Incidentally, I blame the newspapers themselves for that. They could have been Craigslist, but instead they were too slow to adapt and got squashed by a better product.
If every newspaper in America would have gone to a free + paid model they could have saved at least half of their revenue and craigslist would still only be in 7 cities. But they wouldn't embrace change a lost big.
Meanwhile, what content they do offer is increasingly from the AP or some other, larger paper, such as the L.A. Times.
On some occasions they do offer good, interesting local reports, but their current plan of routinely raising the subscription price while reducing content seems poorly thought-out.
There are several groups trying to kill small papers (like patch.com). And they will succeed if newspapers do not rise to the challenge. Technology is becoming cheap and accessible enough that makes this scenario possible. But the difference between patch and a local paper is that Patch doesn't really care about the markets they server--if they stop making a enough revenue they could pull out and leave after they've killed the small paper serving that market.
Then AOL will have a leadership changeover or will get bored of it not really making much money and shut it down creating a void in many communities.