ShmoopTube

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finance a la shmoop -what is cannibalization ? pass me some more leg.

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yeah the real Paleo diet. so yeah cannibalization in the business [leg and foot on a plate]

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world isn't all that different from this. you'll hear the catchphrase you'd better

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cannibalize your own business before someone else does. well what does that

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mean? well the newspaper industry had a great gig for about 250 years. its profit

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Center was the help-wanted slash classified ad pages. in a major Metro

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like Los Angeles they'd sell one page for 80 grand. that's ink on paper and had

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a whole bunch of help-wanted ads on it and that page would cost them about 10 [classified page shown]

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grand to produce. 70 grand in profit for a big page like that LA. yeah great great

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work. if you can get it well then came along the commercial

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Internet in the mid-1990s. instead of cannibalizing itself and building or

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buying its own classifieds business albeit at lower margin it more or less

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hid like a scared ostrich from the much more competitive and lower profit margin

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world of the internet. cannibalizing for the industry would have meant that yes

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they put out Help Wanted sections at vastly lower prices like the equivalent

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of a page that instead of charging advertisers in LA 80 grand charging them [business models listed]

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12 grand or less on a page that cost them maybe 5 grand to put out. and why

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did it cost less? like not 10 grand but just 5 ? well a web server is way cheaper

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to run then killing and pressing a bunch of dead trees, printing them with union

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labor, delivering them and so on. so less revenues less profits but still

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a relevant player in the help-wanted category. so what happened? well

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Craigslist happened. and so did monster.com and indeed and Glassdoor and

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a bunch of other specialty market players like dice in technology. while [glassdoor website pictured]

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the newspaper industry acted like the local monopoly it was for 250 years and

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instead of cannibalizing itself and living with lower profit margins, but

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still living well it ignored the new threat of the internet and well it

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starved to death. and now it's the internet company

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tasting the sweet flavor of victory and the newspaper companies have well turned

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into the modern-day Donner Party, sadly. [Donner party defined]

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