From: The Changing Scene (1937), by Arthur Calder-Marshall:
“In actual fact, the paper which he buys for one penny has cost anything between twopence and threepence to produce, and the newspaper reckons the loss involved in each of these transactions as part of the cost of the paper. One morning newspaper, at the death of George V, managed to carry the full story on the front page. In consequence it sold an extra half a million copies on that day. That extra half-million circulation on one day was sheer loss. Its only commercial value was the advertisement afforded to the newspaper: the unassessable hope that a decent percentage of that half-million casual readers would become permanent.
An understanding of the economics of a newspaper gives an insight into policy. Advertisement is the main source of a newspaper’s revenue. Without advertisements, newspapers would be forced either to raise their prices or reduce their size. The real business of a newspaper is to induce a sufficient number of people to pay a nominal penny for the daily sheet to maintain or raise the rates of advertisements. Anything that will raise circulation without too great an expenditure is therefore permissible. The supply of accurate news has ceased to be the main object of the paper…”