Little Newspapers Doing Well
I do a lot of historical research through online newspaper repositories and sitting at the microfilm viewer, and the meat-and-potatoes of a newspaper in 1920 consisted of a front-page of national news and major local news, a page of just local news, a page of local 'interest' (who was visiting where, how the church social went), a page of recpies and dress patterns for the women of the house, a page of editorials and financial markets, a page of sports, and a page of classifieds. Eight pages, consistently and uniformly produced for decades on small presses for only a few hundred or a few thousand subscribers. Those same methods of news publishing are, apparently, still effective in today's 24-hour news cycle.
So, while those large newspapers have struggled to maintain their hold on news that's available through free sources on the internet, local newspapers are paying their bills by reporting on the stuff not provided by Yahoo! News: the things happening at city council meetings, in the school auditoriums, and in neighbor's back yards. I do suspect, however, that if you added up the budgets of the thousands of successful newsweeklies, they wouldn't even approach that of USA Today, but if they can pay for paper and reporters and keep the lights on, they're going to be the way communities get local news for quite a while.