"Internet outsider" Henry Blodgett's analysis of the newspapers' long-term prospects Why Newspapers Are Screwed is (as you may have already intuited from his title) pretty superficial.
Using revenue and cost numbers from just the New York Times (why?) combined with some debatable assumptions, the analysis tries to show that in a digital-only future for the group online revenues would not be sufficient to cover the reduced, but still substantial, costs of content creation. By extension, apparently, all newspapers are screwed.
So, some basic counterpoints. First, the fundamental assumption - of the permanently low value of news content (and therefore news sites) - is that news content is almost valueless online. It has become a commodity because there is so much of it being produced by everyone from the NYT itself to local TV stations to Korean citizen journalists shovelling their profitable offline content online. Without scarcity there is no pricing power. So far so economically obvious, but work through his theory and of course we quite quickly come to a future in which this array of news content creators do not, in fact, create this vast glut of commodified, generic news because (says Henry) they have gone bankrupt. What prospects then for the handful of high-quality producers of journalism who survive to ring in this future? Far greater pricing power. More money. Perhaps online profitability for their far scarcer news content. Rupert Murdoch once famously predicted a future for the British press which contained only the Times, Sun and Mail (others have added the Guardian to the forecast roster). If most news publishers are to fall by the wayside, the market in which those remaining operate will be very different.
Second, a digital future without print costs does not necessarily mean one without print revenues. See early experiments in this field such as G24, TelegraphPM and others. Again, the value of such experiments (content, advertising space) only increase in the imaginary future where most or all print newspapers have ceased publishing. While it would not (with current publishing technologies) be viable to centrally print and distribute a mass medium such as a newspaper for only a handful of readers, the widespread availability of cheap home printers means that print readerships can go on being served by online news publishers for as long as there happens to be any demand at all.
Third, a point I will return to again and again, newspapers' core value is not their content but their validation. Sure it's expensive to create content. In the long run this probably doesn't really matter. There's plenty of content. The value that newspapers add to the picture is verifying which of it is true.
And finally, a challenge to one more of the assumptions. The whole piece takes as read that the future contains no newspaper print readers. This is an odd conclusion. Globally, newspaper readership is up. Regionally, newspaper readership is up everywhere except North America even without accounting for free metropolitan commuter papers. Add free metropolitan commuter papers to the mix and readership is up almost 5% year-on-year and almost 15% over five years. Sure, we all know that the WAN numbers have their own problems - but it is too facile to simply present as accepted fact the imminent demise of a medium that by one measure grew strongly over both the last one or five years and which in fact continues to find new ways to profitably reach new audiences.
Update: Steve Yelvington picks up some more flaws in the "newspapers are screwed" analysis, concluding "I am not arguing that newspapers aren't in trouble. But the problems are much more driven by a weakening ability to deliver an audience in any medium than by any inherent weakness of an online advertising model. At the end of the day it comes down to a simple question: Are your content and services relevant to consumers in your market?"