Politico is doing the unthinkable: making money by printing a newspaper. With its relentless coverage of politics, the three-year-old outfit has rapidly become a daily must-read for anyone obsessed with D.C.'s power players—including, of course, D.C.'s power players. "We've hired damn good reporters," says cofounder Jim VandeHei. "That gets us the access we need, and that gets us the stories we need." But while politico.com may be the news operation's heart—it gets some 7 million unique users per month—the old-fashioned paper pays the bills. While the paper's circulation is just 33,000, those copies go to a golden distribution list that includes the White House, every key Capitol Hill office, and prominent D.C. businesses. That's an appealing audience for issue-advocacy advertisers, which helped Politico turn a profit in the first year of the Obama administration. And proving that it's not afraid of a challenge, Politico's creators are developing a site to compete in local news.