WHERE is the media going? It seems a straightforward question, but getting a clear answer is deceptively difficult.

Some of those who should know the answer - the chief executives of television and radio stations, newspaper and online companies, film or music studios - are keeping their public comments focused very much on immediate matters.

Matters like which program won the ratings last night, or how many copies of their newspaper were sold yesterday or their new blockbuster movie.

Some senior media executives do have a good idea what is on the horizon, but have no intention of sharing that information publicly for fear of giving their commercial rivals an advantage.

Others seem to either ignore or disbelieve the extent to which the internet and digital media technologies will shape traditional media companies.

Their anxiety about exactly how they will be able to generate revenue from a medium run on the expectation that almost everything is free is entirely understandable.

It is especially understandable for media executives preoccupied by the impact on their businesses of the economic downturn and as they watch their audience/readers disperse across an ever-expanding range of media platforms, which further gnaws away at their revenue.

Two thoughts flow from this; first, just because the online culture is free, that does not mean people are unwilling to pay for new media - witness the creation from scratch and astronomical revenue growth of mobile phone providers.

Second, a narrow focus on the bottom line seems a short-term solution to a long-term problem.

Paradoxically, in times of rapid change what looks like a company's strength can turn out to be its weakness.

Between them, newspapers and commercial free to air television comprise $7.5 billion of the $11.5 billion advertising revenue earned in the Australian media and entertainment industries last year. That makes companies like Fairfax Media, owner of The Age, News Ltd, and channels Seven, Nine and Ten financial powerhouses, but it is the prospect of losing that wealth that can inhibit their commercial creativity.

You could argue that it already has. Newspapers are in the news and information business but it was Google that became the leading global player in the online information and search business.

Newspapers update their offerings every 24 hours, and since the advent of the internet their online editions hourly; they also have in their archives a vast store of material about current affairs and historic events.

It is not them but Wikipedia, though, that is pushing the printed encyclopedia out of business by its contributors' ability to update entries and create an encyclopedia that is free, up to date and far more in tune with popular culture and changing technologies. (Questions about Wikipedia's reliability are valid but overstated in my view).

Commercial television has been broadcasting film and video for decades but it is not them but YouTube that created the habit of watching video online.

What this underscores is that traditional media companies ignore the power of the internet to transform the media at their peril. If they do, they risk repeating the error made by Sony. The powerhouse of the recorded music industry refused to forgo revenue from CD sales only to see a computer company, Apple, create a device (the iPod) that consumers took to like a cat to catnip.

Through iTunes, Apple then created a method of generating revenue from the internet that stemmed (but not stopped) the widespread and illegal online sharing of music.

On the question of what the Australian media and entertainment industries will look like in five years' time, then, one useful source of information is the annual outlook report by PricewaterhouseCoopers, which breaks down the 11 industry segments and forecasts earnings and profitability for the next five years.

The sectors predicted to experience strongest growth over the next five years are the internet (13.9% compound annual growth rate) and subscription television (12.1%).

Pay TV, remember, is prevented from gaining first access to the most sought-after sporting events, but through technological innovation that fulfills at least some customer desires, is building subscriber numbers and advertising revenue.

By comparison, commercial free to air television and newspapers are expected to experience a compound annual growth rate of 3.8% and 1.4% respectively between now and 2012.

For the recorded music industry it is worse, with a forecast decline over the next five years at a compound average rate of 1.5%.

By 2012, according to PricewaterhouseCoopers, the size of the internet market - and that includes revenue for internet service providers as well as advertising - will be $6.74 billion compared with the size of the newspaper market ($5.85billion) and commercial free to air television ($4.17 billion).

The PriceWaterhouseCoopers report's lead author, David Wiadrowski, said the media industries would be affected in the short term by the economic downturn, which muddies the picture of how companies are adapting to structural changes in their industries, but he is optimistic.

He says various sectors of the media industry are "responding strategically to the challenging conditions with collaborative ventures, new content, new business models and new delivery channels". They will need to, or they could be sidelined.