A "newspaper" that stops doing journalism and just reprints AP/Reuters articles and blog posts has already died. Whether they actually go out of business or continue on as a zombie is irrelevant since they have stopped producing journalism in either case.
To reiterate my earlier comment, I am not arguing in favor of this strange California law. And I agree with you that reader-supported journalism (and other media) is the best approach, and I subscribe and donate to several organizations I feel do good work in this area.
I'm solely responding to the earlier comment that the "media are dying. This is normal free market that is working well" to point out that we should not be so sanguine about the death of media like journalism. I am skeptical that democracy and free markets can survive without it.