Unfortunately, advertisers don't want to pay for targeted ads because they simply don't produce traffic and sales results, so the papers are losing money. They can either find an entirely new revenue stream (a trick they have all failed at thus far) or return to their old model. Just put teasers on line and only offer the full content in the hard copy. Your local audience will hopefully come back in sufficient numbers that you can regain revenue from increasing subscription base. If that doesn't work, you are basically out of luck. They have already tried offering pay only content on line. It doesn't work. Internet consumers are simply not accustomed to paying for online content and nothing is convincing them to do so in droves. (with the constant and obvious exception of the pornography industry which still thrives.)

Unfortunately, the TV networks will probably keep offering their content online as well as on air, as their revenue model is entirely different than newspapers and magazines. This is good news for bloggers and such, who should still be able to poach actual journalism to put to our own use, but it lowers the incentive for readers to come back to the fold. It may indeed be nearing the end of the dead tree press except a few specialized outfits which are already pay only, such as the Wall St. Journal and the Economist. Sad to see, but it's not looking good at this point. Even the NY Times may go down by next year from what I hear.