The private equity and venture capital firm 3i is warning media companies to “Engage or die”. In a new report on the future of the media sector it looks at the growth of social media and user generated content and its impact on traditional media and advertising models.

In the report, 3i and business leaders discuss the changing face of the sector in light of the rising influence of user generated content and social networking, the associated challenges and opportunities for traditional media firms and how industry players and advertisers need to adapt their approach and business models for success in the new digital age.

The firm observes that with a membership of 200 million, the population of MySpace is greater than all but a handful of countries. Its peers, Facebook, Bebo and LinkedIn, are expanding rapidly, confirming the huge global appeal of professional and social networking.

It concludes that advertisers cannot ignore the growth of an audience of all ages that is congregating online and avidly consuming and contributing media or all types. Consumers are now creators and editors of content, challenging traditional media industry roles.

The report recommends that increasingly creative approaches and deeper engagement with audiences is required for media giants to maintain their leading positions in the sector.

The investment firm has produced an online microsite including downloadable podcasts of interviews with representatives of the media industry.

3i is listed on the London stock market and has been involved in the media sector for over 50 years, with a current investment portfolio of 600 million euros.