I get it, SXSW is a business, and they want to protect their profits. It makes plenty of sense. SXSW loves attention, they just chose to sit this one out because their analysis concluded that it would be better for their bottom line. They pride themselves as a forward-thinking event, even continuing this spiel in their announcement. It's now obvious to everyone that cares that it was all just marketing.

Ultimately I think this will hurt their bottom line by driving diversity away from their event. Will discussions of racial diversity now be cancelled at the whim of the KKK? These groups operate through threats and intimidation, and I think there is a real risk of other hate groups catching wind of this and using similar tactics to stir up attention for their cause.