Ross Douthat has posted some great links and excerpts concerning the viability of newspapers in the age of the internet. In short, they need to focus more on the interesting rather than the important. The important has become a commodity, covered by the wire services and other reliable sources. The interesting, however, is usually proprietary and profitable. The interesting requires "deep reporting, strong narrative, distinct point of view, and sharp analysis, which even in the blogger era (or especially in the blogger era) is available only piecemeal."
How do newspaper editors know what readers find interesting? Easy: web traffic, and most e-mailed/viewed lists reveals all.
Mickey Kaus has been arguing this point for sometime now, especially with respect to the Los Angeles Times, which failed his Lindsay Lohan test earlier this year by burying a juicy story about her below the fold of section B.
One advantage to a newspaper adopting a more profitable mix of the high and the low-brow, focusing on the interesting, or amusing, is the potential to retain the traditional role as touchstone in diverse communities---communities that are currently susceptible to the potentially divisive allure of the Sunstein-ian Daily Me.