The current generation of newspapers is carrying an infrastructure designed to deal with distribution issues from 100 years ago. We have literally hundreds of newspapers in the U.S., with dozens that are considered "newspapers of record" or major players. In an age when information is instant, and you don't have to wait for dead trees to get delivered to your doorstep to get it, there's just too many news sources.
Does anyone else think it odd that the white house press room is filled with reporters? 3 or 4 reporters could do the same job as the 20 or 30 that pack that news room. I also find it funny that most of the major newspapers carry substantially the same stories. It's all very redundant, because it's designed to be distributed locally in an age when that delivery process took an entire day, and delivering over longer distances was not feasible for a daily paper.
The major newspapers will mostly die or consolidate. Technology has made redundant having a major newspaper with all its attendant printing machinery, reporters, staff, etc. in every major city. Certainly there will be a market for a few major newspapers, but not the sheer number we have today.
I don't think it's the end of the world scenario that people are painting it to be, either. We'll still have multiple sources of info (I suspect the NY Times and Wall Street journal for instance will survive, along with a multitude of local news outlets and other media outlets like cable news networks and bloggers), there just won't be the increadible multiplicity we have today.