The Mail's online miracle: or how to get paid without a paywall

David Mitchell had some brutal alternatives on offer last week. You either build a paywall around your newspaper net site – or you don't, he told Observer readers. You either make money online – or you lose it. You either think Mr Rupert Murdoch may have had a useful idea for his Times – or you excoriate him as per usual. But hang on a moment, because all this black and white stuff leaves out one discommoding part of the argument. Yes, it's the Daily Mail.

Take the Mail in print. Around 1.9 million punters buying a copy every day, which means 4,881,000 readers scanning their favourite sheet each morning. And online, the growth from nothing much four years ago to 40,500,000 unique browsers a month is verging on the phenomenal: up 72% year on year. Through 2009, the Telegraph and the Guardian were two close competitors – sometimes ahead, often very near to, the Mail. Not now. Both still have good growth of their own, but Associated's electronic baby – 16 million unique browsers in the UK, 26.3 million in the rest of the world – begins to hint at a different league.

Ah! Perhaps that's because it is in a different league, say the snipers. Look at those yards of celebrity gossip and pictures on the site; this isn't the Mail we know (and don't much love). This is a different beast that somehow doesn't count because it fights unfair.

Park that charge for a moment, however, and ask why the Mail's online chief, Martin Clarke, is clearly (though pragmatically) opposed to paywalls. Because he doesn't need them. Because the surge of traffic is bringing in advertising fast. Because he can see a moment, very soon, when his digital daily will make real profits of its own.

It's relatively easy to reckon how that could happen since, unlike its rivals, the Mail shuns newsroom integration and runs online operations totally separately, which means that costings and revenue are separate, too. So (purely notionally, on the back of an envelope), the 25 people who sit at Mail online desks each day, boosted to 45 or so for round-the-week working, might cost an average of £100,000 each all in: say £4.5m a year. Add another £1m a month for buying pictures and syndicated tales: £12m. So put down £16.5m for annual costs – with maybe a million or three on top to pay for development and emergencies.

Can internet advertising alone bring in a round £20m to turn Mail red ink into deep black? Clearly it can. However rough and ready my figuring may be, there's a reality to the audience numbers here, and to the rise within that of engaged readers who visit the online Mail much as they might pick up a print copy. Forty million unique browsers creates a tide of interest in the States as well as in Britain. Of course Clarke doesn't need and doesn't want paywalls. He's building a nice little free earner of his own.

But back to the critics again: to those who don't think the electronic Mail is a follower of the true faith. Which is where we reach a fork in the road.

There is no rule that says online papers must play print's little brother. On the contrary, the most successful ones are more like inspired riffs on a print theme. Nor is there a rule that says big print sellers carry the same clout when they transfer to screen. The print Sun far outsells everything day by day but, with 20 million or so unique browsers, was trounced and trounced again by the Telegraph, Guardian and Mail before Mr Murdoch announced yet another paywall.

Why assume that the Telegraph – with 1.7 million print readers a day – must go head to head with the Mail and its 4.8 million? Why assume that the two online versions are really in such close competition either? The online market, like the print market, is beginning to set different rules for itself, to insist that quality and redtop and celeb can define different pitches (and appeals to advertisers) just as they do in the land of dead forests.

In short, it doesn't necessarily matter that the Mail is different. Perhaps its success merely prompts other news sites to be different as well. Not one site covering all, but many sites offering alternative things. Not one site ruling the world, but many sites carving up the globe.

And once we're dealing in niches and targeting – for readers, for ads – then paywalls become merely part of the debate: not Rupert's (or David's) last weapon of every resort.