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We have a free commuter newspaper here in paper---so if internet 'news' became a paywall, I could just get it for free in print. They pay for the paper based on advertising dollars. With nearly every subway commuter picking up a copy, it's a pretty good market.
I am not averse to paying for more in-depth, magazine-type packages. But for just general 'news' like who won which Olympic medals or local event-type stories, I really can't see any incentive to pay when I can get it for free, and not just on-line.
I think this is the same mistake the book publishers are making---they are concentrating so hard on the one option (i.e. the ebook) that they are failing to take into account other options the customer has---the free commuter paper, in this case (I know the people who do ours have similar papers in other cities) or for books, the mass-market paperback, the used bookstore etc.
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