The New Orleans Times-Picayune is cutting its circulation back to three days a week, and the buzz is ratcheting up: When are all newspapers going under?

Before that day comes, we might want to re-examine one of the enduring myths of journalism: that paid circulation is necessary.

The days when main-line newspaper companies shelled out plum dividends are long gone. The New York Times is worth a small fraction of what it once was.

The Washington Post got lucky when it was bought by virtue of a small side bet. The Stanley Kaplan test-prep service today provides the bulk of Post Co. earnings.

The respected Poynter Institute for Media Studies is on the ropes. The Tampa Tribune reported that its competitor, the Tampa Bay Times (formerly St. Petersburg Times) can’t reliably support the Institute, as it had been set up to do since 1970, forcing the Institute on a fund-raising blitz.

Many media companies are touting their new “digital information operations.” Reporting staffs are being told by bean counters that newspaper circulation and finances are declining, so their future is in moving online to see what sticks. It’s uncertain how this new future will pay for itself.

There’s more to this change than the newspaper industry wants to tell us. Conventional wisdom points to the migration of readers and advertisers online. But that’s not the whole story. In many ways, the newspaper industry is helping to kill itself, through overpriced advertising and the myth that paid circulation actually makes money.

Most surviving daily papers today are monopolies. Sadly, many price their advertising that way — probably without realizing it. Small cities all over the country have long had artificially thin papers because local businesses can’t afford their rates. When the Denver dailies decided to combine in a “joint operating agreement,” rates soared, alienating classified and display advertisers.

But the real mystery resides in the circulation departments of old-line paid dailies. The daily paper has long been a paid product. Its leaders  have typically questioned if a paper that didn’t charge could be a real product. That thinking has prevented untold dailies from starting in the decades since World War II. It takes far too long for a paid subscriber base get big enough to attract advertising.

Yet many readers have long embraced the tale that paid circulations are financially critical to papers. They are, but for the reverse reason than most people think. They lose money. They may provide 20-25 percent of a paper’s traditional revenues, but today they provide none of its profits.

The reason is the cost of “churn.” Like banks, health clubs and many others, newspapers lose a sizable percentage of “members” each year. Replacing them is costly, requiring cold calling, promotion and cheap subscriber specials, none of which produce profits. But few papers would dream of giving up paid circulation, pointing to a loss of revenue, even if ditching the paid model would save them.

Broadcast television has long provided free content, paid for by advertising. But most papers don’t dare tinker with models devised by long-buried ancestors.

Many papers would likely prolong their lives by scrapping broken distribution systems as they also plunge into digital futures. Yet backwards thinking dies hard. The New York Times has been jacking circulation and subscription rates skyward, as if it wants to discourage paper readership. Single copies now cost $2.50, dooming news racks. Who lugs around 10 quarters?

The Arkansas Democrat-Gazette is doubling its price from two quarters to a buck, pleading advertising declines. The move likely won’t work, but the paper doesn’t know that yet.

To see it in reverse, consider what would happen if the Aspen Daily News (or the Aspen Times, which went free in 1988) tomorrow charged 50 cents or $1 per copy. Circulation would plunge, but not because many folks wouldn’t willingly pay. To sell a paper requires “gatekeepers,” so gone would be all the places readers can pick up the paper today. That alone would doom circulation numbers, before we even consider readers that wouldn’t subscribe.

After circulation plunged by say, one half, advertisers would revolt, demanding lower rates to match reduced results, or defecting altogether.

It’s hard to see how the Times-Picayune, with some of the most loyal readers in the land, can save enough by killing a few street days. The savings would be incremental, since much of its costs are fixed and tied up in pay for its most important people.

The Aspen Daily News unwittingly created a mini-trend when it published its first paper in July 1978. At one page, it was too small to carry a price, and has continued since using the network television model mixed with mass-market ad rates.

One way to save fine journalism is to reconsider how it’s delivered. We’re not doing writers much of a favor by assuming that it must be wrapped in long-doomed customs rooted in the belief that real journalism, to be valuable, must always carry a price counted in quarters or dollar bills.

It’s not a matter of proving the worth of fine writing. It’s about re-thinking the marketing and distribution of information. We may not have to go entirely digital to survive.

The writer (ddanforth@aol.com [1]) is a founder of the Aspen Daily News and appears here Sundays.