As newspapers continue to struggle, I maintain the belief the solution is more a need to revamp the broken business model than going after the search engines that try to link to them. After all, the search engine is merely linking to news articles that many people might not discover otherwise.
Then you have arguments such as this going back and forth, as to how newspapers should go forward. Frankly, I find the whole thing being made into something much more complex than it needs to be. The solution is an obvious one.
To state my case again, clearly it will comes down to a usable sponsorship/advertising model to keep the newspapers afloat. Because if they think people are going to pay for the local paper, but online, I think that the newspapers are going to be sadly mistaken.