• by Diane Mermigas , January 19, 2009

Media companies adrift in the digital transition and pounded by the recession are embracing new strategies--but they are not backed by the innovative core changes needed to permanently resolve broken business models and declining revenues.

Recent initiatives by traditional media players--spurred as much by cost-cutting as exploring new digital options--lack the radically different infrastructure, practices and interactive trappings essential to sustainable growth. Slapping a digital face on a legacy body just won't do. Meaningful, sustainable digital conversion must employ social networking, a ubiquitous interface and findability tools scarcely evident in these latest maneuvers. And that will prevent them from having any significant financial impact.

For instance, The Christian Science Monitor is the first daily newspaper to convert to an Internet-only strategy, while still publishing a weekly paper edition. An increasing number of big city newspapers are doing the same. Such moves can be significant only if the costly printing infrastructure, equipment and related personnel are eliminated. That cannot happen if the Chicago Tribune only moves from a broadsheet to a tabloid format, as planned. The need to go entirely digital runs contrary to plans by The Printed Blog, a Windy City startup, for streetcorner distribution of a hyperlocal paper newsletter of community Web bloggers and advertisers.

The most progressive newspaper collaboration of blog links, videos, behavioral targeting and front-page advertising cannot save a legacy-burdened New York Times from dogged bankruptcy speculation. Rival city newspapers and same-market TV stations are wisely sharing resources, much of which may still be outmoded. As a prelude to what could be a disintegrating network upfront, NBC Universal is declaring itself a full-scale, cross-platform marketing company to stem advertisers' steep spending declines. CBS finally joins its network peers with full-throttle digital content distribution on its branded TV.com, which includes social-networking functions.

Such initiatives cannot fulfill their financial digital potential if they are mired in inefficient traditional content development and production. While those convoluted conversions drag on, Google's YouTube TV site rolls out via Internet channels on the Nintendo Wiki and Sony PS3 video game consoles. Also of note: An already exceptionally interactive CNN's real-time presidential inauguration coverage this week will occur in tandem with Facebook.

The stampede to dominate the interactive home TV remains secondary to conquering mobile screens of choice--just as physical content distribution is capitulating to content downloads. The only way to link the world's 1.5 billion televisions with 3.3 billion handsets is through the interaction of social communities. Devices and platforms might look like content gatekeepers, but the interactive consumer is still in charge.

Despite the uncommon success of ESPN.com, MySpace and CNN.com, most traditional media digital initiatives, at best, have mixed results. Some structural factors limiting growth potential include building a monetizeable traffic, adequate ad platforms, a digital talent pool and rigorous research and development to foster innovation. JP Morgan analyst Imran Kahn notes that even the best digital efforts are ensconced in fragmented chaos and convention. Like other analysts, he has further reduced financial estimates for legacy media conglomerates including News Corp. and Viacom. There is too little genuine digital interactivity embedded in their core operations and financial formulas to make new efforts pay off.

With three-quarters of U.S. broadband users (105 million) active Web contributors by way of casual social media (uploading photos, blogging, rating products), the marked transformation of consumers from personal communicators into influential connectors is well underway, per a new Netpop Research report. The digital ad agency Razorfish calls fully integrated and mined social networking "the third dimension of marketing." But it cannot be executed atop old-fashioned printing presses, anchor-driven TV newsrooms, network-centric programming and plug-in advertising.

The challenge of true reinvention is being complicated by a devastating recession and wrangling public debates about whether credible news from any source should be paid content fodder for iTunes or other delivery platforms. The reality: there can be no digital gains unless ineffective old-line content economics change with consumers.

The Internet now surpasses newspapers and all other media except for television as a primary source of news--although young consumers predominantly rely on the Internet for just about everything, finds a new Pew Research study. Aggregating news services for customized advertising and fee-supported delivery to iPods, smart mobile phones and other connected devices are also in order. There are no shortcuts for TV broadcasters and newspapers going digital.

The Internet's unique niche and scale economics must be adopted at every level of the media business to translate into sustained growth, profits and engagement with consumers and advertisers. TV broadcasters and newspaper publishers need look no further than Steve Jobs' masterful reinvention of Apple with the 21st-century iTunes, iPod ecosystem that spawns new business models, revenues and a media rebirth even in tough economic times. It just takes courage to jump in all the way. If not now, when?

Diane Mermigas' "On Media" column appears every Monday in MediaPost's Media Daily News. She can be reached at mermigasonmedia@gmail.com or 708-352-5849.