Newspapers have two challenges, I think. One, a lot of their costs are in the massive infrastructure they have for printing and distributing print newspapers — trucks, presses, tons of paper and ink, etc. How do they transition to leaner organizations where they can cut costs out of that very expensive infrastructure? Is that even possible without giving up what print ad and subscription dollars they now collect?

Second, where are the real innovations in making money. If you sell ads more efficiently, even package print and online ads together, that’s an incremental improvement, but I’m not sure it’s innovation. It’s certainly not the kind of game-changing innovation that Google and others have brought to the market with things like search-based ads and pay-per-click models. I think newspapers need something better than incremental improvements to their existing business models. But I admit I’m not sure what that innovation would look like.

@Paul: I agree that smaller publications aren’t facing the same challenges as their major metro brethren. But I think they will also start to feel the pressure as readers and advertisers move away from them and online. I hope they will be more innovative, and more quickly, than the big papers have.

The problem all newspapers face is there are no proven best practices that seem to work for both generating increased online revenue to replace lost print revenue AND help advertisers generate local store traffic whether of the brick and mortar variety or to their virtual stores online. If such best practices were evident everyone would be doing it.

Still it is the major metros that current face the greatest challenges. And there are only 100 or so of them. For the 1450 small and medium sized dailies and 3000-plus communities newspapers in north America, the picture is not yet as bleak. Look for not only adoption, but adaption as best practices for local media online emerge and become clear. Don’t count newspapers down for the count yet. Innovation is everywhere and some of the ideas are bound to stick.

A second question might be: Why are many of those advertising departments not retraining to be consultative sales professionals, selling solutions to real business problems and not just quarter-page ads or 300×250 pixel banners?