Of course, that doesn’t mean anyone’s making money on it, a point Burbank also raised.

Oddly, though, he said there has been “little impact” of citizen journalism, no breakout viral video clips from a cellphone, despite the many opportunities of Joe Biden speaking many places every day. (I might counter that there’s a lot of influential blog and Twitter discussion, and that any Swift Boating might occur online, especially via email. Video is not the only place to look for influence. Not to mention Obama’s in-game ads.)

And, in so complaining, he put his finger on a major problem with journalism as it’s practiced. Amid all the tit-for-tat accusations, running around trying to dig up, follow the latest, get the scoops, journalists too often forget to explain to those who desperately want it what the story at its deepest levels is really about -- which also would serve to tell the reading/listening/viewing public why they should care. That kind of depth, of course, doesn’t get the quick pageviews, nor is it the kind of investigative journalism that tends to win Pulitzers and other prizes. In a business sense, it’s not the kind of journalism that will pay for the resources it takes create it. But it is a big public service that can accrue pageviews (on pages carrying ads) over time. And there are ways to “monetize” it beyond the pageview-ad formulation. (partnerships, re-branding, syndication, books, new sections ... that would be another blog post.)

Not that it’s easy to explain something like this crisis. A lot of people tasked with explaining what’s going on probably themselves don’t understand, and good journalists are trained not to let their grasp exceed their reach. Heck, some of the smartest professors I had in business school seem at a loss to completely explain what’s happening in the economy right now. (One wrote an email about the opposing views of who’s to blame, without answering a question I asked about whether models he taught us projecting increased value as debt is taken on were still valid, or formulations for calculating risk should be changed). And, the ones who can explain it all to us -- smart MBAs who do financial modeling -- are, after all, ones who helped get us into this, with the very financial models they created or followed. They’re likely to earn a lot more than the ink- and pixel-stained wretches working in newsrooms. Then, again, there’s a few of those folk who have a bit of free time at the moment. Maybe they could write a little something for the papers, even help come up with some graphics and videos to explain it all.

Even without the business justifications, though, the explanation would be worthwhile and a public service.

There is, in short, much uncertainty surrounding where the business models for media are and should be headed.

One area that legacy media can control and should know something about is content. Newspapers, broadcasters, publishers of all stripes, have absolute control over their content. Newspaper publishers constantly need to ask themselves “What do consumers want when they subscribe or take $.50 (or $1.00) out of their purses/pockets to buy the publication. Broadcasters certainly ask, ‘Why should viewers tune us in?”

But I’m constantly amazed at their lack of insight and therefore the choices they make. And here I’m referring in particular to the broadly defined “news” segment of the media. Research shows that there has been a range of motivations that are involved in getting individuals to buy a newspaper or tune in a news program—or click to a Web site bookmark. One of the top motivating factors is the interest in learning what we do not know. What happened in the world while I slept? Who won the game last night? What is the weather forecast for tomorrow? What did my stocks close at? What does some “expert” think about a new movie or show? Surprise me!

What we don’t need the news media for is to be told what we already know. The Internet has, of course, made it possible for more people to know more of the answers to the above types of questions before they are available in print or even on a regularly scheduled broadcast. Still, there are many things we know even without the Internet. For example, most of use know if it is hot outside. Or wet or windy or cold. We look out the window or open the door. Anyone who drives a car knows the price of gasoline. Anyone who flies knows the airports are crowded and lines at Thanksgiving are long.

So where am I going with this rant? I’m astounded—and hopefully some of you are as well—at how the editors of news media shoot themselves in the foot everyday with the non-compelling nature of their many of their content decisions. For example, most days I turn on “American Morning” on CNN, even before the computer is fired up. And what do I hear, at length, each day lately? A business reporter, Ali Velchi, telling us the price of gasoline. “Pain at the pump” is the not so original refrain. And the usual “B” roll of someone filling up, with the obligatory quote from the woman in the street who is driving less and someone who will give up their “gas guzzler.” And the anchors commiserating over the latest record. And a reiteration of where Lundburg or AAA thinks the price is going in the “peak driving season.” Compelling stuff, no? Maybe the “Today Show” isn’t so lame.

Not long ago I was asked by a small chain of newspapers to spend a few days with their editors in a session to help them understand and strategize for the challenges facing them. They sent me a large stack of their newspapers so I could get a flavor for them. In the sample were issues from several of the papers with a variation of the headline “It’s Hot Out There.” Immediately I created in my head what this would say. By the third paragraph it would quote some gardener about the heat and how he is coping with it. And sure enough, in the first article I read I was both pleased and disappointed with the copy. There, in the third graph, was a quote from Pedro something, with the Generic Landscape Co. “Yeah, it’s hot. So we start really early and quit by two o’clock,” he explained. I mentally patted myself on the back. But there was more disappointment that the article was so very predictable.

However, the larger point is that, with both CNN and these newspapers (and many others that could be included) that these prominent “stories” were not about news. They were what anyone knew.

In this space I have recently been critical of The Wall Street Journal for a new editorial approach that has often reduced prominence of analysis and surprise in favor of featuring in many cases material that most readers would already know: A who-what-where-when accounting of an earthquake. A routine summary of the previous night’s primary results (and, with its early deadline, less timely that what was in the local newspaper). It is telling readers what many, if not most, could be expected to learn from other media they are likely to have seen.

The legacy “news” media cannot materially change the trend toward whatever is coming via technology. But they can slow their demise by concentrating on the content of their products. And they can enhance the position of their digital products as well by providing audiences with the serendipity factor and with a value added quality that is needed to have users buying, tuning or clicking to their products. That has been the not-so-secret sauce behind the strength of The New York Times, USA Today, Fox News and, until recently, The Wall Street Journal. Give people what they don’t know, not the current weather or yesterday’s price of a gallon of petrol.

It's the operational part -- integrating the two -- that will be a challenge. Very different cultures, even if CNET is one of the more traditional-style companies in its space.

Local advertising traditionally has accounted for about 85% of total revenue for newspapers in larger market, even higher for small market newspapers. Local TV stations receive a far higher proportion of their revenue from spot national advertising, while radio stations have tended to be in between, though in most case closer to newspapers than TV. The primary local competitor for newspapers has historically been directories (e.g., Yellow Pages) and direct mail. Increasingly, cable has been able to siphon off local dollars with the capability to insert advertisements down to the neighborhood level.

What must be most unnerving to newspaper publishers and, to a lesser extent other local media players, is that pure play Web sites now have the largest share of local on-line advertising revenue—43.7% by the reckoning of Borrell Associates.

How can this be? Didn’t the publishers take solace in the fact that their local papers had a built in advantage over the upstarts thanks to their identification with the local market? And that all-critical brand equity?

It is becoming evident that the value of ad placement based on search terms, Zip code or Internet address proves more effective for the local advertiser even if the page viewed does not directly contain information that is congruent with the location of the user. That is, the value of the local newspaper or radio station has been that the advertiser had a high degree of confidence that anyone listening to that station or reading that paper was in their local trading area. But online the advertiser may not only be assured that the ad is placed in view of an individual within their target trading area, but may also have specific demographic or other characteristics desirable for that advertiser. Not to mention the added delight of knowing when an ad may have been seen and responded to in the form of a click or more.

Of course, this is true for the online site of any local medium. Too often, however, it seems that while the publisher’s sales force was working on convincing the paper’s current advertisers to try the online version, the new players had no such blinders. They were marketing to anyone, which often meant new service providers and merchants who had not been print advertisers: smaller in size but far greater in number. A version of the long tail effect. And that is where much of the growth is coming from. It’s not just old advertisers in new bottles.

Yesterday he declared that "the sky's-the-limit profits from traditional broadcast TV are over….Free-to-air television faces a lot of challenges, just from the sheer fragmentation of the audience.” Overall he characterized broadcast television as a "highly challenged industry in America."

This may actually be on the minds of some of the striking Writers Guild of America members. The Wall Street Journal reported than some of the writers who work for the soap operas are resigning from the union and going back to work. The audiences for the soaps have been sinking for years. “Writers and producers in the genre fear that by the time the strike finishes, their audiences won't return.”

On Monday Murdoch publicly admitted that he expected the online version of The Wall Street Journal will soon be free. News Corp. will likely close the deal to acquire Dow Jones next month. "We are studying it and we expect to make that free, and instead of having one million [subscribers], having at least 10 million to 15 million in every corner of the earth, keeping up-to-date minute by minute with all business and economic news from around the world," he told an audience in Australia.

Such comments give some insights in News Corporation's strategy and business model. Clearly, advertising will play a larger role in the business model for online content. On the other hand, he is hedging his bets on advertising from broadcasting. First, he advocates making television productions very high quality, so they can be sold to the global market “and then be brought back to America--or to anywhere in the world, for that matter --and be sold as DVDs.”

So, television becomes more consumer financed, while online becomes the prime advertiser-supported medium. At least in Murdoch’s view. How will this be affected, if at all, should DVD’s be supplanted by online delivery, such as by Netflix or Amazon’s Unbox or iTunes video service? Actually, News Corp has a bet there, with Hulu.com, its ad-supported online video venture with NBC Universal.

News Corp. has developed a “portfolio strategy”: When the crystal ball is cloudy, invest in a range of possibilities. Not all need to be a success. Two or three big ones will do.

For today, I want to highlight the data and analysis published last week by the media-centric private equity firm, Veronis, Suhlis & Stevenson (VSS) in its latest Communications Industry Forecast, covering through 2011. This has nuggets which, if accurate (this is a forecast) would bring to higher resolution the winners and losers in the media arena. For example, total spending on all communications grew substantially faster than GDP between 2001 and 2006. Furthermore, VSS predicts that communications industry spending will continue to grow faster than the overall economy through 2011, making it the third growing sector of the economy.

That’s some good news. On the other hand, the report finds that, for the first time since 1997, consumers spent less time with media in total last year than in the previous year. VSS believes this decrease, though small in percentage terms, is due to changing consumer behaviors and digital media efficiencies. “The drop in consumer media usage was driven by the continued migration of consumers to digital alternatives for news, information and entertainment, which require less time investment than their traditional media counterparts.” It continues: “Consumers typically watch broadcast or cable television at least 30 minutes per session while they spend as little as five to seven minutes viewing consumer-generated video clips online.”

VSS does not see this decrease as part of a long term trend, expecting consumer media usage to stabilize in 2007 and increase slightly through 2011. However, this would be driven by time spent with out-of-home media and videogames as the only major segments to achieve accelerating growth in this timeframe. Overall consumer time spent with media is forecast to increase at a compound rate of 0.5% from 2006 to 2011, down substantially to the 0.8% in the previous five-year period.

The real headline, however, is this prognostication: “In what would be a watershed moment in communications history, VSS predicts that Internet advertising – including pure-play websites and digital extensions of traditional media – will replace newspapers as the largest ad medium in 2011.”

I assume they mean that advertising in printed newspapers will be supplanted by advertising online—which includes the advertising that newspaper publishers generate from their online sites. Still it would be another stake in the heart of what once the biggest rooster in the barnyard.

But here’s another bombshell: “In addition to shifting their attention to alternative media, consumers are also migrating away from advertising-supported media, such as broadcast TV and newspapers, to consumer-supported platforms, such as cable TV and videogames.” Time spent with consumer-supported media grew at a compound rate of 19.8% from 2001 to 2006, while time spent with ad-supported media declined 6.3% in the period. This is not a measure of revenue but of consumer time spent. But with all the buzz about everyone moving to totally ad supported models (see Rebuilding Media’s latest foray into this space), this finding more than suggests that consumers are willing to part with their discretionary income for the right content or platform.

Another data point is found in a piece by Bobby White in The Wall Street Journal (sub. required). "Across the cable TV industry," writes White, "… independent channels are also turning away from TV to the Internet." Black Family History, The Lime Channel, The Employment and Career Channel, Horror Channel and HorseTV are among those that pulled the plug on their cable affiliation in favor a going Internet only.

“The shift illustrates how the Internet is offering a second chance to certain segments of old media. Web-based TV is now becoming a more viable business route, and Internet video is exploding. Running an online-only video channel, which doesn't require expensive cameras and broadcasting gear, is cheaper than operating a cable TV channel. While starting a new cable channel today takes an initial investment of $100 million to $200 million, a broadband channel needs just $5 million to $10 million to get going, says Boston-based research firm Broadband Directions.”

It’s a constant challenge when in the midst of change to separate trends from simple data points. One needs a series of data points over time that show direction. The Journal article may well be a data point that fits into the trends the VSS study provides. It seems though that enough data points are aggregating to confirm some direction with far reaching strategic implications for and broad array of players in the media industry.

Although talk about disintermediation has subsided and the predictions of some self proclaimed visionaries have not been fulfilled, the reality is that this phenomenon has in fact been operating and is picking up steam.

It is most clear in many financial transactions. Pre Internet I recall paying about $150 on average to buy or sell a stock. I’d have to call a broker, who would call me back later with the results of the order. And he or she got a hefty commission. Today, services such as eTrade, Fidelity and many others facilitate electronic orders that pass through them to the exchanges. Commissions have fallen to as low as $5 a trade.

eBay is a disintermediation vehicle for many types of transaction. About eight years ago, cleaning out the basement of the house where I was raised, I came across a stash of Playboy magazines dating from the early 1960s and Life magazines from the same era. My first reaction was to check on their value with some used magazine and book stores around. They, of course, would have bought them below the market rate so they could retail them for a profit. But I stumbled across this new eBay thing, listed them and sold them myself at “retail,” bypassing the intermediary. Moreover, I was able to reach a national (at the time) audience, while the local retailer had to base its price on a smaller, local market.

With its original direct to consumer business model, Dell disintermediated computer retailers. Paradoxically, HP has helped rejuvenate that channel and Dell has just this week acknowledged that it will sell through retailers. As I keep reminding my marketing students, the word “some” is a big word. Some people may like going direct, but some people still like to call a broker, go to Blockbuster, buy from Wal-Mart. For now, disintermediation is not an absolute—it’s an alternative.

The process continues. Netflix started the disintermediation of video rental stores—and will itself be bypassed by downloaded videos unless it is successful in becoming “one of them.” Much software is downloaded, not packaged, hence stores like Egghead and CompUSA have died or had to retrench.

Which bring us to the media world. The first high profile threat was Napster, which was the ultimate in disintermediation by allowing individuals to trade music with each other. After some fumbling, the recorded music industry has reached a degree of accommodation with the technology through iTunes and its competitors. Bye-bye Virgin Music Superstores, Tower Records and a host of others.

Newspapers have seen a portion of their high margin classified ads disintermediated by Craigslist and Monster.com. Why pay those high per word rates when you can reach more people, in a searchable format, than in the shrinking newspaper. Advertisers have learned about disintermediation as well. While banner ads have a third party middleman, Google’s AdSense or AdWords is far more efficient: pay only when used.

The legacy television networks are scrambling to prevent disintermediation. Postings of network shows on YouTube and the like were a threat to the networks and their local affiliates and had to be stopped. To one degree or another ABC, Fox NBC and CBS have elected to disintermediate their own local affiliates by allowing viewers to access many network shows online directly from their own Web site. Meanwhile, NBC has engaged in deals to distrubute its programming via numerous Web sites, as has CBS.

Disintermediation is not necessarily a losing proposition for the media industry. It’s just a matter of learning how to use it to its advantage. For example, last week the season finale of the popular TV series Grey’s Anatomy featured a soundtrack
by singer Ingrid Michaelson. Never heard of her? Not surprising, as she does not have a recording contract. She was found on MySpace by a firm that specializes in locating undiscovered talent (of which there is much) and using their works on TV shows and commercials for far less than it cost to license the music of established artists from a record label.

Because she does not have a record company contract, when one of her songs gets downloaded from iTunes, she pockets $.63 of the $.99 charge, compared to the 10 to 15 cents a major label artist gets sent. That amounts to $37,800 from the 60,000 times her songs have been downloaded. Ms. Michaelson has a gig she would likely have never had before MySpace, income in excess of what she would likely have earned from her music before iTunes. And ABC bolsters its profitability by a few dollars.

That’s the kind of creativity the newspaper industry needs as well. Disintermediation will ebb and flow. But the net will be more flow than ebb.

With more than 36 million unique monthly visitors to Yahoo’s news site alone, the alliance gives McClatchy far more exposure than it gets through its newspaper (aggregate circulation about 3 million, readership maybe two times. Web site visits likely include some overlap with print readership).

This is just one of a string of recently announced deals between newspaper publishing companies and Yahoo and rival Google. It is the start of a realization that the core of the news business in the future for these folks is more news gathering and less news distribution.

It is part of an action plan (I would hope) among some legacy media companies more than others that it can no longer be business as usual in the digitally connected universe. Ken Goldstein, a analyst who concentrates on Canadian media, has a few illustrations that nicely captures how massive this change is, looking in this case at television.

Figure 1

Figure 1, which I have only slightly modified from his, shows the quite simple value chain c. 1975: Content providers—primarily Hollywood studios – created movies and television programming. They were distributed via commercial broadcasters to consumers, with nascent cable providers also starting to retransmit those signals. Advertisers contracted with the broadcasters to deliver their messages to the consumer. Straightforward and limited to handful of players.

Fast forward to 2007. Figure 2 shows a far richer, more complex, more fragmented landscape. The number of players has proliferated exponentially. Indeed, considering peer-to-peer and aggregators such as YouTube that provide easy access to materials from content creators that range from the highly professionals to the rank duffer, the close circle of content providers is blown apart. And this is possible because the gate keeping function of the broadcasters and then cable providers has been undermined by satellite and the Internet, not to mention offline conduits such as DVDs.

Figure 2

Similar charting of the newspaper or radio value chains would yield parallel changes, blowing up of the tight community of players and limited choices for advertisers and consumers. In its place is greater choice for these constituencies. But with this choice comes greater effort, for advertisers to find the best outlets for their target markets and for consumers to know what they want and where to find it.

This change also provides a surfeit of opportunity for those enterprises willing to make the effort and accept some failures in experimenting with evolving and unproven business models. I don’t know how the McClatchy/Yahoo deal will pay off for the newspaper publisher. But it is certainly moving its mindset in the right direction.

• Time Warner’s Time Inc unit announced that it was cutting 150 positions, half from editorial at Time, People, Fortune, etc. This on the heals of a reduction of 600, mostly business side, last year.
• The digital version of Sports Illustrated accounted for 13 percent of profits in 2006 and is projected to rise to 18 percent this year.
• The number of people reading Internet blogs on the top 10 U.S. newspaper sites more than tripled in December 2006 from the previous December—from 1.2 million viewers to 3.8 million.
• On the other hand, viewership of the ABC, CBS and NBC evening newscasts was down by 1.1 million in November from 2005.
• Based on the first six months of 2006, Internet advertising revenue should total about $16 billion for the year, or about 30% greater than 2005. This is roughly 10 times the rate of growth of advertising overall and would make Internet advertising greater than magazine advertising (although some of the Internet expenditures go to the Web sites of magazines).
• A private equity group has agreed to buy the Minneapolis Star & Tribune from McClatchy for less than half of what it paid for the newspaper nine years ago. And presumably McClatchy was happy to be walking away with what it got.

• Denial and isolation - The "This won't happen to me! I don't really have to worry" stage.
• Anger - The "Why me?" How dare you do this to me!" stage.
• Bargaining - The "Maybe I can evade this fate by co-opting or sidestepping it " stage.
• Depression - The "It's really happening and I can't stop it" stage.
• Acceptance - The "Let it happen; I don't want to struggle anymore" stage.

The news industry is dying. In which of Kübleresque stages is this industry. There have been some major changes this year.

But first, do I exaggerate the patient's condition? I don't think so. Nor do others. Furthermore, when I state that the news industry is dying, no, I don't want it to die. I am just stating the condition of the industry. There will always be a need for journalism, but the question is whether there will be an industry in which journalists can work.

Let's examine the patient. Its vital signs have been fading for decades. Circulations and readership of newspapers and news magazines has been evaporating. Listenership and viewership of broadcast news programs have likewise been are dissipating. These declines had been slow, about half a percent annually, but in the past few years have accelerated to a few percentages annually. The industry's heart still beats, and some industry leaders still to profess its vigor, but now even its core vital signs — its revenues (adjusted for inflation) and its profit margins — the pulse and blood pressure of the industry, have begun to wane.

Many industry executives claim that a transplant into the new-media will save the patient. However, an examination of data shows that their online editions are read by fewer people — and less often and less frequently — than the dying print or broadcast editions. Moreover, ten years into these efforts, the online editions are earning only one-twentieth to one-hundredth per user what the dying print edition earns per reader.

The news industry is in critical condition everywhere except countries that only now are forming their economic middle classes such as China and India; places only now rising to the levels North America and Western Europe reached 90 years ago (during the heyday of newspapers). The patient is dying everywhere else. The industry needs a radical course correction.

The eldest form of mass media will likely be the first to kick the bucket. 'Who Killed the Newspaper?' asked the cover of The Economist weekly news magazine on August 24th. , In a post-mortem a priori to newspapers' death, the magazine (which in a quaint British tradition styles itself a newspaper) The Economist cover story began with an editorial stating:

Newspapers have not yet started to shut down in large numbers, but it is only a matter of time. Over the next few decades half the rich world's general papers may fold.

And later in a 2,900-word special report about the newspaper industry, it noted:

It found that the media were trusted a bit more than governments, Fox News was the most trusted medium in the U.S. Al Jazeera most trusted in the Middle East and the BBC (surprise?) most trusted globally. Blogs, says the report, are the least trusted form of news, with 25% of respondents finding them trustworthy.

But the report has some significant markers for looking down the road at where the business of the media is headed. On the one hand, few individual news Web site were cited by respondents as the source they trusted most. On the other hand, given the short time this media format has been around, the Web's inroads may be considered significant.

• No surprise, youth use online sources most. Among all those survey over 10 countries, 19% of those 18 to 24 years old named an online source as the most trusted, compared to 3% of those 55-64 years. As significantly, 56% overall valued the opportunity to obtain news online. In the U.S. it was higher, at 60%.

• The young male audience, in particular, is moving away from television towards the Internet. Ten percent fewer young males, compared to the average, name television as their most important news source (46% as opposed to 56% overall); and 15 percent say the Internet is now their most important news source in an average week, compared to just 9 percent of respondents as a whole.

• In the U.S. as might be expected the important news source in a typical week is television, mentioned first by 50%. But the Internet, mentioned by 14%, has surpassed radio as a news sources (at 10%) and is only 7% lower than newspapers, at 21%.

• Fully 20 percent of American men name the Internet as their most important news source.

Figure 1, taken from the study, shows the percentage of respondents overall who “strongly” or “somewhat” agreed with the proposition “I value the opportunity to get news using Internet/wireless technology." The greatest disparity is in the age demographic, providing yet further data points that online information is already entrenched and will steadily encroach on older media formats as the population ages.

These are breakthrough developments for three reasons:

First, both these broadcasters are extending the model they know best: free programming, supported by advertising. Disney’s plan is to embed traditional spots that cannot be skipped or fast forwarded through, although the programming itself will have the pause, rewind and fast forward features we use on our personal video recorders. Fox did not provide that level of detail, so it may or may not have the same expectation for advertising.

Second, Fox has explicitly said it will split the advertising revenue from its Internet operation with its local affiliates. This notion of the networks generating revenue from its programming, possibly at the expense of lower viewership at the local affiliates during the initial broadcast, has been a sore point with the affiliates. Fox has addressed them head on—and presumably to the satisfaction of the affiliates.

Third, together with CBS’ offering of free online access to the NCAA tournament while charging for ad-less replays of hit shows like “Survivor,” says that the old time networks are adapting to a new game: multiple business models. Anne Sweeney, president of the Disney-ABC Television Group was right on target when she told a cable executive audience, "None of us live in the world of one business model.” They are seeing these options as an opportunity and responding accordingly. Previously much of their motivation was largely defensive, to hedge on the threat the Intrenet posed.

One of the benefits of the Internet is that it expands the options available to everyone—both users and content providers. In the past, resources were scarce enough that there was limited room for experimentation and segmentation on television. Broadcast spectrum was allocated in such as way that it almost mandated that it be used to reach the largest possible audience, hence the mass audience programming of the old networks. Cable expanded choices, allowing Time Warner and others, for example, to offer user-funded channels, such as HBO, with a different programming model than on its ad supported WB broadcast network.

But the Internet, helped along with broadband, is a marketer’s Nirvana and a viewers Utopia (well, at least compared to the first 50 years). We have free first run TV, paid first run, ad supported free next day access with ads or paid commercial-less next day access. There are opportunities for downloading to small, portable players and larger, fixed displays. Advertisers can efficiently target smaller audiences than ever, converting video into the equivalent of the print world’s magazine rack.

Michael Nathanson, media analyst for Sanford C. Bernstein & Company, tells it straight: “A lot of companies are trying experiments like these, not just Disney. But no one knows what the business model is and whether it will pay off." Very true. And the same could be said in the early days of radio, when there were experiments with different subscription and advertiser models.

The difference today is that we are likely to find that multiple models will profitably co-exist with one another, which should please both stockholders and entrepreneurs.  And consumers will soon find – to borrow from another industry—they can “have it their way” when it comes to video.

What in the world does this have to do with Rebuilding Media? Internet video is breaking out big time. After years of Internet video being a postage-stamp sized novelty, it is “suddenly” mainstream. I vividly recall showing a streaming video with RealPlayer (there was no Windows Media Player then) to my inaugural cybermedia class at Temple University in 1996. One student’s hand shot up with a question: “That’s cool. But no one is going to watch videos that are so jerky [it was a dial-up line] and so small.” “Absolutely true,” I responded. “But the importance of this is not where it is today but where we can expect it to be in 10 years."

So here we are 10 years later. Most households that are online use broadband connections. Wireless networks are in place with broadband capability. And cell phones that include the capability to receive video are common. This year may be the year that online video is recognized as a real business, as the established media companies throw their figurative hats in the ring to join the start-ups and innovators.

What’s some of the evidence?

First the new-guy players:

    -- YouTube, one of the latest “new kids, rocketed from 3 million video streams per day to 25 million from Jan. 1 to Feb 28.

    -- Apple’s iTunes is reporting downloads at the rate of about 3 million per month. Some are free, some are paid for.

   -- NarrowStep, a company in the U.K. that provides technology and support for specialized Webcasts, says it is adding two to three new channels per week. Unlike the mostly amateur clips uploaded to YouTube and similar, NarrowStep  is being used to create “slivercast” channels that are intended to be businesses. One client, Sail.tv, says it attracted 70,000 viewers in its first month. (payment required for access)

   -- The Roo Group hosts or consults for 100 Internetcast TV sites which show 40 million videos a month. One client is YuksTV, which claims as many as many as 200,000 visitors in a month.

    -- One of the “old-timers” among the new players is Atomfilms, a home for budding film-makers.

   -- Then there is Google, big and wealthy but still a new player in video. Google provides access to everything from archived NBAAll-Star games for $3.95 to “Twilight Zone” classics for $1.99 to many free – and often worth as much— classic clips such as the 49 second "Benito scooping up after his dog.”

   -- Last year the site of Major League Baseball, MLB.com, generated $68 million in subscriptions from viewers of 2,400 baseball games.

The traditional media companies have gotten the message:

   -- The uber-Establishment Time-Warner’s CNN has been flogging Pipeline, a service that combines real time CNN feed with access to its video archive. It has the confidence to seek $25 annually—less than a subscription to Time.

   -- CBS offered the NCAA’s March Madness basketball games on an advertiser-supported basis and had 5 million takers. Much of the pay-for material on Google Video is both current (e.g., “Survivor”) and historical (e.g., “Brady Bunch”) from CBS.

   -- The prospects of a new revenue stream have driven Disney, which owns ABC, to agree with NBC Universal to provide “Scrubs”, which the former produces and the latter broadcasts, for sale on Apples iTunes. The significance of this is that it is the first time rival broadcasters have “joined together in a digital download deal.”

To be sure, these are just the tip of the iceberg (sometimes a cliché says it best). And naturally there are skeptics, though often one can see where their bread is buttered to understand:“‘I've never been a believer that we should create channels for all these niches like beach volleyball,’ said John Skipper, a senior vice president of ESPN. ‘They just don't pencil out. Because if you have 12,000 people, you can't afford to do it. And if you can't afford to do it, you can't make any money on it.’" But that’s like the publisher of People claiming that you can’t afford to publish a newsletter for 12,000 subscribers. No, not if you use the underlying economics of People.

The folks at Rocketboom.com, which claims “more daily subscribers for original syndicated multimedia content than nearly any other site, including Podcasts,” state it succinctly:

We differ from a regular TV program in many important ways. Instead of costing millions of dollars to produce, Rocketboom is created with a consumer-level video camera, a laptop, two lights and a map with no additional overhead or costs. Also, Rocketboom is distributed online, all around the world and on demand, and thus has a much larger potential audience than any TV broadcast. However, we spend $0 on promotion, relying entirely on word-of-mouth, and close to $0 on distribution because bandwidth costs and space are so inexpensive.

(Hmm, is this last phrase an argument for the carriers in the so-called “net neutrality” debate?)

The role and the business models of these and the many other players are all over the place. None of the new guys bulleted above actually create any content, while all of the old timers do. But the new players, including Google, YouTube and iTunes are providing the facility for all sorts of amateurs, professionals and amateurs-hoping -to-be- recognized- as-professionals to reach an audience.

“Slivercasting” is any way of describing the “long tail” concept introduced in a Wired article by that name in 2004: It refers to the large number of specialized offerings each of which appeals to a small number of people, but aggregate to a large market on the Internet. If each content provider was plotted on a graph along with best sellers, these specialized products trail off like a long tail that never reaches zero, as in the accompanying figure.

Of course, not all these ventures will survive economically, although as we have seen with the blogging phenomenon, in the long tail there inevitably will be some high quality content provided by individuals or entities motivated by other than direct revenue. Still, the implications for the effect of all this on our cumulative time available to spend on individual media programs, products and sites, as well the impact on the slicing of the advertising pie and consumer media budgets is likely to continue roiling and destabilizing the traditional media landscape.

There may be sudden phenomena in nature. But rarely in business. You just need to pay attention.