Neat concept, but I'm betting it fails based on content.
Free national and international news is out there all over the place. Honestly, it's kind of an insult to call this a newspaper because it's so not. It's a magazine. I work for a newspaper, and we wouldn't waste the front page with one photo.
Content will also be "updated, though not as often as a website." So you're asking people to pay more for the same information updated less often? I just don't get this.
Now the framework seems very usable. But to replace newspapers, LOCAL CONTENT will be needed. This seems to be quite the opposite and will die fast and heavy unless changes are made.
Then you get into whether what Rupert Murdoch's companies mine is really news. Forget about Fox News for a moment. Do you think "high-quality journalism" when you think about the New York Post or any of his overseas daily newspapers? Um, no. Unless he changes that model in NewsCorp., you can forget about it even more.