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One interesting side point. In an interview the head of Marchex, with thousands of potential vertical sites was asked who is doing things right (in his opinion). He cited washingtonpost.com.
I can't cite all aspects of what the Post is doing but in one area they have developed very powerful local/regional vertical directories/information sites with opportunities for advertising which speaks to some of the points in the article you cited.
Great local sites (humble opinion here) have first class writers/editors on board, basically taking the best a newspaper ever had to offer and moving those qualities online.
Great local is not community generated media. In most cases CGM is far more noise than signal. Who has the time to filter all that noise? Filtering the noise is what great journalism offered: don't give me rumor or opinion based on opinion. Give me clear signals. Give me "the news". (I'm not talking Fox "news", but to each his own.)
Great local sites are skilled at new school journalism, which blends the best of old school (research, writing skills, ability to write an interesting - draw you in -story) with new school skills for online writing, including the ability to interact with anyone wishing to contribute comments to flesh out a story. The best "handling of the public" I've seen are editors and writers that manage to interact in such a way that "contributors" actually bring additional facts to the table - or flat panel monitor.
CGM has it's place in local sites and some do rather well with it and probably will continue to do so, at least until the marketing world slimes on down to the local level. That day is coming. Give it about 3 years and local CGM - where local reputations are going to be battlegrounds - will likely have the feel of a search for "buy cheap viagra online".
Great journalism and editorial control sets apart the best from the rest. Great journalist is not yet the product of software alone.
[edited by: Webwork at 3:26 pm (utc) on Aug. 15, 2007]