Doc Searls points out how newspapers continue to spiral down, and build on the downward motion themselves:

Our favorite section of the Boston Globe is no more. It was called Sidekick, and it featured local news and events in our corner of the metro: the one called Northwest. It had local restaurant reviews, club, theater, school and museum notices, plus other graces that made the paper especially relevant to our family. Well, now the paper has improved itself cosmetically while diminishing itself substantially. Sidekick is gone. In its place is G, a new magazine style section that covers the whole metro and includes a bunch of other stuff, such as TV listings and funnies in color, neither of which interest us.

I think he's right that hyper-local is the way to go, but the papers have a bigger problem - their costs are utterly out of whack, as the net continues to devastate advertising revenues. That leaves them in a double bind - raising the newstand/subscription price might lose people, and the kind of hyper-local reporting people might be interested in is a lot more expensive to do than the general regional and national stuff they can aggregate. That causes its own problems, as the aggregated content just isn't that interesting.

I'm not sure what the answer is for local papers, but I think they'll have to really hit bottom before they start figuring it out.

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