Techdirt links to an excellent analysis from Vin Crosbie about the current state of newspapers. He also provides a three-step-solution for saving (or even growing) the industry.

"Most printed newspapers' circulations and readerships meanwhile continue their steady 40-year declines. More than 80 percent of American adults read a newspaper each weekday in 1964, but only 58 percent did in 1997, according to the Newspaper Association of America. In 2003, an estimated 54 percent read a newspaper each weekday. Most analysts predict that fewer than half of adults will read the paper every day by the end of this decade.

Like other executives in formerly Industrial Era businesses that must adopt mass Customization, newspaper editors will find many of their traditional practices must change. When there are as many editions daily as there are readers, no one editor or editorial team will have time to examine, edit and approve each story seen by each reader. Instead, the editors must examine, edit and approve the flow of stories rather than on just one generic edition of stories. That's not an insurmountable editorial problem: Stories from wire services and syndicates have already been edited.

All this can now be done online, where the generic limitation of the analog press doesn't exist. Nevertheless, almost all newspapers' Web sites publish only the stories that those presses print. Customizing content should be an imperative task for newspaper new media staffs, but the customization isn't even on the radar at most publications.

This also means that newspaper companies should even acquire distribution rights to stories and information from reputable sources that might not traditionally have been parts of newspapers -- such as trade journals, newsletters, magazines, blogs, other Web sites, etc. The communications, indexing (notably XML), and billing technologies already exist to do this.

A newspaper's service is to aggregate and deliver all the news that a reader should be interested in that day. This service can be branded, but it shouldn't be a package of only one brand's content, and that content should possibly be from all sources, including nontraditional newspaper ones.

This service saves readers from having to search hundreds or thousands or millions of the world's content sources for that information -- a vital service in an era of data smog. It's a service for which newspaper companies should be able to generate great revenues and secure larger readership in the 21st century."