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Flash! Here’s a breaking item on Wednesday’s PR NewsWire from Germany: “According to InfoCom’s latest research, newspapers are realizing that the most important part of the word is ‘news’ and not ‘paper.’”

Wow! Hold the presses Ö er, literally.

This is just another example of business executives not knowing what business they’re in. Back in the 1800s, railroads spread across America. Going into the 20th century, the railroad industry was a powerful segment of the economy. Today, 70% of all US freight is carried on trucks. The railroads are just a shadow of their former selves.

One analyst noted that the railroad executives failed to understand that they weren’t in the railroad business, they were in the transportation business. Instead of thinking of themselves as “Railroad Men”, they should’ve broadened their perspective. Had they done that, they would’ve been better prepared to address changes in technology and customer preferences and adapt to a changing marketplace.

Today, we’re seeing same thing with “Newspaper Men” (and women). As long as they see themselves as being in the newspaper business, they’re destined to fail. Instead, they’re in the news business, which itself is in the information business. They need to find ways to package their product not just in newspapers but in other media that changes with the times. Dead tree papers are gradually fading away, already just a shadow of their former selves.

Newspapers aren’t the only ones. Many people who thought they worked in “content” turn out to be working in “manufacturing” or “distribution”.

To address LarryJ’s point, I think there’s something else at work. When the feds tried to head off a monopoly, the railroads took advantage of the regulations to wall off the industry from new competitors (this is called Regulatory Capture).

Once you have an entrenched monopoly, you start holding people hostage to the fact that you (or your cartel) are the only game in town. People hate the record companies, De Beers, the cable company, the phone company, etc etc. But they’re the only game in town so you live with them.

In an age of rapid technological advance continually smashing and rebuilding industry, you can’t wall your industry off from competition. You can’t wall anything off from anything else in this age. Companies that get by because they’re entrenched are getting bulldozed by new entrants. Right now, it’s mostly just content and communications. Eventually, it’ll be the whole economy.

In other words, we’re not changing from something to something else. We’re entering an extended period of continual, sustained transformation. The newspapers thought they were doing well because they were great journalists. What they really had was a lock on a satisficing market. Exposed to competition, they’re discovering how mediocre and out-of-touch they’ve been all along.

As Wellspring noted, the Record Industry is a classic example; Napster hit in 2000 and it took until THIS WEEK for iTunes to become the top music retailer.

But they’ve always been slow and disoriented towards their consumers. I have a copy of James Brown’s “Roots of a Revolution” pressed in the Great Britain in the early 80’s that has inner sleeves declaring: “Home taping is killing music!” — The image of a cassette tape serves as the skull and beneath it are cross bones, with the closer: “And it’s illegal.” That ridiculous admonishment is every bit as clueless as raiding college dorms. Criminalizing your target audience cannot be good for business.

Newspapers have been equally slow to adapt. Trying to get people to pay to read MoDo and Paul Krugman (HE should be in the record business!) wasn’t helping either.

With all of the quality writers working in the blogosphere you’d think more papers would be trying to hire them and integrate the new media as seamlessly as possible. Instead they wobble around as punchdrunk as any record executive, “Stop it, you’re KILLING me!”