You must Read The Whole Thing, but here is a taste:
Revolutions create a curious inversion of perception. In ordinary times, people who do no more than describe the world around them are seen as pragmatists, while those who imagine fabulous alternative futures are viewed as radicals. The last couple of decades haven’t been ordinary, however. Inside the papers, the pragmatists were the ones simply looking out the window and noticing that the real world was increasingly resembling the unthinkable scenario. These people were treated as if they were barking mad. Meanwhile the people spinning visions of popular walled gardens and enthusiastic micropayment adoption, visions unsupported by reality, were regarded not as charlatans but saviors.
When reality is labeled unthinkable, it creates a kind of sickness in an industry. Leadership becomes faith-based, while employees who have the temerity to suggest that what seems to be happening is in fact happening are herded into Innovation Departments, where they can be ignored en masse. This shunting aside of the realists in favor of the fabulists has different effects on different industries at different times. One of the effects on the newspapers is that many of their most passionate defenders are unable, even now, to plan for a world in which the industry they knew is visibly going away.
(Some of these sentences strike me as being more widely applicable than upheavals in industry.)
If newspapers were truly serving a critical social function (keeping the powerful honest by shining light into dark corners of the body politic, etc.) in the 20th century, then it was always somewhat weird that this function was invariably impossible without adverts for department stores and used car salesmen and lonely people looking to get dates with strangers. Perhaps our current configuration of information production is also strange: Google, Yahoo, et al. appear to serve a different critical function in the information economy, and they're also supported by adverts (the equivalence isn't exact; but I won't get into the differences here). Even so, it's really deeply weird that people supposed that the old weird arrangement would last forever — that no possible technological innovation or economic reconfiguration would upset this duct-taped applecart.
I mean, if you explained this to aliens, they would laugh at you. "Ha ha! Your species' highest form of social organization, the 'hybrid capitalist/socialist democracy', cannot function correctly unless local distributors of colored fabric find it economically necessary to piggyback solicitations on the physical distribution network of their local information discovery node!"
As Shirky points out, there's nothing particularly natural about the way things used to be. And the people who will save journalism aren't the ones complaining about technological innovation; they're the ones who are building something new.
Incidentally, lately I'm tempted to get a Kindle and buy some periodical subscriptions. I've realized that the obstreperous physicality of codexes and broadsheets really does affect my reading habits these days. S. B. Johnson has already observed that the Kindle's much better for reading while eating than a codex. And, of course, holding a codex or broadsheet one-handed on a crowded Muni bus, and then turning the page, is a pain in the ass. Meanwhile, although my HTC Dream has a capable web browser that's fine for most RSS and blog reading, it's not the greatest device for reading long stretches of text. Now, all these obstacles can be overcome, but the overall effect of these physical annoyances is to reduce the amount of time I spend reading long-form text or text printed on paper, and increase the amount of time I spend reading short-form text available electronically. But I already read so much short-form electronic text that it would probably be better to shift my habits in the other direction.
On the other hand, for reasons I have difficulty completely articulating, I would feel like a huge tool holding a Kindle on Muni every morning. So there's that to consider.
p.s. Johnson also had a piece yesterday on roughly the same topic as the Shirky essay linked above.