This is actually a heavily underreported problem:
The San Francisco Weekly has an article about Craigslist's devastating effect on the Bay City's newspapers.
"The Chronicle and its competitors lose more than $50 million per year because of job ads that have migrated to Craigslist."
Ouch.
"The San Jose Mercury News alone misses out on $12 million annually in employment ad revenue."
Less money means less reporters, which means worse news coverage, which leads to fewer readers, which...well, you get the picture, in all its downward spiral-ness.
Not a whole lot to be done, creative destruction and new funding sources and all that, but Craigslist has been murdering the AltWeeklies and the new Google classifieds might help finish off their bigger, more mainstream cousins. Meanwhile, I've seen nothing suggesting the emergence of a viable counter-model for reporting and and distributing the news. There's been plenty of work and progress done on collection and aggregation of existing resources, but nothing that can replace the base producers.
