• by Diane Mermigas , December 1, 2009

An uneven, bifurcated economic recovery could last as long as the recession and stretch into 2011. With every media business model being revamped for a digital marketplace, prolonged economic instability will further complicate the ramping of revenue growth.

It all comes down to improved consumer spending, which drives 70 percent of the domestic economy. That's unlikely with real unemployment topping 18 percent (including part-time and contract workers and those who have given up looking for work), rising credit defaults and housing foreclosures, and tight credit will continue through 2010.

When people do spend, it is different than before the recession. They are more conservative, selective, demanding and digital.

Traditional and online media companies will continue to reduce headcount and cut other costs to bolster earnings (if not revenues) at the expense of research and development to shape new income streams. The confluence of all these factors will stifle the formation of a new digital economy that can flourish in better times. That is essential to creating new media value, according to Liberty Media CEO Greg Maffei. "It's a handful (of companies like Google and Apple) that have hit the home run versus the long tail of destruction," Maffei said at Liberty's recent investor day meetings. "For the most part, the consumer has really benefited from all this. Not the companies."

Google's $160 billion market cap and Apple's $200 billion market cap is what State Street investor Gordon Crawford calls the reallocation of money and value, which hinge on creating new economics. Diane Mermigas