The larger quote: "We are seeing the vertical supply chain of newspapers being blown apart into horizontal focus areas. That's why the most interesting journalism start-ups are focused on one area, like politics, sports, or social change."
He posts in his /Message blog that the paper's attempts to erect a paywall will "simply precipitate a faster migration away from newspapers, online. It's the last gasp of a failing system."
He implies that the blur of non-local content in local papers will need to be unblurred. He isn't sure what will emerge, but has a novel description: "They may jettison a lot of what is taken for granted, as well as inventing something that will attract people's attention in this 21st century. It may be television bended with the web in some addictive way, like the Twitter mashups we are seeing on network news shows. But it won't come from newspapers fighting rear guard actions like paywalls."