally, and very importantly, the Net, the Web enables us to connect directly with our customer so that we can continue to build a sense of community that has been a vital factor into the development of the Lonely Planet brand. At the moment we receive about 40,000 letters a year from travellers who have used our products and about 60% of those are now coming to us by email. So, two things. One is email is very simple for us to process in house. We can read what people are writing to us rather than having a letter scratched on the back of a postcard or a piece of toilet paper or whatever it may be. We can actually read the letter and if it contains useful information, we can clip it very easily and send it to where it's most useful. It might be to an author, a publisher, an editor or it might be to management if there's criticism about a particular guide book or our products in general.

In getting to where we are at the moment, we pretty much broke all the rules and advice that people talk about in taking a business on line. We had no business plan, we had no budget, in fact, we really had no plans at all except to get started and get onto digital and to see how things went. Which I think is pretty much the Lonely Planet travel philosophy anyway. I don't recommend that people follow that path. It is critical to get all the advice you can, do your budgets, make your plans, but I think it's also important to recognise that the Web and interactive media in general are revolutionary and nobody understands it even if they say they do. The people who are going to succeed on line are those who experiment, take risks, with the idea in mind of re-inventing themselves. I think that's a very, very important thing to get across. This is a different business entirely, it's a different audience, it's a different medium.

So, I just want to share with you the three guiding principles we've used in taking our business from traditional analogue print to digital. These have worked for us but obviously they are not going to work for everybody. These are the things we think most important. First of all, do something useful, secondly make friends and thirdly, but most importantly, have fun. Doing something useful. The most important thing you can do in building a presence on line is to create a compelling reason for somebody to visit your site or access information. The idea of having brochure-ware on line just doesn't work. People will come once, they'll disappear and never come back. If you lose a customer on line, you lose him forever. You create a reason for somebody to come to your site and return to it, then they will come back and will revisit. The reason has to be compelling. Give them something that they can take away, something small, that rewards them for having visited your site. People put time and effort into visiting a site on the Web and if you don't give people a reward, you lose them.

Secondly and most importantly, is to develop interactive products. Don't just take an existing product and shove it in somebody's face. Our on line travel guides are very different to our print travel guides. What we've had to do is re-invent the kinds of products that we produce. We are producing things that we never thought we would need to in the past. As an example, a couple of years ago, Lonely Planet established its own branded area on America On Line. We wanted to be where our customers were and the business model for America On Line worked very, very nicely. It rewards content providers by giving them a percentage of the AOL on line fees and if only more of the other ISPs were as enlightened I think content providers would definitely be making more money than they are today. But I think that's still a long way down the track. The AOL model is quite simple. The content attracts members on line and the longer somebody stays on line in our area, the more potential revenue is generated. The killer application if you like for America On Line is chat because you attract somebody to your site and they chat with other people and they stay there for a very long time. So we've developed chat areas on America On Line. One that we run here in the UK and one that we run in the US and they are enormously successful. Chat and delivering travel information through people typing on keyboards was something we needed to produce in order to enable us to develop income from that particular source.

Many of these new ideas were developed by America On Line, because in an interactive world, you can produce a product once and roll it out to many others . We have a discussion area for example which is hugely popular and, again, this is an area where we basically create a space for travellers to talk to each other and it has absolutely no importance at all to Lonely Planet. We provide the space, we provide some topics, we provide a set of rules and then we just let people go for it. People come and use this area of our Web site and they create their own content. The more people who come, the more people come to read what others have read. We're not just taking stuff that's in our books and putting it on line. We're thinking laterally about ways to attract people and providing content and spaces and starting points for people to provide or to create their own experience of Lonely Planet on the Internet.

Something else we're doing that comes under this "doing something useful" banner is trying to reduce our costs to a certain extent. A lot of our guide books we update every couple of years and it becomes less and less relevant as time marches on. In the past we have kept our books updated by printing a Stop Press to put in the back of every book and that would keep them going for another couple of months. The problem with that, of course, was we had to publish those updates in order to ship them all around the world and the updates went out of date very quickly indeed. It was expensive and it just didn't work. So what we do now is publish our updates, in fact we call them upgrades, direct to our Web site and we advertise the fact on the back of every guide book. This saves us print costs, extends the life of our print products, draws our customers back to our Web site where they can become part of the Lonely Planet community of travellers and hopefully can spend more money on the product. This is something that is working very, very well and these upgrades are extremely popular and people are now requesting upgrades for our complete range of guide books. It is something that gives us an edge over our competitors and also of course, other things being equal, people will buy the most current guide book and our guide books can always become this, in some shape or form. The other thing that is useful is selling the product.

The buying patterns of our Web customers have surprised us. We have a very, very simple e-commerce engine, I hesitate to use that word, on our Web site which we wrote ourselves. It cost us about $500 to do it and we sell a lot of books on line. The average sale is two titles but we often see orders coming through for five, six or seven books. I have never seen anybody walk out of a book store with six guide books under their arm. But they do on line. Typically, a customer will buy a guide book, a phrase book, an atlas and they might buy a video. And if you think about it, if you go into a book store, phrase books are over here, travel guides are over here, atlases are over here and videos are over there. Book stores don't think of putting them together as a bundle, as a package, but we can do that on line. If someone is going to Thailand, you can say take all the stuff on Thailand, these products are complementary and we can make a much bigger sale than we can through the retail channel.

We also see customers buying books further down our list than they do in a book store. We publish 360 titles. Book stores typically take 20-50. So there's 300 titles that just aren't getting out there in the market place. But now we're selling a lot of our guides on Argentina, Namibia and those sort of places that you don't find in bookstores. The other thing we're finding is that we're selling to people outside our traditional markets. So we're selling to people in Japan, Korea, Malaysia, Brazil, East Germany and so on. We're not just taking sales away from the High Street merchant, we have actually created new market places and market places are extremely difficult and costly to get into. And the Web works. We're always going to need a national brand but the Web has extended our reach into these marginal markets. As an aside, you might be interested to know that the single biggest order that we have taken over our Web site was for several dozen books destined for the library of a large software company in Seattle, Washington and payment was on a company credit card!

Something else we are usefully doing on line is new product development and testing. We have an idea for a new guide book, a new kind of travel product. You can put it up on the Web and let people play with it for a couple of months and get some feedback on it and then, using that feedback, decide yes we're going to invest in it or no we're not. This is an extremely cost effective way of doing some primary market research and product testing.

Making friends. This is one to one marketing. Being on the Web enables us to reach out to a whole new market. People who travel need destination information and who don't go to book stores. Four years ago, for example, we started producing travel guides to the US and the Web gave us an entry into US colleges and the travelling professionals in a way that would have been extremely costly for us to do with traditional advertising. It also helped the fact that you talk about prime markets, business people travelling and students travelling, are exactly those key markets that you use the Web to get information on. In most cases, the Web was the first exploration for Lonely Planet and it was a relatively simple matter then to build the brand and Web presence before others. In the US in particular, the Web is an ideal medium to reach a large critical audience very, very rapidly. One thing that has been important to us is the development of what we call a trust relationship with these people. This is the idea of making friends. We did nothing to alienate visitors to our site. They're guests, they come and go as they please, we respect their anonymity and their privacy. We don't have memberships and this approach works I think to our benefit. We encourage people to write at every opportunity and as I said before, they do write to us in detail. They give us a lot of information about themselves, they offer information about our products, our competitors. The type of information you could never really gather from a formal survey. The point is that we're generous with them in terms of giving them access to a lot of things on our Web site and in turn, they're generous with us. Because we encourage this open interaction, our customers tell us exactly what they like and what they don't like about our products.

In our discussion area for example we don't censor any criticism and there is a lot of criticism of our products. We let that criticism flow. We find that after a while people start making useful suggestions, many of which we have actually taken and incorporated back into our products. So over here we basically extract some gems from that and use to put back into our products. A summary of the feedback from our Web site is sent to our company directors, managers and publishers as required reading. This feedback that we get from our customers. These are customers talking to us in the most direct way possible. There's no intermediation at all. The Web also gives people permission to speak their mind, as you know from the type of email that people send you. And you should find a use for that. Encourage people to write, encourage people to tell you what they think of the services you offer. We also scrounge gems of material from this feedback which we can incorporate directly into products. If a hotel closes down in Entebbe for example. It might take us a year before we send an author out there but the traveller, who has used our book and been to that particular destination last week, can tell us two days later and we can make sure it gets into our update. In one of our discussion groups at the moment, there's a lot of discussion about going to Croatia and this is starting to trigger some sparks. Maybe we should be looking at a travel guide to Croatia. We've got to do a little bit of testing around that particular destination to see whether it's viable or not.

Another thing that's very important is our email newsletter which we send out once a month to people who register for it. We now have about 40,000 people registered for that email newsletter and we expect that to soon grow to about 60,000. It's very, very cost effective, much more cost effective than doing a printed newsletter. It means we can keep in contact with people and draw them back to our Web site on a regular basis. We also run competitions, have giveaways, a whole range of things to make sure people like our products, like our brand and are thinking about us often.

The last thing about the Web and interactive services in general is that they are entertainment. It's important to have fun with the stuff. Web sites have a personality and a sense of humour works as well. For example, we call the marketing area on our site, propaganda. We didn't test the name but we felt it was right in the context of the Web and we don't push people at it as well. We leave that marking area lying around and if people stumble over it, they find it and enjoy using it. The marketing area of our Web where we sell books to people is the second most popular area on our Web site and not because we push it into peoples' faces, but just because we leave it there and they discover it themselves. Something else about having fun on the Web is taking risks. Get your hands to it, get out there and try a few things. The Web is very forgiving and has a short memory which means you can go out there and try something that's outrageous. If it doesn't work, it doesn't matter. Just go on to the next thing.

A final piece of advice that I wish someone could have given me a few years ago was that to succeed in this new business you need to create a Web culture, interactive culture. You need to build the Web into your company. Are there people in your company who still don't have the Web on their desktop? If there are, why? Don't give your Web site, your interactive services management to temps. It needs to be creative. You need to find someone smart, under 25, to manage your Web site. You need to tell them what you want, give them the resources and then, more importantly, give them permission to scare the pants off people. I think if you do that and they come back with something that you think is just the ticket, they've done something wrong. If you feel comfortable getting involved in things like the Web and interactive television, you're not doing it properly.

So, running very quickly through some of the things we are doing on the Web site at the moment. This is what the Lonely Planet Web site looks like and one of the things we want to do is make it look totally different from anything you've ever done before. This is our idea of giving people permission, we employed some very, very young graphic designers and just said create a Web site. I don't particularly like the graphics, they're not my style, but it works. It works because people haven't seen this kind of thing before. It's not our corporate image, it's not our brand but we are trying to create a whole new customer base who don't have a preconceived idea of what we're like. We've created travel information products. Our Home Page is a magazine style, it has a series of departments that run down the left hand side and we bring features up to the top and we revolve those that are important on a daily basis. Every day we change a couple of small things on our Web site. We bring content from deep down and bring it up to the top and we revolve them. It's very, very simple, easy to do but it makes it look like the Web site is changing on a regular basis.

We provide destination information and this is re-engineering. This destination information is adapted from our guide to this particular destination, to the Seychelles in this case. It's not guide book information. What we think people are doing on the Web at this level is getting some ideas for taking a vacation or travelling and they want a taste of what this destination has to offer. So we offer them a very, very brief summary of what they can do in this particular destination. We give them some basic facts and tell them a bit about the environment, the economy, all the things you will find in the guide book but in a very short abbreviated form. We also have some interesting things we can show them, a map on line and because it's on line, we can make them more interactive. If they're interested in information particularly on Victoria, they can click on Victoria and go straight back to information about Victoria. It's about customising information. Allowing people to find their own route through the information.

Upgrades. We have an area to reboot your guide book. Very simply, if people have a guide book. Here is a 2,000 or 3,000 word update of that particular guide book which includes changed information. We can also do things like if there are new on line services for example we can actually put in a direct link to the Web site. Or if there's a travel advisory put out by a particular embassy, we can provide a link as well. We can give people the information they need but we can also give them pointers to other sources of information as well which is very useful indeed.

Finally, the last thing I want to show you is the discussion area. We set up a very basic template called Africa and people can create all the content themselves. There are 147 topics on this particular page to do with Africa at the moment. It's generated over about three days. We probably have about 20,000 people a week adding messages to this noticeboard and it's self- generating content. Once we've actually set up the template and format people come here and create the content themselves. We can basically create a very popular site on the Web with minimal effort.

I will leave it there for now and take questions if you have any.

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