I think you're mistaken there. If the model worked, then thousands of newspapers wouldn't have closed, downsized, or worse. We'd be back in the 80's when cities like Cincinnati and Chicago had FOUR real daily newspapers, and just about every single radio station had its own news department.
What happened is that the internet ad companies convinced newspapers that an ad that used to cost $1,000 for 1,000 people to see in print should only cost 10¢ for 1,000 people to view online.
What happened is that now advertisers can measure the impact of their ads and realize they just wasted $1000. If advertising was worth $1k, ad companies would still charge it. The people getting screwed in the old system were the advertisers.
The world only sustained thousands of newspapers because physical delivery made them inherently local. The internet made the market for news national, if not global. Consolidation is natural.
Personally I can't stand all attention grabbing moving things so have been using all sorts of adblockers since they first showed up. Before then I played around with custom css in netscape and blocking in the hosts file, running a local webserver for faster blocking instead of blackholing stuff. uBlock is so much easier to use :-)
I think it's a little bit of both. Internet commoditized newspapers and unbundled them, allowing us to peruse individual articles without the regard for whole. But you're right that instead of figuring out a proper way to deal with this, papers just got convinced by adtech companies and doubled-down on ads on-line.
(Then again, were they wrong? The model works. Much like for a factory that dumps all its toxic waste into the nearby river, the model works. Doesn't mean it deserves to, and that it will work forever.)