Media Need a Blog Strategy

Today, much later than initially expected, the impact of the Internet is starting to show up in the numbers. According to the recent TNS Media Intelligence Report on advertising, from January to September 2004 year-over-year growth in online advertising rose 25% to $5.6 billion vs. $4.4 billion in 2003. At the same time, national newspaper advertising was up 9.7% to $2.4 billion from $2.2 billion, and local newspaper advertising went to $17.7 billion from $16.6 billion, an increase of 6.6%. Radio fared even worse with spot radio advertising the only category to have a negative increase.

There are over 3 million blogs out there currently, but less than 1 million of those are updated regularly. And, according to Jason Calacanis -- owner of Weblogs, which hosts Mark Cuban's excellent blog among others -- there are probably only 200 blogs with more than 1 million pageviews per month and 20 with 10 million pageviews a month. But that number is going to grow, and 10 million pageviews per month is certainly more than most online news sites get per month by a long shot. Now, as news events break, the bloggers provide the first and most in-depth coverage, live and opinionated. So what's left for the newspapers and TV news?

Not to Be Yellow, but Adapt or Die

Traditional media companies have been desperately trying to reinvent themselves of late, with Dow Jones' acquisition of Marketwatch (MKTW - commentary - Cramer's Take) the most recent example of an "old media" company darting around for the latest hot flavor. The press initially existed to bring information, and hence power, to the people by informing them of the goings-on of those in charge and to give them a choice. The Internet has finally succeeded in this regard through the use of blogs, and that is going to mean the demise of almost every other source of news -- unless the traditional media firms follow the suggestions I'm about to outline.

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James Altucher is a managing partner at Formula Capital, an alternative asset management firm that runs several quantitative-based hedge funds as well as a fund of hedge funds. He is also the author of Trade Like a Hedge Fund and the upcoming Trade Like Warren Buffett. At the time of publication, neither Altucher nor his fund had a position in any of the securities mentioned in this column, although positions may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Altucher appreciates your feedback and invites you to send it to [e-mail].

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