According to this article in the NY Times, Google is set to begin digitizing back issues of newspapers to add to its Google News Archives Search feature. "Google said it was working with more than 100 newspapers and with partners like Heritage Microfilm and ProQuest, which aggregate historical newspaper archives in microfilm. It has already scanned millions of articles," according to the Times. Google will handle the digitization for free and Google advertisements will appear alongside the search results.
It is not clear if the digitized articles will be available for free. Currently Google News Archives Search includes both free and pay-to-view articles. A quote from the editor of the Quebec Chronicle-Telegraph--“We hope that will be a financial windfall for us.”--seems to indicate that the articles may not be free.
Frankly I was not even aware of Google News Archives Search until I spotted this article, though apparently it has been around for two years. There is not that much there yet--it indexes the New York Times archives, but those articles are already available from the newspaper website for free. And the Google News Archives Search links to the Times articles don't work--du'oh! Other links lead to paid archives at newspaper websites or to commercial services such as NewspaperArchive.com. In fact a search for "Spokane" limited to newspapers before 1880 turns up only New York Times and NewspaperArchive.com articles.
Google News Archives Search could eventually expand into something useful. It would be nice to go to one place to search across different digital newspaper collections, even if many of those searches led to walled subscription sites. You could still order microfilm of a newspaper once you identified it via Google News Archives Search, or go to a research library that held subscriptions to the digital database. Or even, God forbid, pay for the article you need!
But so far Google News Archives Search does not even access many existing digital newspaper sites. The Brooklyn Daily Eagle and the Chronicling America sites for example do not seem to be included. Google News Archives Search is a very beta project so far.