Allan Young has a graet post Jamming a Square Peg Through a Round Hole on the SAMBA blog. Allan notes that newspapers continue to loose money not only because of a late online presence, but "Maybe they are asking the wrong question? It ought to be, "Why doesn't anyone read good Web-quality content for local topics?" When new mediums or distribution channels arrive, they demand a new form or style of content. The radio folks couldn't figure this out when TV blasted onto the scene. You cannot just port your usual stuff and expect it to work in the new new thing. That's boring and awkward."
Traditional newspapers with online sources are failing, yet new sources are rising. Seeking Alpha's Wall Street Breakfast: Must-Know News is a great take on old style news. They condense and organize the news for a certain group of readers based on articles from many traditional sources such as The Wall Street Journal or Bloomberg. Then they give people an easy way to comment and find related articles.
The news market is actually getting larger as it changes. As Allan suggests, the content and style of news must adapt, just as radio figures had to adapt to TV, or face near extension. There may still be a need for traditional newspapers, just as radio has survived, and in some cases thrived. The key for newspapers will be to keep the connection with the readers. Is there something about the reading the paper with your morning coffee or the full size photos of your favorite sports team? Successful blogs and new media grow because they are built for a tribe - they connect with people.
