In Part One of Mediashift’s Great Debate on Micropayments and Paid Content, David Carr of the New York Times goes up against Techdirt‘s Mike Masnick. And from my vantage point, Masnick wins the matchup with room to spare.

Carr’s points – in favor of putting up pay walls for content – are fairly representative of what we hear from newspaper folks nearly every day now. While pointing to iTunes and the Wall Street Journal as examples of how pay schemes will work, he also hints that the only alternative, advertising, won’t sustain the news operation. And on this, Masnick doesn’t miss the opening:

Your argument that an ad-based model won’t work is also a bit of a red herring, as it assumes that there really are only two options out there: pay wall or ads. I’d argue that’s not true — that there are many other models, including hybrids. Also, it ignores the flipside of the equation, which is that some of the new models have very different cost structures.

I come away from this Round One feeling that Mike Masnick is immersed in online culture and understands both its strengths and weaknesses. Carr sounds all too familiar, the old-school print writer who suddenly has solutions borne out of desperation and no small amount of resentment for a different medium.

Even as paid content continues to gain momentum in media boardrooms and on the news industry conference circuit (witness ridiculous posts like this one, claiming ‘consensus’ on the matter), those with practical experience play a necessary and realistic role of debunker.

John Gruber of Daring Fireball weighs in with Pay Walls, taking apart screenwriter David Simon’s call for immediate subscription-only services for the two biggest American newspaper sites. Simon’s a great writer, his HBO series The Wire ranks in my arena as one of the best ever on television. But like so many professional writers who believe the newspaper business is only about journalism , Simon falls short on discovering the more fundamental issues. Gruber’s summary hits one of those issues good and hard:

The primary problem with newspaper companies isn’t their revenue. It’s the size and scope of their operations.

Robert Ivan at Metaprinter, in concurring with Gruber…

Pre-internet, general interest newspapers made money because they were effective advertising solutions on a cheap and convenient distribution platform, not because they won Pulitzer Prizes.

Ivan also points to more viable solutions for newspapers, essentially the offering of creative services and marketing for the greater internet.

This is precisely the position I’ve begun to take in recent months, in my own business meetings with those who care to listen, or just those who get stuck in a room with me. Accepting the premise that (A) paid content will only work in very unique niches, and even then only to a certain degree, and (B) online ad placements will only cover a part of the revenue needs for even the leanest of news site staffs, then we must move along to (C) which is, other stuff to pay the bills. And in the newspaper/media setting, the best use of (C) might well be a hybrid of agency work and nimble online marketing for the many small and medium-sized businesses with whom we already have a working relationship. That’s new territory, especially in a business where we’ve traditionally given away creative production of ads as part of the placement cost. New territory, one way or another, is certainly where we’re headed.