*UPDATE: It struck me in reading these numbers that the idea of the physical newspaper as a secondary source of news is solidifying among readers. I'm sure higher gas prices helped chase off those who subscribe out of mere habit. But given the fact that circulation dropped at major dailies amidst a fascinating presidential campaign and as the economy was just beginning, we're seeing more and more people rely on the Internet for news.
Most news junkies graze among the news sites throughout the day. Those who continue to subscribe to a newspaper either pour over it in the morning before heading to work (ritual) or find in it things that they can't find during the day - in-depth features, crosswords, comics, business stories and editorial/opinion pages, etc. Or, they may turn the paper later in the day when they have time to read through longer articles.
None of this is evidence that newspapers should be cutting back on editorial staff, although I'm sure it will be taken that way.
**UPDATE II: What Ken Doctor at Content Bridges has to say about it:
One big reason the numbers are declining is the product itself. In the last year, we've seen unprecedented cuts in the product -- and the customers are noticing. It looks like the amount of newsprint is down about 10-15%; some in stories, some in ads. Trusted bylines have disappeared overnight. Readers notice, and talk to their friends, and they're saying: it's not the newspaper it used to be. When the subscription notices come, they're a little less likely to be acted upon.