My own two cents worth (and you'd be overpaying of you offered more): The tragedy of the newspaper industry is two-fold. First, newspaper publishers (fearful that a small herd of techno-proficient twenty-somethings would set up shop and publish a competing local news medium online) offered all their content free on their websites. They thus contributed to the principle that "content" is free, only the medium matters. In the early days of the Web (and I'm old enough to remember Gopher), this fear-based mentality was sensible. Remember when Bill Gates described the banking industry as a "dinosaur?" The response of the banking industry was to run to Washington, D.C., and beg (remember, Republicans were in power at the time) to block Microsoft from entering the banking industry. (Gates had little interest in entering the banking industry, but the banking industry's supposedly free-market allies nonetheless raised up their crab-like talons to make sure it didn't happen).
The news media, with the First Amendment thankfully in place, had little such hope of lobbying their way to derelict relevance.
This gets to the second point. The "print" news media has been too quick to abandon the rough and tumble free marketplace of "ideas" that is the basis of a free media. Granted, what really makes newspapers tick is information, not ideas. More people buy papers to get sports scores (historically, at least) than to read the opinion pages. But where else did "ideas" get discussed and disseminated in the marketplace? Paul Krugman, George Will, Thomas Friedman, etc. (and frankly, in a good newspaper, the guest columnists and letter-writers were usually the ones worth the price of admission). Thomas Friedman's recent piece about the need for a $1 a gallon gas tax was priceless. (It would create incentives to reduce our dependence on foreign oil, as well as to fund some of the much needed infrastructure/stimulus/health care/entitlement/debt reduction needs in the budget. Politically unachievable? Check. In the best interest of the country? Check.) The piece was worth way more than the $2 cost of the NYT these days. But how many people can afford and are willing to drop two bucks a day on a newspaper? Until the NYT and other major papers begin charging for content online, they'll be endorsing their own extinction. The popularity of sites like Ron Silliman's shows that ideas still matter, and are still worth something. And the proliferation of so many interesting blogs further underscores how much ideas still matter. I heard the novelist Sarah Schulman once ask the question, essentially, what good is freedom of speech in a country where no one cares about ideas? The Web, in some ways, has created a venue for people who care about ideas to talk to each other. I'm don't think newspapers could have maintained their near monopoly on the discussions of ideas in our society (the days when freedom of the press only belonged to those who owned one are long gong). I'm glad that monopoly has ended, but the abandonment of journalism centered on ideas and discussion is a second reason why newspapers (even their online editions) are struggling to remain relevant.