The classifieds just piggybacked onto newspapers because they had a distribution mechanism & the could make the network effects happen. It never had anything to do with news. There was a symbiosis, but it was an incidental one. You can't just counter that with 'Democracy needs News.'
Consider a possible parallel. Imagine T shirts where a major ad industry. Various brands are able to sell cool T shirts that are very fashionable & desired. They sell em cheap & make it up on ads bought by the highest bidder. This becomes a cultural norm. Everyone wears these $2 shirts that would otherwise cost $50 & everyone gets a handful every month.
Now say no one wants to buy the ads any more or say the fashion becomes put a sticker over the ad or say atheist buses & neon building become so common that advertising is devalued. Whatever. Can't sell the ads any more. OK. Well, people will buy less shirts. It was nice while it lasted. We had $2 shirts. But that's it. No way around it. I will buy fewer shorts at $40 then at $2.
"What about Google.org, Google's for-profit philanthropic arm, which is investing in alternative-energy startups?"
Is it just me who finds those suggestions bizarre to ludicrous? They're practically begging.
People love getting personal messages delivered to them, but that couldn't save the telegram. I mean, come on, TV news has been around for sixty years and we're still acting like the news still belongs to newspapers?
Even if they publish all of their stories online, you have to realize that newspapers typically have huge CapEx and/or fixed costs. If they want to keep a single print copy out there, there is a huge fixed cost to print the first paper copy. I know that there are ways to reduce the fixed cost, but that increases the marginal cost. Newspapers have optimized their businesses on the assumptions that they'll print lots of copies. The "crisis" in the industry is that they all realize that assumption won't be valid sometime between now and "real soon now".
The internet is quite simply a MORE EFFICIENT way to sells news. It costs less to produce, distribute, and sell. So much less, in fact, that for existing businesses (newspaper co's) it's very difficult to make the transition without the entire thing collapsing.
The smaller newspapers are having more success at this than the big ones because their investments are lower than the big guys. They also are in a different news business; they do LOCAL news. Thus, they have unique content with less competition. All of the big newspapers are essentially the same national news, and that is very competitive due to the internet.
It's also not just a matter of "moving content online". Newspapers get ~75% of revenue from ads (display ads + classifieds, about half & half), ~18% from subscriptions, and a few other sources. The classifieds business kinda got stolen out from under their noses (see craigslist) and that killed about 25% of their revenue. Online ads are more trackable, and work better, so that reduced the VALUE of the same print ads. And subscriptions are down. Take nearly any business and tell them their revenues will drop by at least half and stay that way and see how well they do...
Isn't that the same thing they claimed they were doing (with Apple) when they introduced Google Maps and YouTube on the original iPhone? Mr. Schmidt appears to really like that concept...