Today, the Pew Research Center released its annual report on the State of the News Media 2012, and for newspapers, the news is not good. Revenues are falling everywhere and according to the report, the major newspapers lost $10 in print for every one dollar they gained online—and they are all trying to move online fast. This is an increase in the decline; in 2010 seven dollar were lost per one dollar gained.

The great irony here is that the papers, which are supposed to be the purveyors of news and information of the highest quality, could not accurately report on or understand this trend when it began. Much of their failure stems from a combination of factors: idealism, bloated and incompetent middle management, and hubris.

I have three stories to tell you that say it all:

First, in the 1990s, Craig Newmark, who had started and popularized the online classifieds website Craigslist, managed to get a meeting with the top editorial and management executives of the San Francisco Examiner and the San Francisco Chronicle. He explained what he was up to and that he hoped to partner with the local newspapers. In one quite believable version of the story, the newsmen laughed him out of the room. Their message was: We know how to do classified advertising, kid. And that was that.

This matter came up again while I was a fly on the wall at the MIT Media Labs. The CEO of a mega-publishing house and his minions were discussing technology and the media. At one point, the topic of computerized classified ads arose and the publishers responded with a similar you-do–not-have-to-tell-us-our-business attitude.

This past week, I heard that in the early stages of Google, the company offered the New York Times a partnership that would have granted the Times 10 percent of Google. The paper laughed it off as folly.

Mind you, these are the people who provide us with news and insight.

I am sure that there are hundreds of stories like this since it is a reoccurring pattern in the entire history of tech. It dates back to the beginning of computers themselves and maybe even goes back as far as the era when transistors were replacing the vacuum tube. The old technology remains flat-footed and unable to respond correctly.

Some do take advantage of the opportunities when things change. Take the fabled Fisher Coachworks, which transitioned from horse and buggies to automobiles. In high tech, it might be argued that IBM has managed to move from one thing to another as times changed.

The hardest thing for any business to do is to abandon an old money-making business model for something completely new and alien. This is especially true if the new model does not make sense to the old-timers. Over the last two decades, I have given more than my fair share of speeches discussing trends to newspaper people. Typically, less than 10 percent of the audience believed any of it. It was like another speech of mine called "Film is Dead" that I preached in the early 1990s. Again, not well-received by the establishment.

Well, it's too late now to do anything radical and the organizations must bite the bullet. Keep an eye especially on the New York Times, since it has best weathered the storm. It can probably continue to hang in there if it does not cheapen its product any further. But, like every other metro daily, in all likelihood it will panic and make questionable decisions. They all do, so why would the Times be any different?

Meanwhile, the news-hungry public has perhaps a few years left of professional and comprehensive news coverage at its disposal. After that, only the Huffington Post, Fox News, Drudge Report and scattered specialty sites will remain. This will have the same effect on the public psyche that the balkanization of TV has had. It will create a nation of scatterbrains relying on dubious sources and rumors to form their world view.

Probably not a good thing.