BOSTON (MarketWatch) — You gotta be online.

In the exciting new digital world, journalism has to appear on the Web for free.

You gotta blog. You gotta tweet. You gotta update your Facebook status. All the bloggers are doing it. All your competitors are doing it. You gotta keep up! Shorter! Faster! Now!

So says conventional wisdom. Is it true?

Listen to a counter-revolutionary.

Ian Hislop is the editor of Britain’s legendary satirical newspaper, Private Eye. The Eye mixes spoof news stories and hilarious cartoons with political gossip and old-school, investigative reporting. Hislop has edited the paper for half its 50-year existence.

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This week he appeared before the Leveson Inquiry, the British government investigation into the press that was sparked by the phone-hacking scandal at The News of the World (a British newspaper published until last year by News Corp. NWS, -3.57% , which also owns MarketWatch). Most media coverage of Hislop’s appearance focused on his robust rejection of calls for tighter regulation of the media.

But less attention was given to comments he made which were arguably more interesting: Hislop thinks newspaper companies are crazy to give away their products for free on the web. “I can’t see why journalism, which at its best is a noble craft, should be given away,” he said.

After his appearance I interviewed him by phone. I know Hislop — I used to be a contributor to the Eye, back in the day, and sometimes when I’m back in London I stop by one of the magazine’s famous (or infamous) lunches at the Coach & Horses pub in Soho.

Private Eye editor Ian Hislop poses behind a replica of his desk at an exhibition at the Victoria & Albert Museum in honor of the newspaper’s 50 years of publication. Reuters

Private Eye doesn’t publish online. If you want to read the newspaper, you have to buy it, and pay about $2.25.

“There’s just a few teasers,” Hislop says of the company website. The posts say, in effect, “we’ve got a good piece on this, and if you want to read it, go and pay for it.”

Sacrilege!

Hislop explained that he made this decision over a decade ago. During the late 1990s, when everyone was rushing onto the Internet, he decided it was all madness. “Everyone was putting stuff up on the Internet. Everyone said, ‘You’ve got to get (the Eye) up there, you’ve got to get it out there, everyone wants everything for free.’ I just couldn’t understand how it would work.”

He confesses he may “sound like a Luddite,” but he was skeptical of the business model right from the start. “They said, ‘We’re going to get lots of advertising,’ and they didn’t.”

At the time, the industry thought Hislop was mad. The paper would vanish into irrelevance, people said. It would start by losing all its new readers, and would be stuck with old fogeys. “Every consultant was saying, ‘No young person is going to read you, they want everything for free.’”

How has it worked out?

I turned to the Audit Bureau of Circulation, the industry standard for measuring newspaper sales, for numbers.

In the past 10 years, the number of newspapers sold in Great Britain every day has plunged from 13.3 million to 9.88 million.

Private Eye publishes every two weeks, and targets higher-end consumers. So the market to which it should probably best be compared are the so-called “quality” Sundays. According to ABC, from the first half of 2001 through the first half of 2011, sales of those have collapsed by a third, from just over 3 million copies each Sunday across the entire industry to just over 2 million copies.

How has Private Eye fared over all that time?

According to ABC, 10 years ago it had average sales of 176,000 copies.

Last year? try 206,000 — a 17% increase.

And all but 2,000 of those copies are fully-paid sales, either in the newsstand or by subscription. By contrast, most of the regular newspapers get a growing share of their circulation from discounted bulk sales, promotions and so on.

Furthermore, during the past 10 years Private Eye has actually increased its cover price by 50%, from 1 British pound to 1.50 pounds.

“Paid circulation is up, we are bucking the trend, and our anniversary issue sold all-time record 267,873 copies,” says Hislop, who then made fun of himself for boasting. The Eye’s publishing company, which is privately held, remains profitable — despite the hefty legal costs involved in breaking scoops about most of the crooks in Great Britain. (It doesn’t hurt that the Eye runs a small staff — 10 full-time, and about 30 contributors.)

How has it bucked the trend? The Eye has a product that’s distinctive and valuable. It’s the funniest publication in Britain, as well as probably the best source of investigative reporting, and it’s required reading the moment it comes out each fortnight. Few, if any, competitors try to do what it does, and even fewer do it consistently. That gives it some market clout to charge.

(Hislop notes that his famous counterpart in France, Le Canard Enchaine, also refuses to publish online — and is also successful.) But the Eye has also succeeded because, quite simply, it has refused to devalue itself by giving its product away for free.

Think: If Tiffany’s acted like a newspaper, they’d have cut their prices to match those of Hong Kong counterfeiters, and the stock would be in free fall.

Today some news companies are trying to restore pricing. The New York Times Co. NYT, -0.61% has introduced a hybrid free-and-pay plan. News Corp.’s Wall Street Journal charges, while its London newspaper the Times has a paywall.

Does Hislop think mainstream newspapers can somehow restore their pricing power? “I’d love to think so,” he says. “It may sound funny for me to say, because of our (critical) history with Murdoch, but I hope he succeeds.”

His message to those running the rest of the industry: “Don’t give the stuff away. The industry’s going to die if you don’t believe in it.”