Since the internet took off, the print media’s advertising-supported business model has floundered. In the past 20 years newspapers’ ad revenues in America have fallen by about 80% (to Depression-era levels), while circulation has roughly fallen by half. Though online traffic has surged, revenue from digital advertising has failed to offset the profit draining out of print. Platforms such as Google and Facebook have become the new moguls of the media landscape. In Britain, for instance, Google accounts for more than 90% of search-advertising revenues and Facebook for half the value of all display ads, says the Competition and Markets Authority (cma), a regulator. In the past two years they have between them disgorged 40% of online traffic going to national papers. The cma warned in July that ad-fuelled online platforms could hasten the decline of reliable news media.

From https://www.economist.com/business/2020/10/17/should-big-tech-save-newspapers

But Google is “coming to the rescue”:

Mindful of the hue and cry, Google is offering a handout. This month it pledged $1bn over three years to newspapers to curate news content for its site. Some publishers saw it as a precedent—and a tacit admission that Google should pay for news. Even News Corp, a media behemoth controlled by Rupert Murdoch, which has led the crusade against the tech giants, welcomed the move. Last year Facebook agreed to pay News Corp a licensing fee for displaying some articles in its news tab.

Question is… whom are they really rescuing? Newspapers, or their own company, from anti-trust proceedings of democratic governments?

If anything, the gratitude for big tech’s largesse shows how desperate newspapers are for payment of any kind. Yet set against revenues of $162bn last year at Google’s parent, Alphabet, $1bn is a pittance. More to the point, it will not change the underlying economics of the global newspaper industry, which had about $140bn of revenues last year. That is because the ad-funded business model was living on fumes even before the internet ate the world this century. 

Desperate is the word.

(emphasis mine)

The real failure is that papers have lost control of distribution to Google and Facebook, making it harder to monetise the traffic.

I fully agree.

This is a mistake some content industries, such as video-streaming and music, have avoided. 

I totally disagree. Since I subscribed to Apple Music, I didn’t buy a single song – whether CD or Digital. The payout of Spotify and Apple Music to the music companies and to the artists is minimal. This danger is still looming over newspapers, and there will be temptation to sell via “all you can eat” platforms and get only cents for a couple of articles, instead of reliable subscriptions directly with the reader.
I believe the solution are paid subscriptions, directly with the reader. I cannot see any other way. Advertising directly sold to the customers (without Google) could slowly become a second support leg, if we are lucky (and if publishers start understanding this – a few already do). For some countries that still heavily depend on print advertising, this will be even more critical. 

Moreover, some of the advertising dollars made by big tech came from bringing new firms, particularly microbusinesses, into the market, rather than poaching online advertisers from newspapers.

I disagree. Advertising is lost to newspapers, because it is cheaper and more effective to do it via Google (Google having all the private data profiles of billions of people), and Google can distribute it over the whole surface of the WWW – which is, by nature, much more space than the original “scarce” space in newspapers.
My opinion:
Newspapers need to save themselves, yes, absolutely. But they can only do it with the help of their readers. That means, they must build on the trust they have with them – instead of damaging it by inserting trackers into their sites. They must offer high-quality reliable content, and convince (or strengthen) the opinion that this is worth paying for. 
On the other hand, they must seriously fight Google and Facebook – who are their biggest adversaries, who took away already most of the advertising, not least based on the knowledge that they gained on the readers by the trackers inserted by the newspaper publishers themselves. Publishers put, so to speak, the Trojan horses into their own products, in a move that still seems naive to me. (Nowadays, it probably doesn’t matter anymore, as Google already has the personal profiles – but it is still harming the trust of readers into the publishers.)