The Oracle of Omaha had little good news for the newspaper industry following Berkshire Hathaway's annual meeting. In comments made in the Washington Post, Warren Buffett noted that it was once an excellent investment buying newspapers because a dominant paper in a city could count on steady advertising revenue, and could raise ad rates annually. Not so anymore.

With declining circulation due to alternative new sources such as the Internet and television, ad rates are no longer so elastic. That assertion is backed up by the Wall Street Journal which reports on figures released today by the Audit Bureau which show industry wide declines of between 1-3%.

So, where to from here? Buffet's last comment is a telling one. He argued that owning the dominant news website in a region was not enough to guarantee sustained profitability for newspaper firms.

There is no doubt that newspapers need to secure a strong foothold in the emerging channels which are gradually cannibalising their revenues, but even if they do so – these sites are unlikely to offer the smooth ride and high barriers to entry which they have enjoyed during the last fifty years of publishing.

Ironically, one glimmer of hope is the infinite number of weblogs which are being created every day, and which are endlessly discussing, commentating and driving link traffic back to newspaper websites.

Oh, that is, if the geniuses in newspaper web publishing departments realised that non-expiring links and open access to content was a good idea.

The New York Times takes an interesting look at how newspapers like The Houston Chronicle and Yellow Pages publishers like Bellsouth and SBC Communications have recently become Google and Yahoo adword resellers, leveraging their existing sales relationships with small & medium business owners.

You can see why the search engines would be happy with such a partnership given how expensive and time consuming account managing millions of low value business advertisers would be. But from the newspaper perspective, you have to wonder whether they will learn the game fast enough before their portal partners begin stealing the food from their plates.   

You are no doubt somewhat bemused by the hype over video search, the latest craze animating the titans of the new economy. Yahoo and Google’s offer to host your home videos seems both considerate and vaguely sinister. We all know, after all, the kinds of video most people are looking for when they jump on a search engine. But rest assured, home movies are a red herring. As more and more people illegally digitise and download broadcast television and movie content, the real issue for media companies will be finding an effective means to simultaneously secure and open up their material for public access.

OK, you know video games are big business. And you have probably heard they can not only make as much money as a blockbuster movie, but if they are released in tandem with one, can do ever better. That’s about half true – most comparisons don’t factor in Hollywood’s downstream revenue from DVD retail and rental, and overstate video game numbers by leaving in hardware sales. But even still – it’s a hefty dollar sign, and if you happen to be a media company without a shiny new games development division, the big question on your mind has got to be – what now?

One of the wierdest creative tensions in Hollywood is between finding new distribution channels for old content, whilst rigorously defending existing channels from new challenges. Back when the box office was king, getting the DVD format greenlight was an uphill battle. Now that DVD is a $17.5 billion dollar industry, you can just imagine the reception to proposals for digital downloading replacements. Still, potential lost billions or not, it seems this time round Sony is determined to avoid being iPodded again.