Media Companies: Stop Trying To Save The Past

John Einar Sandvand wants to ban one word from every media company’s vocabulary.

The word he has an issue with? “Cannibalization.”

I think he’s onto something. This word has become corporate Kryptonite, paralyzing business owners and senior management who’d rather protect yesterday’s profits than build tomorrow’s business.

But while we fret about our digital products cannibalizing our traditional revenue, the competition are too busy eating our lunch (and dinner, and probably tomorrow’s breakfast too). They’re not thinking about cannibalization because they never had anything to cannibalize in the first place.

Why “What Can Become Digital, Will Become Digital” Isn’t Optional

Remember when music executives thought people would never give up the “superior sound quality” of CDs for compressed MP3 files? Or when newspaper publishers believed readers would always prefer the tactile experience of print? Not only were these assumptions strategic miscalculations. They were fundamental misunderstandings of human behavior.

People don’t optimize for quality. They optimize for convenience.

The shift from vinyl to CD had nothing to do with audio fidelity. It happened because people got tired of flipping records and dealing with scratches and static. MP3s won because clicking “buy” at 2 AM in your pajamas beats driving to Tower Records.

Move forward a decade or so to the introduction of music streaming services, primarily pioneered at the time by Spotify. Streaming services beat downloading MP3s because paying $10 monthly for everything beats paying $15 per album for something you might not even like.

Netflix didn’t beat Blockbuster by making better movies. They won by eliminating late fees and the Friday night scramble to find something good to rent. The product wasn’t better entertainment. The product was less friction.

The Coexistence Delusion

Traditional media companies love pointing to vinyl’s comeback as proof that old and new can coexist. Not only is this a misplaced and romantic notion, it completely and utterly misses the point. Buying, caring for, and listening to vinyl today is a hobby, not a primary consumption method. It’s like arguing that artisanal bread proves industrial bakeries are doomed. The numbers tell a different story.

When our mass market becomes a niche market, we need niche market costs and niche market expectations. Most companies attempt this transition while maintaining mass market overhead and mass market growth targets. No matter how you look at that, the math simply doesn’t work. While vinyl sales have growth every year for the past decade, they still only make up a total of around 4% of all music consumption. If that’s the base premise of your business plan, you better have a 96% cost reduction strategy ready.

If Content Is King, Then Channel Is a Pawn

Publishers who wax poetic about the smell of fresh ink and the feel of paper are conflating the wrapper with the gift. Readers buy books for the thoughts, ideas, and stories contained within. Normal people (i.e. people who don’t work in the printing industry) don’t give a stuff about binding craftsmanship. Sure, I’ll admit the tactile experience of a hardcopy book can be pleasant and even enjoyable, but it’s not the value proposition.

This matters because businesses that mistake their delivery mechanism for their core competency get blindsided by disruption. Kodak thought they were in the “film manufacturing” business when they were actually in the “memory preservation” business. Newspapers thought they were in the printing business when they were actually in the information business.

Your printing presses aren’t your competitive advantage. Your editorial judgment is. Your distribution network isn’t your moat. Your relationship with readers is. Figure out what business you’re really in, then find the best way to serve that need.

The Spotify Lesson We All Should Remember

Music streaming didn’t succeed by simply replicating the CD-buying experience, but digitally. Spotify moved the road forward by creating something that, at the time, was entirely different: “unlimited access” instead of “individual ownership”. The shift from “buy this album for $15” to “access everything for $10 monthly” wasn’t simply an iteration of what we already knew and were familiar. It offered a new model, and new perception of how music could be accessed (rather than acquired). The more enlightened record labels of the day adapted by changing their role from manufacturers to partners. They stopped trying to sell plastic discs and started developing artists and curating experiences. The labels that survived figured out how to create value in a world where manufacturing and distribution became commoditized.

Of course, such a history lesson applies way beyond the music industry. When our industry’s fundamental economics shift, we have two choices: adapt our role or watch someone else assume it.

Why Gradual Change Is the Riskiest Strategy

It seems that many, let’s call them “traditional”, media companies approach digital transformation like they’re adjusting seasoning in a recipe. A pinch more investment here, a small team there, maybe a mobile app to check another box. While such an incremental approach may feel safe, it’s actually the riskiest strategy possible.

Why? Because markets aren’t like glaciers. They’re more like avalanches. They don’t transform gradually, as much as shift suddenly after pressure builds incrementally over time. Businesses that recognize this pattern invest ahead of the curve. The ones that don’t, inevitably find themselves playing catch-up against competitors who never had such legacy constraints and so were able to move faster.

Reed Hastings started building Netflix’s streaming capabilities in 2007, when the concept of sending a DVD by snail mail was still growing and profitable. He understood that protecting today’s cash cow was less important than building tomorrow’s business. Traditional media executives called this cannibalization. History calls it a masterpiece of strategic foresight. He bet the farm on 13 black, and won.

What business schools don’t teach student about digital transformation, is the biggest obstacles aren’t technological or financial. They’re political. Every profitable traditional revenue stream creates internal constituencies with every incentive to protect the status quo.

The print advertising team doesn’t wake up thinking about how to transition readers to digital. They wake up thinking about how to sell more print ads. The distribution manager doesn’t strategize about direct-to-consumer delivery. They optimize existing distribution networks. Everyone’s doing their job perfectly, all the while the company is gradually becoming irrelevant.

Successful transformations often require separate organizations with separate leadership, separate metrics, and separate incentives. Companies that try to transform existing structures often find their efforts undermined by well-meaning employees optimizing for yesterday’s success. Humans are reluctant to change, to adopt new thinking and behaviors. That’s why having someone outside, without all that baggage from years of thinking in a certain way, is usually the only real way to get a digital transformation to truly stick.

The Real Competition We’re Ignoring

While traditional media companies strategize about competing with each other’s digital offerings, native digital companies compete for something much broader: attention. Netflix doesn’t just compete with HBO. They compete with YouTube, TikTok, video games, and anything else that might occupy our free time. Framing things from this perspective is crucial. Our competition isn’t other traditional companies making digital investments. Your competition is companies that were born digital and never learned to think about cannibalization because they never had anything to cannibalize.

Amazon didn’t worry about cannibalizing their bookstore business because they never had bookstores in the first place. Google didn’t worry about cannibalizing their newspaper classified business because they never sold classifieds. They just built better solutions to problems customers actually had.

The Two-Path Strategy

We have two viable strategies, and we need to pick one of them.

Path one: Go all-in on digital transformation. Accept that traditional revenues will decline faster than expected. Invest accordingly. Build new capabilities, hire different people, measure different metrics. Most importantly, resist the urge to protect old revenue streams at the expense of new ones.

Path two: Go what I’m calling “Premium Traditional”. Accept smaller markets, but charge premium prices. Restructure business costs to match the reduced scale. Focus on customers who genuinely value the traditional experience and will pay for it. More craft brewery, less Budweiser.

The fatal mistake is trying to take both paths simultaneously. You’ll end up with mediocre digital offerings that don’t satisfy digital customers and traditional offerings that feel outdated compared to focused competitors. Failure at both ends.

What Happens When We Ban “Cannibalization”

Organizations that eliminate cannibalization from their vocabulary often discover something liberating: clarity about their actual competitive position. Instead of protecting what exists, they can focus on building what should exist.

The music industry spent years fighting MP3s and file sharing instead of jumping on board and building streaming services. Publishing companies spent years defending print circulation instead of creating compelling digital experiences. Television networks spent years protecting cable bundles instead of developing direct-to-consumer offerings. Taxi companies could have built an Uber years before the idea jumped into Travis Kalanick’s head. But they didn’t, because they were happy with what they had, and customers didn’t have any other choice.

In each case, someone else eventually built the future they were afraid to build themselves.

Our traditional business will decline, whether we build a digital replacement for it or not. The question isn’t whether disruption will happen. The question is whether we’ll be the disruptor or the disrupted.

We need to stop thinking about cannibalization, and think instead about evolution. The brands that thrive in the next decade will be those that recognized this distinction and acted accordingly.