Public relations firms and computer companies will pay journalism students more. But if we don't adjust our pay scale, they will end up working for someone else, and quality journalists will look elsewhere. Newspapers are not competing with just other newspapers, but competing with corporations, magazines and so on. I am glad Bill Gates wants to compete on-line. The car industry was not competitive until Japan and Germany came in and forced us to make better cars.
Competition is good from a consumer perspective.
The real issue is that competition is tricky. Microsoft is forcing dailies to try harder, though. Microsoft now wants to tap into classifieds, but they should invest in journalists. We need more journalists looking into local government trends in society and their effect on the future. I did better when I had to compete than when I wasn't competitive.