The media execs attending lunch at the Paley Center for Media Tuesday seemed relieved that they could take a break from watching their P&L’s get jackhammered by scrappy new entrants with tiny cost structures.

Not that the topic of conversation at this week’s schmoozefest, “The Great Digital Debate: Free vs. Paid Content,” was much of a diversion.

The biggest guffaws came when media futurist Shelly Palmer likened the media industry’s focus on free-versus-paid content to worrying about what song the band was playing aboard the Titanic.

The CEO of National Public Radio, Vivian Schiller, sounded a shrill warning for news organizations who might be tempted to begin charging for their content on the Internet.

While acknowledging the difference between NPR’s charter, which prohibits charging for content, and commercial journalism, Schiller said pay walls demonstrated “elitistm” and threatened to alienate the very audiences with which media organizations should be engaging.

Steve Brill, the founder of American Lawyer and CourtTV, now runs Journalism Online. He dismissed criticism of his latest company’s business goal — to provide publishers with mechanisms through which they can charge for content.

Brill asserted that no news organizations have been able to survive on advertising alone, saying that publishers have always had to balance circulation revenue with advertising and other factors to arrive at the right mix.  One example he gave was the free magazines provided to passengers on the Delta Shuttle, on which hundreds of thousands of well-heeled business passenger have flown for years.  While readership could easily be puffed up through such giveaway programs, there was a price to pay on the subscription side of the business.

Commodity content — weather, lottery numbers and roughly 90% of the material most news organizations present on their web sites — would not be good candidates for subscriptions, cautioned Brill.  The other 10% could command a fee, and Brill claimed to have received 1,200 inquiries from “affiliates” eager to begin charging.

A video of the entire discussion was added today to the Paley Center website.