Dave Morgan of Tacoda provides a detailed overview in MediaPost of how newspapers are getting trounced by online classifieds. The most dramatic change is not merely that readers and advertisers prefer the online medium, but that newspapers have abdicated control over classified pricing to their new online competitors.
I've seen the effects of this kind of change firsthand, and seen how unprepared print media is to dealing with it. So it's good to hear someone articulating these points so well:
Is this the end of newspapers? Does this mean that as low-cost Internet competitors take hold in local markets, newspapers will be inevitably pushed into a Death Spiral? No, but it does mean that newspapers can't just play defense if they want to survive. It will not be enough to just try to "defend the fortress" of their classified businesses. They will need to get aggressive. They will need to focus on growth strategies, both online and offline.
(Thanks to Jeff Jarvis for the link.)