If lies are free than the truth has to be to. In moderate-sized cities there is not enough news to justify a daily paper but weeklies and web-based papers have better economics and fill the gap ne can be financed with advertising.

Many people don’t have money. Moreover, many people are careful what they spend money on, because there are many seemingly-useful services; while a news subscription doesn’t cost much, if they spent money on everything that seemed as useful, it would be a lot.

Presumably many people want others to be informed (and want local news to exist in general), some of whom do have money. Maybe the news could introduce a way for those people to pay extra, where the extra proportionally lowers the price for everyone else. If enough people pay enough extra, the baseline price would $0, then the news would be freely available online and maybe distributed in paper. Also make it a trend to post gift codes to social media for people who are desperate or thrifty.