The more highly diversified Dow Jones Company, meanwhile, enjoyed increased earnings last year. Its Wall Street Journal uses a business model that gives far greater emphasis than the Times to paid Internet content. Dow Jones executives believe their material is so specialized and valuable to its affluent, Web-savvy readers that the potential audience is in the millions. A great deal of Web effort goes into online updates to provide investors with breaking business news, according to Web managing editor Bill Grueskin. At the end of 2006, the Journal reported about 811,000 premium online-only subscribers who paid $99 a year each. An undisclosed number of print subscribers paid $49 for the additional Web content. With its paid-subscription model, the Journal has far less Web traffic than the Times, despite its larger print circulation. But the Journal can charge more to advertisers for its premium audience, according to Grueskin. The Journal projects 2007 growth in online revenue of 20 percent, somewhat below the industry average. Some in the industry think the Journal is mistaken in its strategy of forgoing more Web visitors in exchange for premium subscription income. On the other hand, as Grueskin puts it, “The marginal cost of servicing an additional Web subscriber is basically free.” The Journal, in its recent shift to a smaller page size, has taken a gamble that it will maximize its unique franchise by redoubling its print and Web commitment to business and financial news. In a letter to readers posted on the Journal’s Web site, explaining the Journal’s new, smaller page format (which reduced the news hole by about 10 percent), publisher L. Gordon Crovitz promised, “We’ll deliver more value-added analysis of financial data,” as well as expanded personal material. What Crovitz didn’t emphasize was the sharp cutback in the Journal’s traditionally superb political reporting and analysis of social trends.

The Times, Post, and Journal, already well on their way to becoming print-digital hybrids, will surely navigate this transition. At the other end of the spectrum, small-town and suburban weeklies, community tabloids, and papers targeted to ethnic groups are much better defended against Internet incursions. Readership of print weeklies continues to grow, using a model that is part paid and part “controlled,” meaning free to readers but guaranteed to advertisers, thus aping the free content of the Internet. Free community papers clearly have momentum; subscription and single-copy income is down, but ad income, and overall income, is up. The advertising base of local weeklies was never as reliant on large national advertisers, and their intensely local franchise is retaining both a readership and local advertising bond that the Web is challenging at a far slower rate than it assaults regional dailies.

At greatest risk are newspapers in between—the mid-sized regional metropolitan dailies, like The Philadelphia Inquirer and the Minneapolis Star Tribune. For example, when McClatchy bought the hugely profitable Star Tribune from the Cowles family in 1998, the paper was one of the Internet pioneers. The family had invested heavily in But when the dot-com bubble burst, and profit margins fell from over 30 percent to under 20 percent, McClatchy began disinvesting. To make matters worse, the innovative was ordered to convert to the technology of McClatchy Interactive, which was based on the successful site of another McClatchy paper, the Raleigh News & Observer. “We lost at least a year,” says one reporter. And not long after the technical overhaul was complete, the paper was sold again; the Web staff is now scrambling to disengage from an alien technology that it never liked. Sources at the paper say that Web traffic and Web advertising revenue were close to flat in 2006, while they rose sharply at most newspapers.

Robert Kuttner is co-editor of The American Prospect.