I'm glad to see the NY Times is able to make some good revenue off their site, but this probably only works for the larger papers.
Large influential papers like the NY Times and Wall St. Journal have a certain level of clout and original content that people are willing to pay for. It's highly unlikely that your local newspaper is going to make any reasonable amount of money off of creating a paywall. Most local papers feature largely wire stories you can find online from thousands of other papers. More circumstantial -- but it's also been my observation that the "younger generations" increasingly don't care about local interest stories or Prep Sports that may be in the local papers -- which is usually the only original content they offer.
So in the long run, I can see this saving a handful of the largest national papers, but I feel most local papers will be in even more trouble in the future.