• The Australian, Thursday, February 15, 2007 11:15 AM

The crossover from old to new media is opening up a huge rift, through which billions of dollars could be swallowed up from the bottom lines of the world's big media companies, warns a new IBM report.

A clash is at hand, which, according to the report, "Navigating the Media Divide," is reaching fever pitch. "Industry incumbents are responding -- but perhaps not quickly or completely enough. While they are fighting an escalating competitive battle on this front, traditional media cannot ignore the impending division in its own ranks."

Case in point: the music industry. EMI only yesterday unveiled that its traditional CD sales are slumping worse than expected. The company is now expected to turn to DRM-free online music to fill that gap, though the specter of piracy looms over that strategy.

"We estimate that the music industry lost between $US88 billion ($114 billion) and $US190 billion in its transition to digital," a music exec said in the report. "Television and film companies will be next if companies don't systematically navigate the media divide. Media companies must take action before it is too late."

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