Michael Arrington, founder of a network of technology blogs including TechCrunch, published an interesting piece yesterday on new media business models and a hypothetical example based on the New York Times (What If: The New New York Times).

If anyone has any clue on where new media is headed, Arrington would be on the short list. Of course no one can say for sure what will happen. But we do know the traditional media business is going through a painful metamorphosis. Will the end result look like a mangled human fly (but with loving eyes) or an uber-powerful transformer?

Arrington’s hypothetical scenario asks: “would happen if the top 10% of the writers at the NY Times just…walked out”? Could a “New” New York Times emerge?

Interesting tidbits in the article abound:

  • The NYT today, at $1B, is about 80% smaller than just 5 years ago. Wow.
  • AOL, meantime, has amassed an army of 1,500 (!) journalists (as Arrington says “Journalists still matter”)
  • NYT employs over 9,300 employees, of which approximately 400 “or so” are writers

As I read through it, I was reminded of a talk Barry Schuler gave last week about a similar topic. In essence he painted a picture of traditional media being stuck in “death valley”. Older business models were disintegrating faster than new ones could be invented.

And that pretty much sums of where we are today. Sure, yes, we know the dynamics are changing. Society is evolving online (for better or worse). At some point though, for long-term sustainability, new business models and economics must emerge. Where will they come from? What will they look like? And who will be the new faces gracing BusinessWeek… oops, make that, TechCrunch?

It reminds me of a dental visit I made this morning. While I was waiting two teenagers were talking about iPhones and Facebook. One kept asking the other, “but, is it free?” Pandora? Neat! Free? Yes, ok good.

This upcoming generation, as has been well-documented and reported, likes FREE. They know FREE. And the Internet + FREE go hand-in-hand. Oddly, you don’t get what you pay for. You get more. Way more. FREE office applications, FREE music, FREE games, FREE CRM, FREE videos, FREE TV (Live stream of CNN for example).

So who pays the bill?

Advertisers do. Or at least they are supposed to. They’re flat broke too. Signs, however, point to increasing budgets finally.

My best guess at this point would be you either need a Government bailout. Or venture capital.

As Arrington concludes: “Lean journalism, for the win.”