Well, the newspaper has been in trouble for a lot longer than the internet has been mainstream. There was a huge wave of consolidation in the 70s and 80s, remember. Also remember that most newspaper revenue used to come from classifieds. More importantly, most of the readers came for things other than hard news: sports, stock tickers, astrology, comics, etc.
It real sucks to say this so bluntly, as my wife and many friends are journalists, but "real" journalism is, and always has been, a kind of prestige side-show -- like Honda's racing team or Microsoft Research.
I was not aware that classified ads used to be the main source of revenue. I thought that most of the 20th century, paid advertising (the kind with graphics) was the main source. I'm curious. Do you know something I could read to find out more about this?
Regardless, as you say, the solid news was never the main draw. It looks like journalism has been using a weird, indirect revenue model since long before the "new economy".
It real sucks to say this so bluntly, as my wife and many friends are journalists, but "real" journalism is, and always has been, a kind of prestige side-show -- like Honda's racing team or Microsoft Research.