Well, it's better than per-click micropayments. I think most people are willing to pay a set amount for news as a sort of utility as long as it goes to the outlets they choose and they don't have to evaluate the payment with each click.
From the newspaper's standpoint, they become mendicants, or worse... PBS or NPR. I don't think that will sit well with many in the industry, but faced with an inefficient, obsolete business model and eventual bankruptcy, the NPR-ization of all media just might be their only option.