During the years 1870 to 1900, daily newspapers quadrupled in number from 489 to 1,967. Circulation (aggregated) rose from 2.6 million to 15 million copies. Weeklies grew from approximately 4,000 to 12,000 in number, mostly in rural areas.
The US population doubled during that period. The enormous growth of publications signaled something else going on: as Arthur Schlesinger, Sr. called it “the rise of the city”. And that condition was accelerated principally due to mechanization, industrialism and a greatly expanded communications network that included:
Widespread use of electricity fueling industry and light bulbs (helps in the convenience to read).
Invention of the telephone by Bell (reached one phone per 100 households by 1900) and intercity lines covered the country.
Western Union quadrupled its telegraph lines between 1880 and 1900.
Railroads expanded its miles of track from 93,000 to 193,000 miles.
And probably most important for publications, the federal postal service’s expansion of services combined with the Postal Act of 1885 (provided a 1-cent-a-pound rate for newspapers and magazines) paved the way for low-cost delivery of publications.
Introduction of the typewriter and adding machine facilitated the faster pace needed to handle the complexity of correspondence and record keeping.
The socio-economic life of the US greatly changed and thus brought incredible growth and opportunity for journalism, which was seized by the publishing world.
As an example, Pulitzer’s New York enterprise (NY World in the mid-1890’s) showed a $10 million valuation and $1 million net profit. Translated into 2005 dollars as a percent of GDP, that’s $8.2 billion and considering that the World was just operating in the NY market, it makes Google look like retail shoe store. As the winds of change would have it, even from that lofty perch the World was defunct by the 1930’s.
Newspaper and magazine share of market for ad dollars decreased by nearly 36% (from 1935 to 1980) after the introduction of radio and television. The fact that newspapers remained strong profit centers reflected the rapid growth in advertising expenditures that outstripped their loss of market share.
Newspapers have been profit harvesting for the past thirty years. That practice is over and the plight of the Inquirer and Daily News is emblematic of that.
Socio-economic change similar in scope to the latter part of the 19th century is upon us again. Print publishing is, after all, a manufacturing enterprise and prospered during the industrial evolution as a result. Anyone foolish enough to buy a newspaper today with the notion that the profit harvesting will continue or that you can tweak the product to meet the socio-economic challenges of this period will suffer great disappointment.
The market share for printed products in their current form will diminish greatly over the next decade. Again, technology merely facilitates and influences the socio-economic trends and is not the cause. Newspapers have lost touch with their readers and failed to represent the context of a complex society within which news reporting must operate. Journalists can restore it insofar as they relinquish their bias for the format and embrace the call of society for context and meaning and deliver it in the ways available to them.

Since paid circulation is just a small percentage of a newspaper’s revenue, I’d say it’s more than “defending a paid model” that is causing the ship to sink.
It’s more about defending a controlled distribution model, when it’s obvious that distribution of information is now free for anyone to pursue, like yourself.

Once you realize you can be disintermediated, it becomes clear that the old advertising model doesn’t work as well as it used to, so you find you must provide and extract value in another way.

Which is what you do. You leverage your relationships in order both give and get value.

So advertising now looks a lot more like a gesture exchange than an interruption.

Just ask our friend Steve. ; )

P.S. The only way newspapers will win is to move from the big advertising one to many relationship, to the small attention one to one relationship.
They don’t need to turn the ship, they need a fleet of smaller boats.

Usually I get The Times, even if I do prefer The Guardian, becasue the Time’s tabloid format is far more commuter-friendly than the Guardian’s “French” format. These things matter.

More and more I’m just picking up the free papers- Metro etc- than paying money for The Times. I can get rich, informed news and commentary online…. more and more I realise the point of reading a newspaper on the train is just to make the journey less unpleasant.

As someone who makes a good of his living via the distribution of free content, I have no sympathy for people who are having their life sucked out of them from defending their paid models.

What Associated Newspapers have done in London isn’t quite what you describe, but one might argue that launching a free paper (Metro) in a city where you operate the only paid for title (Evening Standard), then launching a free version of that paid-for title (Standard Lite), then turning that free version into a stand-alone free paper (London Lite) is pretty close in terms of cajones…