Clay Shirky explains why we need the news environment to be chaotic.
On the difference, or lack thereof, between the new and ad biz (emphasis added):

So long as newspapers faced little competition for advertisers or readers, this was a distinction without a difference, but as papers are being sundered by the internet, we can see how tangled the system always was. Outside a relative handful of financial publications, there is no such thing as the news business. There is only the advertising business. The remarkable thing about the newspapers’ piece of that business isn’t that they could reliably generate profits without accomplishing much in the way of innovation–that could just as easily describe the local car dealership. The remarkable thing is that over the last couple of generations, those profits supported the fractional bit of those enterprises that covered the news.

On how the news got to be bundled the way it is:

The rationale for creating such a bundle went something like this: “We will print enough content to fill the hole left after we’ve sold the advertising space. We will include content proportional to the amount and intensity of reader interest, modified somewhat by editorial judgment. Overall, the value of the bundle will be more than the sum of its parts.”

And a fun experiment to do with an oldy timey printed news paper:

Buy a newspaper. Cut it up. Throw away the ads. Sort the remaining stories into piles. Now, describe the editorial logic holding those piles together.