As the print version of the newspaper becomes obsolete and media companies become less profitable, “how will we pay for the journalism we need?”

That was the question posed in a symposium sponsored by the Knight Fellowships Program last night.

After 90 minutes of discussing the issue in Kresge Auditorium, it was apparent that there’s no easy-to-agree-upon answer. But the panelists did come to one consensus: newspapers are in bad shape.

In a sometimes testy conversation during which panelists cut each other off, an Internet executive, a media industry analyst, the founder of Salon.com and an editorial writer for The San Jose Mercury News offered diverging outlooks for the future of the newspaper.

“It’s a scary world for all the traditional media,” said Vindu Goel, an editorial writer and blogger for The Mercury News, who moderated the event. “It’s clear that the traditional business model won’t keep working.”

Lauren Rich Fine, a publishing analyst, blamed the drop-off in classified advertising for the precipitous decline of the newspaper. Newspapers used to have a virtual monopoly on selling ads for real estate, jobs and cars. Now people go online.

“It isn’t so much that readers aren’t interested in journalism,” said Fine, sitting with the others in chairs that formed a semi-circle with a small mahogany table at their feet. “This industry has been asleep at the wheel selling advertising.”

David Talbot, founder of news commentary Web site Salon.com, chastised newspaper management for not taking risks and being creative. He decried cutbacks in newsroom staff size as counterproductive and said that even august papers like The Chicago Tribune are looking more and more like mid-level suburban papers.

“You can’t have a shriveled product with cutbacks and cutbacks and cutbacks and still expect people to read,” he said. “The newspaper industry is still in a death spiral. It’s not investing enough in the future.”

The panelists also discussed concerns about the bid by Rupert Murdoch’s News Corp. to buy The Wall Street Journal. Talbot and Goel worried about Murdoch’s reported track record of kowtowing to the Chinese government at the price of journalistic integrity.

Pitching his company like a salesman, Lem Lloyd, vice president of Yahoo!’s recently formed Newspaper Consortium, said the sales tool his company is marketing will help newspapers “leverage” their Web sites to make more money. The consortium, announced last November, partners more than 150 daily papers with the search giant to personalize ads that readers see when they log onto news Web sites.

“Newspapers, through the Yahoo! deal, will be able to understand more about their site so they can serve up the right ad, at the right time, to the right audience,” he said. “Newspapers are ironically in a very good place because local online ad dollars are going locally.”

Lloyd suggested that companies aggressively hire ad salespeople to stay competitive and push their locally-tailored online product.

But Talbot strongly disagreed, saying newspapers should stop giving their content away to readers without charging a subscription fee.

“Early on what happened was that big newspapers made bad deals with some of the Internet portals,” he said. “They devalued their own content. At this point, it’s getting the genie back in the box. For one thing, [newspaper companies] have to swallow hard and say we’re not going to sell our stuff cheap anymore.”

Talbot said that his online magazine, Salon.com, has successfully charged what amounts to a voluntary paid subscription. The number of subscribers paying the monthly fee, he acknowledged, dropped as people realized that the site was not about to go out of business.

“The challenge from the beginning was, ‘what was our business model going to be?’” he said, referring to when the site was founded in 1995. “Advertisers hadn’t even heard of the Internet, let alone an online magazine.”

Fine said newspapers can succeed by focusing on producing local news that is interesting to readers, not necessarily by charging for content. She cited the Cleveland Plain Dealer’s effort to cover high school football with a special section in its print edition and Web site, which asked readers which games should be covered.

“People’s habits are changing,” she said. “Increasingly people are going online. Consumers have a choice. They look at the front page. If they don’t like it, they don’t buy it.”

Talbot said newspapers remain in “crisis” and said he hoped managers could start to find the way out.

“What I see is that newspapers were slow to innovate, slow to respond to these challenges,” he said. “We’ve seen a decline in the quality of the newspapers over the years. Less space devoted to investigative reporting. You don’t have the voices of the columnists. They’ve become banal, tepid and bland.”