Lucas Grindley blogs about how citizen-driven, niche microlocal sites are a threat to newspaper franchises:

Letting a geographic niche site grow under your feet is what the Innovator’s Dilemma warned against. An effective low-end competitor pushes the original business to focus on the high-end market. For newspapers, that means focusing on large advertisers and rich readers. Inevitably, the formerly low-end competitor makes headway into the high-end market. And the original business slowly loses all market share. Read the book. This exact plot has unfolded many times, in many industries.

I would add, it’s not just local news blogs and blog-like sites that can slowly slice away bits of audience from newspapers, but blogs covering other topics beyond its own geographic borders. Don’t buy the myth that blogs are just mindless rants of people with too much time to parse the latest political controversy. There are blogs about food, gardening, law, entertainment, and on and on, that are written by smart, informed experts. More and more bloggers are finding interesting and relevant revenue streams, but a blogger need not be in the money to steal your audience. And an expert blogger doesn’t need your content as a cruch, either.

It’s rarely just the one cut that kills you.

Here’s more on hyperlocal news sites from NYT.