You're right about having to define 'success'
Disclosure:
Yes, I hate Murdoch. No, I wouldn't pay for his papers. Yes, I think the price is too high. On the other hand, would I pay 5p per Guardian article or a few quid a month? Maybe. So I'm no hardcore freetard.
The point is, as you mention, that The Times (or the Independent or Guardian) have never made money, online or off. Journalism costs more money than you can sell it for. The greatest journalistic organisation in the world is the BBC, who don't have to worry about profit.
I don't really get why you'd define success as 'making money' in the internet age, because that's not how it was defined before. To many people, success of a newspaper would be better defined as readership, influence, quality and integrity.
If a newspaper is breaking interesting and important stories, is widely read and highly regarded, it's more successful than one that makes a profit but no-one reads. Else Nuts and Zoo would be the high mark of British publishing.
I think the key for the future of news is to use other things to pay for the quality. For the Guardian that means its AutoTrader mothership, which makes a pretty penny. For The Times, that would mean using Sky or the tabloid market to fund something worthwhile further up the chain.
I agree with the Guardian approach - because they're widely read and well-regarded journalistically, and believe that it's wrong to sacrifice readership for profit. Whether it can carry on forever is another matter, but so long as AutoTrader keeps the group afloat I don't see why not.
If newspapers have to turn a profit by themselves, we'll end up with Metro. Bland churnalism with at least 50% of the space given to advertising.