Let's go back to the newspapers of the early 19th century. They hired the journalists who ran around the city covering news stories. They employed the editors who directed the journalists and then decided which stories to run and where to run them. They owned the printing press that printed the papers. They even owned the distribution system that got the papers delivered to the newstands.
If you look at the newspaper business today, it's basically the same.
The same is mostly true of television news, at least local television news. They own the stations, they employ the talking heads who deliver the news and producers who decide what to cover.
Traditional media is about vertical integration, from the creation of the content, to the display of it, to the distribution of it.
There have been some important moves to disaggregate and organize around a horizontal model in recent years. Cable is a good example of that. The production of the content is divorced from the distribution of it in the cable model. CNN produces a 24 hour news channel but Comcast gets it to your home.
The Internet is forcing the entire media business into a disaggregated horizontal model where the creation of the content will happen in one place, the editorial function will happen in another, the production will happen somewhere else, and the distribution will happen in yet another manner.
But these horizontal layers are not going to look like slices of the vertically oriented media company of the past. You won't see a layer of content producer companies selling content to a layer of editorial companies selling content to a layer of distribution companies.
These layers are going to be dominated by lighweight web services (think google or craigslist) that will empower the users themselves to do this work. People talk about user generated content as if there is another kind. There isn't. I love the story about the animated video created for Firefox Flix that prompted the people at Firefox to say "that was done by a professional". Maybe so, but he is still a user and a fan, and as professional as it seems, it is user generated content. Same is true with Om Malik. Is he a traditional journalist or a blogger? Does it matter?
Editors are quickly being replaced by services like Digg or the new Netscape where people decide what goes up on the front page and what does not. And we are in the top half of the first inning when it comes to a people powered editorial function. This is where I see a lot of action happening in the coming years.
And distribution? Well for one, its all going via IP; wire line, powerline, coax, wifi, wimax, 3g, and who knows what other forms of IP. But people powered distribution is the big story here too. Whether its emailing links, embedding videos onto social network pages and blogs, or superdistribution of music and video where everyone participates in the value chain, we are seeing the end users participate actively in the distribution of media.
So when I get a business plan that suggests that all of this can be packaged into a single company, a new media company for the digital age, I cringe. Media will not be delivered from creation to consumption by a single entity in the digital age. Anyone who tries will fail. I am sure of it.
UPDATE: In my haste to finish this and get to a dinner with friends, I left out the whole monetization layer. That won't be any different. Ad networks like Adsense, FM Publishing, TACODA, and FeedBurner are already showing how that's going to play out. But maybe that's a post for tomorrow.