Many publishers and readers of newspapers think that the industry is declining. It is true that overall circulation is lower than it was before broadcast TV, cable TV, and the Internet made huge inroads. Yet by comparison with those mass media, the position of newspapers suddenly looks quite strong: the audiences for up-and-coming media remain terribly fragmented, so newspapers, though diminished, have once again become something like a broad-reach medium. In the United States, they reach 59 percent of the adult population daily, a penetration rate higher than that of prime-time TV, at 42 percent, or of radio, at 25 percent. Instead of substituting on-line publications for newspapers, readers commonly frequent the World Wide Web sites of their usual papers or use the Internet to complement the print media. In fact, many newspapers have succeeded in extending their readership bases by attracting new demographic groups to their Web sites.

Perhaps it should therefore be no surprise that newspapers around the world have been aggressively raising their prices. What is a surprise is the fact that, in seeming defiance of the standard inverse relationship between price and circulation, this development hasn't driven away readers. In an industry that has been...