It used to be that you could get a paper for a quarter out of a machine on the street. That quarter covered printing and delivery. the newspaper had a classified ads section (plus inline ads, plus ad inserts) which actually funded the people who make the newspaper.

Not to mention they often had a rich owner who ran them at a loss if need be to ensure they keep being friendly to him/her when needed.

Because what you paid is far less ( think 10x) than what it takes to run.

Traditional paper-based newspaper is ad-supported too.

> If news sites want to charge for their content they should put it behind a pay gate.

This is the 'trade journalism' model. Here, good journalism still exists, but the price is more than most people would afford. People buy trade journals when the news is important, with direct financial implications that justify the cost of admission.

General journalism, however, is something close to a public service. It's better in a vague, hand-wavy way to have an educated citizen body that's informed about current affairs, but few individual citizens derive much value from their own knowledge. (This is also why people tend to gravitate towards 'entertaining' news, by some definition. Come for the sports scores, stay for current events.)

In this model, the benefit of news is externalized. I benefit when other people are educated. This is a classic market failure, and it suggests that a reader-pays framework will underprovide news.