It’s now conventional wisdom that the future of media is digital and on-demand — content creators no longer own the distribution channels. But the economic center of gravity in media has not shifted to reflect this change. The laws of media dynamics will force the center to shift — advertising dollars always follow the audience, so the question is not if, but how — and, which companies and brands will survive the transition.

Here’s the challenge that Legacy Media companies face. Imagine that:

1. You are print publisher whose audience is rapidly shifting to the online version of your publication, but your print/online ad revenue mix does not reflect your print/online audience mix. Your advertisers are still paying more for your print advertising on a CPM basis, despite your delivering more media value online in terms of both audience and accountability. Your online advertising is more profitable, but only because it gets content “for free” from your print editorial operation.

How do you shift the center of gravity online without upsetting the apple cart?

2. You are a cable network watching the emergence of on-demand digital video. Your business is built around advertising, which depends on controlling the distirbution channel, and on content fees, which is based on cable TV bundling. You realize that you can likely reach more people with your content by making it available digitally and on-demand.

If you give up control of distribution, will your content fees make up for the loss of ad revenue? Or can you figure out how to bundle advertising with your distributed content?

These are the quandaries of Legacy Media (a better term than “old media.”), which few in New Media understand. It’s very easy to dismiss Legacy Media as “dinosaurs” that will go extinct, but the evolution of media is a lot tougher from the P&L perspective than the ideological perspective.

With that in mind, here are the first in series of ideas on how Legacy Media can attempt to shift their business’ center of gravity. These ideas are focused on print publishers, because that is the business I know best. I’d welcome any feedback and other suggestions.

1. Adjust pricing to reflect media value
If audience is shrinking in print and growing online, the advertising rate card should reflect this shift. Publishers can take a bold move to encourage the “right-sizing” of their advertising markets by reducing their print ad rates and increasing their online ad rates proportional to the shift in audience. The fear, of course, is that reducing print rates will look like capitulation — instead, publishers need to make it clear to advertiser that the shift is incremental, not discontinuous, and that it is based on principle — publishers who perpetuate the old valuations are poorly serving their advertising partners.

“Principled pricing” means that advertisers pay for current media value, not legacy value.

2. Align ad sales staff incentives with media value
Too many legacy publishers have old incentives structures in place that encourage the sales staff to put all their effort into selling media with a declining audience. Sales folks are always guided by their incentives — if you pay them a premium for selling digital media, they will get out into the market and put pressure on advertisers and old-school media planners to allocate their dollars proportional to where the audience actually is (rather than where it used to be).

3. Abolish the separation between print and online journalism
Most publishers have a hierarchy in their editorial staffs — junior writers begin their careers online, then “graduate” to print. Most of the “print journalism” gets posted online, but these writers don’t see themselves as writing for online. This “digital divide” is driven to a large degree by the perception that people don’t read long-form journalism online — and most journalists prefer to write long.

There are several problems with this — 1) There is no editorial innovation online, because the top edit talent is focused on print; 2) From a P&L perspective, edit costs are artificially weighted in print, even though that content is being monetized online; 3) Journalists still see the greatest prestige in writing for a shrinking audience — like the economic imbalance, this too will become untenable.

Journalists should write for a brand, not a medium. There should be no “print” or “online” writing jobs. BusinessWeek has done a great job leveraging their editorial talent into digital media, from blogs to video to podcasts. All journalists should be required to produce content across all media — if journalism is to evolve, it needs to be medium-agnoistic.

As for the problem of long-form pieces online, the reality is that media consumption is going digital, and one consequence of this shift could be a decline in the readership of long pieces — but it doesn’t have to be that way. Readers don’t want their media in static packages, but that doesn’t mean they don’t want to take it on the plane, in a cab, in the bathroom, or on the beach. Until someone perfects “digital paper,” publishers need to provide readers with alternative ways to take their content offline — color printers are increasingly cheap and ubiquitous — if we create easy links to PDFs of long stories that include all the photos and graphics (and embedded ads!), people might actually print them out and read them.

Change is never easy, and rarely without risk. But if legacy publishers fail to adapt, a new breed of content brands already stands ready to replace them.