Here's a place that offers some hard data on newspaper readership: The Readership Institute at Northwestern University. Here's a jargon-laden descripion: "It focuses on actionable research, field-testing of readership-building ideas and measurement of their success."
Here's a link to their latest report. (Attention student bloggers: Stay within fair use copyright rules by posting links and sources and not entire stories.)
News flash: Readers have NOT left the building
The 2008 RI tracking study of newspaper and online readership in 100 U.S communities of various sizes has some good news and bad news.
Readership of the local daily newspaper among the general population is down a little from the last reading in 2006, but that result may be due to seasonal variation.
Readership among 18-24-year-olds in the general population continues to slowly decline; but the habit is fairly stable for 45-plus.
More here - http://www.readership.org/blog2/2008/07/news-flash-readers-have-not-left.html
We will talk in the fall about how shrinking newspapers are changing journalism.