For publishers and business strategists, the Web is about nothing less than financial survival. Donald Graham, the Post ’s CEO, was an early Web enthusiast, taking losses of more than $100 million a year in Web operations during the late 1990s in order to build up the Post ’s Internet capacity. “Anyone looking for quarterly returns should not invest in Washington Post stock,” Graham says. The paper’s much-admired Web journalism turns a healthy profit now. Online revenue at the Post was $72.7 million, in the first nine months of 2006, up 31 percent. The Post Company’s $1.1 billion Kaplan test-prep and tutoring company is increasingly an online product, too. Caroline Little, ceo of Washingtonpost.Newsweek Interactive, says online income has vast potential. “The ratio of the huge amount of time people spend using the net to the relatively low ad revenue realized from the net is way out of whack,” she explains. Internet ad income should grow rapidly at the expense of both print ads and TV ads. “The question,” Little adds, “is how can we contribute enough to the bottom line to keep the core journalism alive?”

The Internet now accounts for about 5 to 6 percent of newspaper advertising income. With Web income soaring and print revenue basically flat, analysts expect the lines to cross within fifteen years. By about 2020, if current trends persist, half of a newspaper’s income and most of its readership will be via the Internet.

Despite the seeming anachronism of paper in a digital age, however, the economics of the business require newspapers to persist as partly print media for at least another generation. Some Americans still want to pick up a daily paper rather than read content on a screen. And as a business proposition, the average monetary value of a visitor to a newspaper’s Web site is only 20 to 30 percent of a newspaper’s print reader; Web ads command lower rates because of the greater competition among Web sites. So even if a newspaper shut down its print operation, published only on the Internet, and somehow managed to keep its entire circulation, the revenue loss would exceed the cost savings.

A key to the transition to a hybrid world is investment. The New York Times is currently spending several million dollars a year on a new R&D unit, Web staff, and new products. Depending on how you count, the Times has over 100 people in the newsroom whose duties are more Web than print, including producers, software developers, and reporters and editors. (Full disclosure: For the past twenty-two years, The Boston Globe, now owned by the Times, has published my weekly op-ed column.) The Times is rolling out a nifty digital device called Times Reader, developed in partnership with Microsoft. (For the next few months you can try out the beta version yourself, free, at nytimes.com.)

With Times Reader, the on-screen page offers stories in the same fonts, look, and print-like appearance of the familiar print Times, but allows a variety of search, page-flip, and rearrange options. For instance, you can click on a word or phrase and get a little clickable chart of all the stories in the paper that touch on that topic. It’s easier to read than a standard Web page, and even more ingeniously searchable. Times strategists imagine a reader at the breakfast table or on a plane curling up with Times Reader as with the print newspaper, and not promiscuously surfing around the Web. Can’t competitors just imitate it? “We certainly hope so,” says Michael Zimbalist, the one-time Disney “imagineer” hired in late 2005 to head R&D at the Times: “The more this kind of platform is widely used, the better we’ll do.” If it becomes a common way of reading a newspaper, he explains, the Times has a head start.

Robert Kuttner is co-editor of The American Prospect.