It happens every time old and new media executives clash at digital media conferences – debate quickly turns to whether online video helps or hinders traditional TV viewership.

A Nov. 18 nextMEDIA panel on re-engineering the broadcast business revealed an array of positions.

Barbara Williams, EVP of content at Canwest Broadcasting, told the Toronto crowd that her TV-heavy network has embraced the Internet, but remains wary of a medium that threatens its core business.

‘We have to be playing with these tools to help advertisers get more in front of the consumers. But there’s also $600 million in traditional TV revenue that we have to protect as we play here and here and here,’ she argued.

Meanwhile, Dominque-Sébastien Forest, GM of digital media and e-commerce at Quebecor Media, said long-form video will eventually thrive on the Internet and be monetized, in contrast to bite-sized video snacks on YouTube and other file-sharing sites that currently offer scant returns for content creators.

The key for producers, Forest argued, is making attractive and addictive long-form online content that’s cheap to produce.

‘I will not be able to repeat a broadcast model and just monetize that content online,’ he said. ‘But I can make money by making branded content online, and presell content to advertisers as part of a value package.’

An example: Forest found a producer to shoot an awards show for online streaming at a cost of $16,000. The Quebecor executive told the producer not to low-ball his production costs just to get the business. The producer insisted he wasn’t – his production costs were $8,000; the rest was profit.

Of course, the prospect of trading dollars for dimes can’t be too enticing to traditional producers and broadcasters as they balance whether to target TV, the Internet, or both.

Raja Khanna, co-CEO of GlassBOX Television, has placed bets on both media after apparently coming up short with pure-play online video.

‘Maybe I’m turning into a dinosaur. I’ve never really been able to monetize online video in a meaningful way,’ Khanna said, recalling earlier efforts at QuickPlay Media.

So he took a step back and co-founded GlassBOX as a cross-platform broadcaster that includes traditional TV in its product mix.

‘For me, our audience is on all platforms. They’re watching a little less TV, but they’re still watching TV. It’s important that we’re there where our audience is,’ Khanna argued.

In fact, as historic ratings for the recent Beijing 2008 Olympic Games and Saturday Night Live reveal, multi-platform availability for engaging video can drive TV audiences higher.

Yet however much comfort broadcasters take from media multi-tasking – whereby mostly young people surf the Internet or play video games as they watch their favorite shows on the TV set – the obvious question is: doesn’t viewing TV shows online cut back on traditional TV viewing?

It does, according to the recent IBM study ‘Beyond Advertising: Fact or Fiction’.

No wonder bite-size clips of Tina Fey impersonating Sarah Palin resonate on YouTube. The IBM study found online video is gaining traction on mobile phones and personal computers at a dizzying pace.

IBM researchers also spotted corresponding declines in traditional TV viewing among consumers increasingly willing to watch TV shows on their PCs or mobile phones. Seventy-six percent of consumers polled said they watch video online, and just over half surveyed said that has reduced their TV viewing.

The lesson for IBM is that consumers are more receptive to ad-supported models if they can watch TV shows on their PCs or mobile phones.

That’s good news for new media, but not so good news for traditional producers and broadcasters, in a world where conventional TV viewing is falling and online video viewing is gaining, and where you increasingly have to trade dollars for dimes in terms of licence fees and ad revenue to do business.