But as Anderson was collecting kudos as an online news pioneer, VillageSoup remained in the red. And by launching two newspapers, he had made the already competitive news market in Knox and Waldo counties even more crowded. “Even after we created the papers we still continued losing money,” says Anderson. “And that’s when we came to the realization that there were too many papers—there were seven newspapers serving 80,000 people. We had to rationalize the market, we had to get fewer papers in this market, because advertisers can’t support them all.”

Anderson’s solution was to purchase the Courier newspapers. The 2008 deal included the Rockland, Camden, and (two) Belfast papers, as well as weeklies in Augusta and Bar Harbor. Anderson cut dozens of jobs and consolidated operations. In the shakeout, the three Waldo papers became one—using the venerable name The Republican Journal—and the Knox County papers were rolled into the Courier Gazette. That paper was soon renamed the Herald Gazette, and dropped frequency to twice weekly, after Anderson shuttered the Camden Herald.

Anderson says he had not intended to close the Camden weekly, which had been published since 1869. “But then when the economy got wiped out from underneath us, we had to start scrambling,” he says.

While Anderson searches for an ideal formula, Maine weeklies with less sophisticated online operations appear to be surviving, or even thriving. Mike Lange, executive director of the Maine Press Association, says of the twenty-one weeklies he represents (the Village-Soup papers not among them), “most are doing very well.”

Alan Baker, owner and publisher of the Ellsworth American and Mount Desert Islander (Anderson’s direct competitor in Bar Harbor), says his papers remain profitable. And he says the papers have even seen modest increases in circulation in the eight months since he put most online news behind a paywall. He feels the newsprint model still works well for most weeklies. “If we do our jobs properly,” says Baker, “we have a niche that’s secure for the time being.”

But Anderson says the old newsprint business models might not last. “I’m betting long-term,” he says. “You never know when it is going to turn. GM bet for a long time, and they lasted for a long time, without building high-quality small cars.”

While Anderson is now convinced of the value of newsprint, he also says VillageSoup earns 21 percent of its ad revenue online. “Because of our start, and our approach, we’ve achieved something nobody else has achieved, but it is still not enough,” says Anderson. “Eventually it may end being fifty-fifty, but I think, long term, that fifty percent of that ad revenue is still going to come from print. Print plays a very important role. It does something for advertisers that online will never do. And print does something for readers that is going to be hard for online to ever do.” He says his newfound devotion to newsprint is a major shift in his thinking that he did not anticipate thirteen years ago.

VillageSoup has not yet seen a profitable year, but Anderson is hoping that 2010 will be the first. He owns the company, and will not say specifically how much he has spent on the venture, but says it is millions. He remains enthusiastic about his news model. “We’re not done shaking this industry out yet,” he says.

And in the culmination of one aspect of his vision, Anderson launched the first franchise version of VillageSoup in January, in Wareham, Massachusetts. Wareham Week will go head to head with two established weekly newspapers. It will feature a Web site, of course—and a print newspaper.

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Murray Carpenter is a contributor to CJR.