Back to the Future for Newspapers?

I remain interested in my former business ... not by actually reading newspapers printed on newsprint (ick), but by looking at them online, and in the boxes next to my bus stop. And by following the stories of the industry's contraction -- but not, I believe, demise. And big-time newspaper smartie Norman Pearlstine agrees, according to the Silicon Valley Insider:

Speaking to an audience of media execs at the Argyle Executive Forum, Pearlstine said he he believes the news business is going back to the end of the 19th century,
when a city like Chicago had 28 local papers, all small and privately owned.
Pearlstine doesn't believe the newspaper business model will support the kind of long-form, investigative journalism that many of the top reporters and editors have spent their careers pursuing.Case in point: The Washington Post's recent 17,000-word, four-part series on IED's in Iraq. Great story, Norm said, but probably better positioned as a book, or a premium download for Amazon's (AMZN) Kindle. "There might be 50,000 people in the world who want to read that story, but not the ones advertisers want to reach," he said.

Ouch. It's hard to take comfort in a scaled-down, scrappy future when you're in the middle of it all. I feel for my friends trying to carry on, knowing that their future probably looks like this:

A newspaper in Madison, Wisconsin, just took the step that many newspapers will
be forced to take over the next decade, many sooner rather than later: It shut
down its print business, fired a third of its staff, and restructured its
business to focus exclusively online.

Said newspaper is The Capital Times: http://www.madison.com/tct/ Pretty cool site, actually.