I've been reading Doc's take on various newspapers (especially the one closest to him, like today's post). Giving it some thought, I don't think net friendliness is the biggest problem that a lot of papers have. Sure, it's a big problem, but I think there's a bigger one: focus. Consider the blogosphere for a minute. How many bloggers are there that try to cover the entire playing field (sports, national news, local news, etc, etc)?
Not many.
I think the future for successful local newspapers will be in understanding that. It's not that they need to emulate blogs, it's that they need to emulate the focus. How many papers focus on current events in a locale? Other than the free local paper that gets tossed once a week, not many (and if yours is like the one that arrives here, it doesn't do a great job either). That's where I think local media needs to go - more local. Why even try to cover the same ground as the national dailies?