Newspapers used to make economic sense. In the age of mass production of uniform product, they were an efficient ay to transmit timely information. Additional copies were cheap compared to the fixed costs associated with printing, so it made sense to include everything in order to appeal to the the widest readership possible, which spread the relatively large fixed costs over the widest possible subscribership. The inefficiency of having much, if not most, of the paper no of interest to a particular reader was made up by spreading the fixed costs over as many people as possible. The two big advertisers - department stores and classified - also wanted as large an audience as possible. In the age of mass communication the newspapers had advantage over competitors - first radio, then TV. The first is that reading is much faster than listening. Second, people can access the information in a newspaper on their terms - TV and radio require you to sit through the broadcast to hear what you are interest in. So in the one size fits all world of mass communications newspapers ruled.
The economy of scale also drove to monopoly. Only a few of the largest cities kept more than 1 mass circulation daily newspaper. When I was a kid the St. Louis Post Dispatch became the St. Louis's only daily newspaper when the Globe Democrat owners decided it would be more profitable to run the printing presses fo the Post than it was to print and distribute the Globe. Two attempts were made later to create a second newspaper: first a revival of the Globe, and then the brand new Sun. Both were failures. With the monopolies came a drop off in quality. The Post was never a better paper in my lifetime than when it was tying to fend off The Sun. Quality all across new media has fallen as a result. But poor quality isn't the biggest problem facing newspapers.
The problem for newspapers is that with the advent of the internet, newspapers are no longer an efficient way to distribute information. Instead of pushing out the same universal product to every customer, consumers can pull only what they want when they want it via the internet. The problem for newspapers is that everything they know about the newspaper business, as opposed to the news gathering business, hurts them in this new model. The internal power structure is set up all wrong for the new model. The culture of the newspaper is geared to putting out the product every 24 hours and providing as little product support as possible once the newspaper is in your hands. Didn't get your copy - they are only too happy to get a copy in your hands as fast as possible. Provide corrections, clarifications, or follow up once you have it in your hands - not so much. So the typical newspaper website is just like the newspaper, although they have been adding more interactivity and faster updates with time.
Now newspaper advertising is drying up, never to come back. What they are going through is not a downturn but the end of the mass circulation metropolitan daily. The classified ads are going to Craigslist (once you've used Craigslist, you'll never buy another newspaper classified ad) or Monster for jobs. All that's left are car ads and the car companies are having their problems, just like the department stores. Every advertiser has to be pondering the high cost of untargeted advertising - the same revolution in universal push versus targeted pull.
Technology created newspapers; technology is what is killing them.
