Great posting, JB. I was just talking last night with a journalist friend in Hawaii about the same problem: how to generate revenues from the web to fund traditional journalism.
Not traditional newspapers, mind you, but journalists. Because if his paper goes belly-up he's sure not going to write for the web for free.
My friend works for the Honolulu Star-Bulletin where he's been pointing out for years the self-destructive logic of posting the paper's content on-line for free yet charging for the 'hard copy.' (If newspapers can be considered hard.) Maybe posting on-line content made sense in the 1980s as a teaser to buying the complete paper, but not today. His idea is to start charging a minimal amount for reading the paper on-line -- maybe $3 a month/ 15 cents daily paid via PayPal -- and if the physical paper goes bust the publisher becomes purely a content provider.
But I had an even better idea, if I may say so. If papers become passe, go ahead and charge $3 month or whatever for the basic on-line content. However, also offer readers enhanced versions at escalating prices that include less and less advertising. Imagine, no more obnoxious spinning banners and pop-ups. At the highest rate you'd see only text and illustrations and media -- just clean fresh news. I'd buy that.
How about this? Papers could digitize all their back issues and make them available to researchers via a search engine, and include this feature as part of a super-enhanced package deal. The "NY Times" has started offering their archive on-line, but it charges an ungodly amount of money per search. The Chronicle has been around since the Civil War, and its morgue would be a huge benefit to researchers of Western Americana.
We're talking about a new business model for newspapers here. Very sad? Yes. Unthinkable? No. But consider the alternative -- a world of unedited and unpaid bloggers all flogging their own points of view. I think I'd prefer to see the return of the town crier.