John Dies at the End started as a free web serial which was online for YEARS before the author put it on CafePress (while still keeping it free). The an indie pub, Permuted Press, did a 10,000-copy run of it (and sold out) while still allowing David to keep the story free to the public online. (The edited version was only available in print, I believe.) About a year after that he landed a major book deal with Thomas Dunne books and is, as of this post, #552 in sales rank. That's with preorders - the book will be released in five days. When he landed the big contract it was at the cost of the online version, but in David's opinion more people will find out about, and thus read, the book with that contract than they would if it stayed online with no pro marketing push behind it.
Have I mentioned David Wong is my hero? He's the reason I put Peacock King on the internet. His book is my favorite novel. It is genuinely scary, utterly hilarious, completely wrong and amazingly original. It's so good that it deserved four adverbs in one sentence.
What helped Wong a lot was that he ran a popular website - Pointless Waste of Time. However, the JDatE thing was actually viral word of mouth and a ton of people found out about the book who never went to PWoT. He just had something that people talked about and made references to, and his fans brought him all the way to publication through their fervor for his work. It started out as a short story one Halloween, became a regular thing each Halloween, and then progressed to a weekly serial publication each year in the months around Halloween. Somehow it turned into a full cohesive story during all that. It's kind of weird to read the Permuted Press version, in fact, because I remember David's story from when it was just a bonus short on his website. It still comes across great.
Uh, anyway. That's JDatE. If you couldn't tell, I'm a big fan.
Oh! The first chapter of the sequel's available online now, and the website has a bunch of other content. Also, the Cracked forums (David is a writer/editor at Cracked now, so all the PWoT stuff migrated there) are pretty awesome and have a section for writers and readers.