When a new technology comes along and changes the way we live our lives, it has dire implications for many traditional industries. But what happens to the huge companies whose success has been built on the traditional technology, such as modern media giants. It is unrealitic to expect them to just slip quietly away, but when a publication as established and powerful as the New York Times requires $250 million to remain solvent, it highlights the true extent of the crisis facing the paper publication industry.

Newspapers and Magazines Decline

The second half of 2008 saw the worst drop of newsstand sales in decades. Ad pages in magazines decreased by 12% in 2008, a trend expected to continue into 2009. The first quarter of 2009 was the worst in modern newspaper history – ad sales fell by 28.3% in three months.

Magazine sales, although less seriously affected, have also seen a decline in certain sectors. For example, car magazines have been particularly affected as more and more websites cater for the car enthusiast. Top Gear Magazines subscriptions are well down on previous years and look set to continue falling. Other sectors of the magazine market remain relatively buoyant, with women’s glossy magazines and Gardening publications remaining popular. Gardeners World Magazine subscriptions have remained almost totally static over the last 2-3 years.

What may be even more concerning to the big media companies, however, is the new role for non-traditional news outlets like Google and Yahoo, whose power is growing.

Perhaps the savior of the traditional news delivery is the e-reader. Once the technology improves – with larger, color screens the likes of which advertisers demand – such e-readers may well become the replacement newspaper or magazine. They’ll likely even include video capability. But while companies race to develop these technologies, it’s unclear what the business model will look like.

As with any new technology a number of companies are vying for dominance in the e-reader market. News of an Hearst’s impending release of a wireless e-reader has created a frenzy of excitement amongst the technological press. Publishing via an e-reader would undoubtedly save publishers a great deal of money on ink, paper, printing and delivery, all of which can account for more than 50% of productin costs.

The mainstays of the ink-and-paper past won’t simply disappear. Surely some will – many in smaller markets already have – but the biggest players will innovate simply because they’ll have to in order to survive. Paper publications won’t disappear, but they may become rare.