Local news organisations contracted earlier and further than national ones. The cause was a specific collapse in their business model rather than a general decline in reading.
Classified advertising was the foundation
Local papers derived a large share of revenue from small advertisements for jobs, property, vehicles and personal notices, which cost little to produce and sold reliably.
That revenue existed because the paper was the only practical way to reach buyers in a defined area, giving it a monopoly on local classified listings.
Dedicated online marketplaces removed that monopoly quickly, offering better search, wider reach and lower prices, and the revenue did not migrate to the paper's own website.
Geographic exclusivity disappeared
A local paper's other advantage was that readers in its area had no alternative source for national news, which the paper supplied alongside local coverage.
Once national outlets became directly accessible everywhere, that bundled function lost its value, and readers kept the national source rather than the local one.
What remained uniquely local — council meetings, courts, schools, local business — was exactly the material that was expensive to produce and had the smallest audience.
Display advertising followed the audience
Advertisers who once bought space to reach a geographic market gained the ability to target by interest and behaviour across every site a person visits.
Geography became one targeting option among many rather than the only mechanism available, which removed the basis for the local premium.
Cuts fell where scrutiny was heaviest
Reducing staff means dropping beats, and the first to go are usually those requiring sustained attendance for occasional stories, such as courts and municipal government.
Studies of places that lost their paper have documented measurable effects, including reduced competition for local office and higher municipal borrowing costs.
Those effects appear years later and are difficult to attribute at the time, which is why the losses accumulated with little public reaction.
Replacement models are partial
Nonprofit newsrooms, public funding, subscriptions and philanthropic support have each rebuilt some capacity, generally in larger cities where donors and subscribers are concentrated.
Smaller communities are harder to serve under any of these models, because the fixed cost of a reporter does not fall with the size of the audience.
The structural problem is that accountability reporting benefits everyone in a place while being paid for by the few who subscribe, which no business model resolves neatly.