Yellow Pages heal yourself!
Quite dire that. While I'm a huge fan of 'Web 2.0' (even I'm getting tired of calling it that), I'm not in complete agreement with the aforementioned panel. Offline classifieds are doing step 1 fairly quickly - going online. Take www.Superpages.com as an example. Owned by Verizon, Superpages is ranked 329 by Alexa. From that lofty position, Superpages (and other classified models) have a clear opportunity to enable a lot of things which make Yelp (4,851 but growing quickly), JudysBook (6,841) and InsiderPages (10,085) increasingly popular - namely user-generated local content that is shareable - which in turn promotes viral growth. While Google is a great tool for data discovery, it does a far worse job in helping decipher, filter and screen that content, or building a community to generate user reviews (i.e. I'm not going to go to Google to find a great contractor).
The other thing to remember is that often these old-school classified players have large salesforces to reach all those small businesses out there. If those teams could be used to not only capture sales, but capture more relevant, catalog-friendly data on those businesses, this could help drive better search results... (i.e. give me an auto-repair shop that fixes interiors vs tire repair)
While the shift from Web 1.0 (base classifieds) to Web 2.0 (classifieds enriched via user-content) is a difficult pill, it's not impossible. And its far from a death sentence so long as the cure is applied...