Britannica was almost killed off by online Encarta.

Britannica was almost killed off by online Encarta.

In 1768, three Scottish printers began publishing an "integrated compendium of knowledge" which they called Encyclopaedia Britannica.

In 1920 it was bought by Sears Roebuck, the American mail-order company and moved its headquarters to Chicago.

In 1941 ownership passed to William Benton, who later bequeathed it to the Benton foundation, a US-based charity. EB grew into a profitable enterprise whose product was regarded as the gold standard for accuracy and comprehensiveness. By 1990 sales revenues had reached US$650 million ($1094 million).

Yet within five years, EB underwent a near-death experience. What almost killed it was a product most of its executives regarded as a joke, an encyclopaedia on CD-Rom launched by Microsoft and called Encarta.

The original content was licensed from an outfit with the Dickensian name of Funk and Wagnalls, and some of it gave trash a bad name. So Microsoft spruced it up, added multimedia content and made it easy to use. To the astonishment of EB's board, this meretricious object triggered a precipitous decline in sales of their gold-standard product.

Faced with catastrophe, the Benton foundation put EB up for sale.

It took 18 months to find a buyer, a Swiss billionaire named Jacob Safra who bought the company for half its book value. Full print sets of the EB are still available, as well as an online edition.

The story of Britannica is now a business-school case study in how rapidly competitors can emerge - apparently from nowhere - in a digital world.

The First Rule of Business nowadays is that somewhere out there someone (and not just Google) is incubating a business plan that is based on eating your lunch.

But the story continues. Last week Microsoft announced it would be closing all its Encarta websites (with the exception, for some reason, of the Japanese one) at the end of 2009, and discontinuing sales of Student and Encarta Premium software products worldwide in just two months' time.

Why? Well, the company explained on the website: "Encarta has been a popular product around the world for many years. However, the category of traditional encyclopaedias and reference material has changed. People today seek and consume information in considerably different ways than in years past."

Translation: Wikipedia ate our lunch. To see why, log on to Wikipedia and search for "Britannica". Shortly after the announcement, a new paragraph had been added to the lead-in material to the entry. "In March 2009," it read, "Microsoft announced it was discontinuing the Encarta disc and online versions." QED.