It was 45 minutes into a meandering discussion at the Chicago Journalism Town Hall before someone gave the discussion what it needed: a death sentence for the way the news is currently reported and sold. Depending on which side of 25 you are, it was either surprising or par for the course that said person was legendary newsman John Callaway, someone who might have been expected to have a bit more romance for what used to be.

“Newspapers, as we know them, are dead,” said Callaway. “Ask yourself: ‘What is the [new] model?’”

By the end of the three-hour discussion, moderated by (and peppered by frequent discursions from) former WBEZ newsman Ken Davis, and led mostly by a panel of well-established representatives of the old guard of Chicago journalism, no one had come up with the answer, but some had figured out the right questions to ask, while others realized they had a lot to learn.

Davis said in choosing the venue, the Allegro Hotel at LaSalle and Randolph, he meant to invoke the backroom deals made by political hacks at the Bismarck Hotel, where the Allegro now stands. (I always thought it was the Morrison Hotel, but no matter.) Perhaps he thought the assembled group of 300 or so journalists and writers would find a way through the morass of corrupted ideals and agree on the best candidate for saving the news business. Unfortunately, to paraphrase Ald. Paddy Bauler, Chicago news ain’t ready for reform.

While some on the 13-person panel could count themselves as bloggers, only three could lay claim to it as their professional day job (four, if you count Chicago Tribune columnist Eric Zorn, who probably blogs more than any other print columnist out there). So rather than an exchange of ideas between the print and online worlds, the Town Hall felt more like the funeral that Callaway suggested. From the outset, it was clear that many were there to pat themselves on the back for a job well done, rather than perform an autopsy. By my count, there were 25 rounds of applause, most given for hard-to-argue bromides like “Ethics are important” and “People should get paid for their work.” Perhaps from the perspective of the veteran journalists, it seemed as if it was necessary to stipulate all that, even though no one argued against it.

Of course, the good old days weren’t always good. Geoff Dougherty, founder of the Chi-Town Daily News, noted that his former employer the Miami Herald was laying people off when it was making a 20% profit, in an effort to get to 25. Andrew Huff, editor and publisher of Gapers Block, a site for Chicago news and commentary, also said that the definition of journalism has changed since Pulitzer and Hearst were duking it out (not a set of standards anyone’s looking to re-adopt) and would probably change again.

Perhaps what was most troubling is that some in the room didn’t realize they share a common set of problems. For every complaint on the print side, there was a corresponding grumble from the online side. Sure, there are online sites that don’t properly attribute their content, but as Brad Flora of the Windy Citizen (a Digg!-like news aggregator of Chicago stories) pointed out, when the Chicago Tribune re-published a video that first appeared on his site, it failed to acknowledge the source. And as many were rending their garments over how you can publish anything you want on that gosh darn Internet, the online folks were classy enough not to mention Judith Miller.

The biggest problem facing the new order of journalism seemed to be a lack of operational definitions and universal adoption of standards. Two of the panelists—Ben Goldberger, editor of Huffington Post Chicago, and Huff— run sites that depend, to varying degrees, on linking to other sites’ content; original opinion and commentary; and discussion of the same. Both were referred to as “news aggregators” during the panel. Yet the ways in which both sites attribute and utilize content from other sites is vastly different, to the point of controversy. (When Davis asked Goldberger why HuffPo was able to make such an impact, Callaway harrumphed: “Theft!” He may have meant online sites in general that don’t properly attribute its sources, but that didn’t stop Goldberger from squirming.)

Even the experts in the field find themselves thrown by online terminology. Robert Feder, former media columnist with the Chicago Sun-Times, said “No one goes to Medill to be a platform manager. It sounds like a CTA job.” Sure, it’s a good line. But would he say that no one goes to Medill to be a managing editor? The responsibilities are the same, it’s just the medium that’s different.

For many, it’s the lack of institutional memory and the potential for unenforced ethical standards that’s troubling. But ask anyone who’s written for the Internet and they’ll tell you the medium is famously self-correcting, if for no other reason than the litany of self-styled media critics to be found in comments on any number of stories. Barbara Iverson, co-editor and publisher of ChicagoTalks.org, said it’s easier to check out the veracity of a story on the Internet. And if the number of people in the room who were unemployed or underemployed was any indication, Chicago certainly doesn’t lack for journalists, at least a few of whom could be talked into the role of ombudsman for any nascent sites.

When a few of the panelists, including Callaway, suggested it was possible to fund a viable news organization with $2-$4 million, many in the audience—and some on the panel—scoffed. And sure, if you’re going to maintain the level of staffing and overhead that most newspapers have now, that probably seems like a pittance. But the costs of maintaining a vital online presence that does real journalism are nowhere what some would imagine;  Dougherty runs Chi-Town Daily News with a $340,000 two-year grant from the Knight Foundation.

In this new world, it’s not possible to be all things to all people as a news entity. Thom Clark, president and a founder of Chicago’s Community Media Worskshop, said newspapers don’t need to bother with reviewing movies anymore  since arts and entertainment publications like the Reader and Time Out Chicago do it just fine. Left unsaid was the hyperlocal mission, or even the hyperspecific, covering just one particular part of the news with a small staff and low overhead. But even Huff admitted that with a low overhead of $100/month, he wasn’t making enough to pay his writers, all of whom write for the site out of “love for the city.”

NBC 5’s political editor and Chicago Sun-Times political columnist Carol Marin then raised a salient point: Some of the costs of journalism are hidden. Like when lawyers are hired to go to court to defend the rights of reporters, or when newspapers are telling a story someone doesn’t want told, the way the Sun-Times‘ Natasha Korecki did with Roland Burris’s affidavit. When Zorn wondered how you can retain quality people for thirty grand, Callaway suggested a cooperative freelance model was the way to go, back to the $4 million newsroom again. He said perhaps foundations could bankroll news investigations, without actually owning the news organizations themselves. Some on the panel flirted with an “iTunes for news,” but no one pointed out that iTunes users only pay for music they think they’ll like, not for the stuff they listen to because it makes them more aware of the world.

There are models out there to fund the news, and this was another group that went underrepresented on the panel: No one from the business side was on the panel, and none of the CEOs and entrepreneurs who could fund a new kind of news organization were in the offing. Iverson started to discuss eight models for funding journalism, but only got as far as five before Davis cut her off, saying “I think you’re overwhelming us…” On the contrary, Iverson had managed to distill the economics of the news into a few easy-to-understand structures, even if you’d never seen the assets side of a balance sheet. There seemed to be a pervading fear of profits, or at least profit-making enterprises, in the room. Perhaps this is because the two Chicago dailies have been so used and abused by those focused only on the bottom line or, in the case of the Sun-Times, thieves. (That’d be Lord Black, not those darn bloggers.)

But Davis’s hesitation to discuss the business side of journalism is yet another holdover from the good old days when editorial was on one side of the wall, and sales and marketing were on the other. Smart writers now know that while editorial should never be influenced by money or marketability, they still need to have more than a passing familiarity with the business end of things, as one day they may find themselves in the editor/publisher role, creating partnerships or selling a product to make enough money to keep the news rolling.

And that’s the real question:  how to make money from all this news. None of the panelists had much of a chance to opine on this point, so this is where the audience got involved. Flora and Sachin Agarwal, chief executive behind dawdle.com, an online video-game retailer and Windy Citizen advertiser, blamed the ads themselves, noting that most still looked like crap or were so much eyewash, unable to deliver the kind of bold, dynamic look that serves the advertiser’s product as well as print. Emboldened, Agarwal began pointing fingers, saying that sites like Pitchfork and Ars Technica had made “millions of dollars” in online ad sales and why couldn’t the panelists figure this out as well? Of course, he neglected to mention that getting people to pay for music and technology news and reviews isn’t quite like getting them to pay for news about the local library board or for a reporter to sit in the state capitol building all day, cultivating sources.

Leave it to Zorn, long the early adopter among those in Chicago’s mainstream media, to bring in some reinforcements. During a Quixotic discussion of micropayments and Kachingle, Zorn said: “Who’sWhere’s kiyoshimartinez?” Turns out, he was one of several people who’d been live-Twittering the event, offering instant feedback and reporting about it. (Note to everyone who suppressed giggles when anyone mentioned Twitter: That’s why you’re in this mess.) Zorn had him stand up and, as he later wrote on his blog, voice some of his criticisms of mainstream media sites which:

“…offer really poor advertising solutions for advertisers, which means they’re not going to get high advertising rates and therefore not capitalize on the vast amount of ad inventory they have but can’t sell. In turn, they’re forced to run remnant ads, which have very low CPM values and you end up with ads that feature belly fat and mortgage rates.”

At one point, someone mentioned Google as a model, but Huff noted the idea of presenting every bit of news without filtering for your audience was dead too, and a site like Capitol Fax, which aggregates political news for free while charging a subscription fee for original, reported content, was worth pursuing. But take away that aggregated news, Marin replied, and all you’ll have left is a really good newsletter, without explaining what exactly was wrong with that. Still, as much as the sites that drive traffic back to the original sources are a needed part of the news consumption process, they don’t, by themselves, pay the salary of more than one or two reporters. There might have been more ideas in the room, but many of those who got up to speak seemed more interested in telling sob stories.

Some seemed to recognize that the funeral would only last a couple of days before it was necessary to get on with life. Davis suggested that the technology and methodology for fully monetizing online news had yet to be developed. CLTV political editor Carlos Hernandez-Gomez said that reporters need to be able to work in multiple mediums and brand themselves. Indeed, those will be the kind of reporters who will be able to staff the for-now theoretical $2-$4 million online newsroom. Marin surmised that some reporters aren’t good at editing, writing and producing; some are only good at one thing.

If anyone in the room thought they didn’t need to start learning how to do more…well, it’s their funeral.

For more wrap-ups of the Chicago Journalism Town Hall, and coverage as it happened, search Twitter for the hastag #cjth. For a live-blog of the event, visit ChicagoPublicRadio.org.

Update: Per Eric Zorn’s comment below, I’ve corrected his quote. Kiyoshi Martinez also has a blogroll of recaps, plus links to audio from the event. Also, here’s Geoff Dougherty’s plan for creating a $2 million newsroom.

Update 2: There are two new ruminations on the CJTH: One from Whet Moser, the Reader’s Web guy, who expertly breaks down the various blog/aggregator models and the importance of SEO; and another from Andrew Huff, EIC and publisher of Gapers’ Block, who makes an important clarification about the money he makes on the site that also clarifies his quote about re: their ad sales:

While it’s true we’re not making a ton of money, we’ve been profitable, inasmuch as we’ve made more money than we’ve spent, for years. The size of that profit has been limited in large part due to my personal lack of time to devote to selling ads. Not a lack of a market, but the inability to serve that market. Even without a dedicated sales force, we’ve made enough in the last couple years for me to quit my job and make Gapers Block part of my full-time work. And now that we’ve got someone actively selling ads for us, I’m confident that profits will continue to increase, allowing us to pay more than just me. (We started to pay the editors this year; it’s a pittance, but it’s something.)