One problem is that local news doesn't scale. Nothing really replaces local reporters developing sources and attending a lot of boring selectman, zoning, etc. meetings. I live in a small town that had a "labor of love" local paper for a while but it went out of business and now there's effectively no local coverage.
The proximate reason it went out of business is b/c Craigslist took all it's classified income. That's why (in addition to Craig Newmark's professed interest in journalism) I think Craigslist is the perfect organization to be funding reportage.
It's not my money, so clearly knowing how best to use it comes easily to me.
