As the internet has grown in popularity, traditional media properties (in an effort to keep up with the changing tide of consumer tastes) have begun offering their content online. The problem is, as we discussed in last week’s post, online models (including Social Networking websites) have yet to show any signs of sustainable profitability. In fact, many online versions of traditional properties actually rely on the offline entity to cross subsidize the operating costs of the website component. Conventional wisdom dictates that major media properties leverage the internet to keep up in the “Digital Age,” however from a business perspective it may not make sense to shift content online for the following reasons:

1) Traditional media channels have taken decades to develop and are protected from new entrants by high fixed infrastructure and distribution costs.

2) The online landscape is densely competitive, has lots of players, very low costs of entry, and no costs of switching for consumers.

3) Many online models (e.g. Social Networking) are intentionally unprofitable – their goal is only to gain volume, which gives them an advantage over traditional media properties when competing for consumer attention.

As traditional media properties shift their content online, they shift their consumers away from offline channels (which, barring the current economic conditions, have shown to be profitable advertising supported businesses) and on to the internet, which for the most part has not shown to be profitable. Traditional media channels are certainly facing challenges that require shifts in strategy and adaptation to market conditions. However, in the “Digital Age,” digital is not always the answer. By shifting content online, traditional media properties are conceding the death of their offline channels in exchange for a gamble that they can find a profitable online business model.

Is the Internet Killing the Media Industry?