Seth Godin argues, over the course of a number of books, that the old way of doing marketing is over, so why are the major brands not being unseated?

As Craig says, momentum is definitely part of how brands stick around.  So is the notion of substitution economics - it takes a while for new models / channels / brands to take hold and for dollars / eyeballs / consumers to move to the 'new' way of doing business.  More specifically there has to be an economic reason for people to switch and this often does not happen all at once, giving incumbents time to adjust *their* models / channels. Also, the question assumes that Seth Godin is right ;-)  Yes, the 'new' model is about storytelling and experiences and aligning with the language of Facebook et al.  But a lot of marketing still has not changed.  You still have to think about campaigns, and lead gen, and offers, and audiences, even if the channels are new.  And then you look at 'old media' like TV, where ad spending is (almost) back to its peak levels - even though those dollars are still buying spots that shout and interrupt programming.  The more things change...

It is largely forward momentum which keeps many of the large brands and products alive. Some of them, however, have changed and provide more of what the customer wants. Companies like IBM and MIcrosoft could go for decades just based on what they did in previous decades - IBM has changed and adapted, but MS has not. You must remember the audience that Seth is speaking to - that is, regular folks like you and I. For most people and most products, the ideas he expresses are in line with reality. There are always some exceptions.

Who says the major brands aren't being unseated? Seems like they're gobbling up the new companies that operate according to the Godin philosophy. By their very nature, big schools of fish are too centralized to be nimble. So they buy little fish that are.

The question implies that major marketers have not changed since the time Seth Godin (and many others!) started writing about changes. I would argue that the reason some of these firms are succeeding is that they are, in fact, changing. Marketers have really embraced modern tools of segmentation and targeting. It might not be the two-way communication ideal, but it is a far cry from shouting to the masses. Case in point: recall that Target's models predicted the pregnancy of a teen before she had told her family. Marketers have embraced the possibilities offered by new media tools. We may not always like what this looks like, but they are definitely there, having the conversation. Some are better than others, certainly. Regarding advertising and storytelling, I believe you would find few advertising specialists who disagree with this sentiment; Advertising IS storytelling. Certainly brand advertising is mainly about storytelling. Sponsorship marketing has become extremely sophisticated, and is used to tell the stories that are hard to tell in other ways. Social media and other digital information sources has put a tremendous amount of power in the hands of consumers, and marketers are totally responding to this. Major hotel chains monitor travel sites continuously, for example, trying to respond to problems as quickly as possible. And they are often responding to individual complaints. A few are trying to leverage possibilities of greater customer intimacy through these channels. From my perspective, I do not see marketers standing still at all. They may at times be reeling from the pace of change. But they are changing.

Big brands are failing: Dell, Kodak, Blockbuster, HMV, Nortel, (we'll see if Blackberry makes a comeback), Borders, even Apple had nearly died before its amazing comeback... There's no question that having deep pockets (or access to them) helps one survive difficult times, but it is not always enough.

Size matters.  I think it could be that simple, at least until the next generation of marketers come to the fore...