A VC

I was meeting with an old friend yesterday.  We were catching up on his career and the stuff that I've been doing.  We got to talking about old media (books, music, newspapers, etc) and the issue of cannibalization.  He's an experienced online executive but he hears this all the time from old media people - the fear that the online channel will "cannibalize" their old media channel.

I want to say this loudly and clearly, so loudly that the old media people will hear this. 

Online does not cannibalize offline, it turbocharges it.

Here are my proof points:

1 - The South Beach Diet.  The book was doing ok.  Then the publishers cut a deal with Waterfront Media where Waterfront paid for the rights to create subscription based online newsletters with diet tips.  Waterfront then went into the paid search market and bought a huge amount of keywords around the south beach diet theme and drove a ton of traffic to the South Beach Diet website where they sold these online newsletter subscriptions.  Guess what happened?  Sales of the book took off.  It turns out that all this online advertising, which the publisher was not paying for and in fact got paid for, were having a huge crossover effect on the sales of the book itself.  The Wall Street Journal did a very good piece on this story several years ago.  I am not going to take the time to go back and find it, but I assume if you are a subscriber, its in the archives.

2 - Seth Godin's Books - Seth regularly puts his books in pdf form on the web for free months before his publisher releases them in print.  Sounds crazy, right?  Wrong.  The viral spreading of the pdf version of the book creates buzz, word of mouth, and thought leadership for Seth's book.  When he releases them in print, they go to the top of the charts for business books.  Read Seth's books and blog for details on how this works.

3 - Yankee Hotel Foxtrot - This story has been told a thousand times, but I'll tell it once more.  Wilco recorded this album and its label, Reprise, decided they didn't like it and didn't want to release it.  What did Wilco do?  They released it on the Internet.  For free.  Then they went shopping for a new label.  They eventually found one, Nonesuch, and they released the album in CD format at the normal price.  What happened?  The record sold more than any record they had ever released at the time.  It was a huge hit for the band and took them to a new level.  Now Wilco will do that with every album they put out according to Jeff Tweedy.  It's smart marketing.

4 - The New York TImes.  I hear rumors all the time that the New York Times is rethinking its policy of having a free web site.  They worry that it is cannibalizing sales of the paper.  This is wrong thinking.  I don't know the statistics, but I am certain that the New York Times website gets more readers than its paper version.  That it reaches more people.  That its online ads are seen more than its paper ads.  That its journalists have larger online audiences than offline audiences.  And if I am wrong about any of this, I won't be in five years.  I am certain that across the US and in foriegn countries, The New York Times is reaching vast new audiences that it would never have reached in paper form.

5 - Catalogs.  Another friend of mine runs a catalog business.  I was talking to him yesterday.  I mentioned that online is now a bigger commerce channel than catalogs.  He said that's not a meaningful statistic for him except that it means he takes less phone calls and more orders are processed by computers.  It's like going from bank tellers to ATMs.  It's been great for his business.  And he'll still put out his catalogs every month because its another form of marketing that works for him.

I could go on and on about this with more proof points.  They are all over the place for old media people to see if they'd just take their heads out of the sand and look and think and realize that online turbocharges your opportunities.

I was inspired to write this post by Jeff Jarvis' rave review of Tom Friedman's The World Is Flat book which I blogged about a couple weeks ago.  In that review, Jeff says the following:

Well, Tom, here's a suggestion: Take giant swaths of your book and put them up online -- using Dan Gillmor and Cory Doctorow as your models -- and I guarantee that you will find your theses and writing and name spread farther faster than the best damned publishing PR campaign in the world. And you'll sell more books (and audio downloads).

That's the right advice.  Put your content online.  Let it go where it wants to go.  It won't hurt your offline business, it will help it.