Reflections of a Newsosaur has given us an outline to the current three approaches to "saving" the newspaper business. Advance's approach is one of the three. There are a couple links included in the Advance part of the story you may want to follow.
One of the links is to a June 3 NY Times story that has some interesting reflections about the success, or lack of success, of AnnArbor.com. Advance protects its business information so some of the speculations is just that. However the loss of 20,000 newspaper subscribers in just three years is hard to hide.