What the newspaper industry needs to understand and embrace is the opportunity that new media brings to their business. They are the makers of content, and news presents important currency to the online world. It is ever changing and brings viewers to repeatedly view their sites for the most updated information. They are content creators and have built brand names and credibility from their traditional print distribution.
Change is hard, but as they adapt, they have the opportunity to attract more online users and be the preferred brand choice. It's interesting to note that the Wall Street Journal has made a decision not to give away all content for free and to continue to push the subscription model; as a print subscriber, it becomes an added value and ongoing source of valuable financial and business information. While the New York Times has moved away from this model, only time will tell which side is most financially successful. Magazines, like Newsweek and Time, may look with interest at these models for their business. Consumer Reports which does not accept advertising seems to have done quite well as a subscription only service.
Yes, most content is being delivered free and digital distribution enables people to share walled garden information outside the wall; but if the brand value and quality of the content can be groomed, it will only encourage others to purchase a subscription to enter the site.
Content is King. And original, credible, well produced content from known and trusted brands are preferred. Be it video, audio, or print, users will gravitate to those sites that do the best job making and analyzing the news and delivering quickly. It is old fashioned journalism with a new distribution stream.