There was of course a physical paper that had to be printed and delivered so a base cost at the very least kept printing and delivery down to reasonable numbers. The ads could pay the reporters wages, etc.
I'm not sure what the new rationale is for double-paying for the content.
It would seem to my naive brain that the more eyeballs on your ads, the more money you make from the advertisers. Needless to say a paywall (even a free subscription wall) blocks those eyeballs.