Can newspapers be saved?

clay shirky reporting:
The ‘analog dollars to digital dimes’ problem doesn’t actually seem to be a problem. It seems to be a feature of reality. Digital revenue per head is not replacing lost print revenue and, barring some astonishment in the advertising market, it never will. There is no supply-side scarcity to boost margins; power over aggregation has moved from producer to consumer; advertisers prefer selling cameras and shoes on purpose-built sites; readers feel the same about finding jobs and dates; and there are few commercial or geographic restraints on competition. The market values analog readers more highly than digital ones because the market is right.
Seeing this, several people have started looking for ways to exit that market. One of the most widely circulated of these ideas is David Swenson and Michael Schmidt’s proposal that newspapers be subsidized the way colleges or foundations are.* Steve Coll followed this with a suggestion that commercial papers be allowed to reinvent themselves as non-profits.*
The intuition common to such proposals is that advertising revenues can no longer be relied on to fund serious reporting. (Gadget reviews and celebrity coverage, yes, but not the police beat.) Evidence entered for this thesis includes the decline in print’s commercial fortunes*, the attendant downsizing of newsrooms—already 30% smaller, on average, than a decade ago*—and the outright collapse of papers like the Rocky Mountain News, Albuquerque Post, and Cincinnati Post.*
...

Buy a newspaper. Cut it up. Throw away the ads. Sort the remaining stories into piles. Now, describe the editorial logic holding those piles together.
If you’ve picked a general interest paper, this will be hard. I recently learned, from a single day’s paper, that a bombing in Kirkuk killed 27, that Penelope Cruz has only good memories of filming Pirates of the Caribbean while pregnant, that many U.S. business hotels are switching to ‘shower-only’ bathrooms, and that 30-year fixed mortgages fell from 4.63% to 4.61% the week before.........
http://www.shirky.com/weblog/2011/07/we-need-the-new-news-environment-to-be-chaotic/