One of the big differences between small business and large business is the number of hats you wear as an employee. At a newspaper, you have reporters, photographers, developer (usually just one??), editors, illustrators…the list goes on.
They all have specializations, and they all cost money. A full salary. Benefits.
Neighborhood blogs have newspapers shaking in their shoes not because those blogs are real editorial powerhouses, or because they have the resources to compete on citywide coverage, but because they can do so much more with so much less.
I’m about to move to Eastlake, where former P-I staffer Curt Milton runs the Eastlake Ave blog. He keeps a part time job, makes tons of local connections, writes his posts, edits them, and shoots and edits and uploads video and pictures.
One person.
How can you compete with that?
Eat Sleep Publish is a Seattle-based blog that explores the difficulties and opportunities currently facing the publishing industry. 
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I think another factor in the popularity of local blogs over local papers is their underdog appeal. A basement-based blogging site gives the reader the impression that the publisher is ‘one of them.’ Reporters and other newspaper employees don’t have that same everyman appeal. One area where blogging falls short? Copy editing.
An area you have been overlooking: Some ISP’s are actively encouraging “local” news by giving “local” non-journalist reporters the opportunity to report local news at no cost on the ISP “Home Page.”
Ten Mile – no way! Where do you see this happening?
And he makes no money doing this. But it’s lots of fun!