Billboard, the so-called Bible of the music industry, is reportedly facing steep cutbacks as investors sour on the direction of the publication and its prospects in the troubled economy.

The publication, which has tried to create at least a perception of success since its latest owners Prometheus Media Group took over, has never been able to overcome its fundamental problem.

Back in the day, Billboard’s strength was its ability to reach tens of thousands of record store owners, at a time when independent record stores ruled the retail landscape.

It was the most efficient way for record labels to market to store owners who made buying decisions about records.

But that business model is largely dead and has been for years. As Billboard’s record store audience dwindled, so did its fortunes.

Record labels now market directly to the top 10 or so retail outlets that sell the lion’s share of CDs, and even the big retailers are now under pressure from digital music sales.

Yet, Billboard continues to beat the same old business model.

What’s worse, it’s devolved into nothing more than a high-priced fanzine.

The predicament is unsurprising since Editorial Director Bill Werde has a limited fan magazine background.

Billboard Editor Danyel Smith, formerly the editor of Vibe, another consumer magazine, suffers from the same shortcoming.

Werde’s boss, Richard Beckman comes from a consumer magazine background at Conde Nast. The last time Conde Nast tried its hand at a business magazine, Portfolio, it flopped miserably.

In the last decade, Keith Girard was the first and only Billboard editor-in-chief who had a business and trade magazine background.

After the death of long-time editor Tim White, then-owner VNU searched for almost a year before reaching outside the music industry to Girard, who had successfully turned around two other business publications.

Not surprisingly, he met fierce staff opposition when he tried to redirect the publication.

Yet much of the change that has taken place began under his tenure, including refocusing billboard.com a consumer site and creating billboard.biz, a site especially tailored for the business audience.

He began serious coverage of the legal and management side of the industry and also launched a music legal and management web site.

He was also the only editor, before or since, who was able to meet the standards of the American Bar Association for Continuing Legal Education (CLE) credits for Billboard’s Music & Money Conference.

It was not only a strong endorsement of the quality of the programming, but it made the conference a must-attend event for industry lawyers and management.

He launched Billboard’s coverage of digital music, music and fashion, increased coverage of business issues, expanded Washington coverage and strengthened Billboard’s editorial voice.

He created the magazine’s touring conference and established, or re-established strategic relationships with the National Academy of Recording Arts and Sciences, producer of the Grammys, the Rock ‘n Roll Hall of Fame and Rolling Stone magazine.

In addition, he reorganized the staff, increased minority hiring and cut more than $1 million in editorial costs while expanding coverage.

But since his departure, those initiatives have languished, either through a lack of vision or lack business journalism expertise.

Now some music executives fear the worst. Billboard may be “on the verge of economic collapse,” according to Paul Resnick, writing in Digital Music News, an online industry site.

The situation is “difficult to gauge,” he writes. “But reports from the inside suggest an uncertain climate, with considerable anxiety over future direction.”

“That includes a possible hiring and spending freeze, according to a separate source.”

Beckman has already reportedly been kicked upstairs and no longer is managing the turnaround, largely because his effort to turnaround sister publication The Hollywood Reporter, has “tanked,” he writes, citing a source.

“But the most serious problem is that investors apparently want out, and are losing patience with the plan.”

“They bought these properties and now there’s serious buyer’s remorse,” another executive close to the acquisition told the Web site.

“It’s the same old economic cocktail of woe, though this time, worsening advertising, subscription, industry, and macro-economic elements could be coming to a head.”