The state of the business of Hollywood, and more precisely the Southern California film industry, is finally getting  some long overdue national press coverage.

Digital technology and the Internet have shaken the foundations of every American business. This, of course, has been exacerbated by the current economic crisis. By looking at attendance numbers and box office returns, Hollywood seems to be doing pretty well and entertainment has often been cited as being “recession proof”.

Armed with this assumption the national media, those in other parts of the country hard hit by the economy and even our supposed liberally biased lawmakers, never seem to have much sympathy for the troubles of “Tinsel Town”. But here’s the dirty little secret; A-list actors, high-paid producers and Bentley driving agents only make up a fraction of people who make their living here. Yes, entertainment industry labor makes a higher wage than the national average, but the costs of living in Los Angeles more than make up for it and for most, the work is freelance and filled with short and long periods of unemployment.

Those actually trying to earn a living in our little industry town who don’t reside under a rock, have first hand knowledge of the bigger reality which is, because of a confluence of factors, several mentioned above, the rank and file workers of the motion picture, television and gaming industries are hurting, major studio production slates for films and television are down, and most everyone can see the fissures in a business model, which has historically been painfully inflexible.

Alas, business reporters are starting to take notice. Friday, Steven Pearlstein of the Washington Post wrote about the problems of an industry, which is still working off this business model created almost 100 years ago.

There is a sense that it may all be coming to an end, that the threat this time is real and that the old business models can’t survive. With the rise of legal and illegal downloading, the Internet has already decimated the music business, and it is just beginning to overturn the economic foundations of the movies, television and electronic gaming as well.

And last week, Michael Cieply and Brooks Barnes of the New York Times had an insightful article about the challenges facing a new generation of studio executives. The people at the center of power in an industry which creates jobs not only locally, but worldwide.

After riding two decades of almost nonstop growth from the cable and video revolutions, a new generation of Hollywood power players is finally being forced to test its mettle.

These executives — consummate insiders who enlisted when young and worked their way up — now find themselves pushing 50 just as some brutal problems are pushing back: a collapse in DVD sales, a credit crisis that has curtailed financing for new movies, a group of corporate owners determined to pull more profits from studios to compensate for hard-hit publishing and broadcast television divisions.

For those of us tenacious, brave or crazy enough to be in this business, the title of a 1940’s era musical-comedy seems appropriate advice, “Hold on to Your Hats”.