The conventional wisdom is that online is killing print. So why would a new startup want to create a printed newspaper based on entirely on Web content?

Ask Joshua Karp, the founder of The Printed Blog, which launched this week in Chicago and San Francisco. His paper is taking content from about 300 blogs, wrapping local ads around them, and distributing a printed version free.

The paper is starting with a weekly edition but Karp has hopes to go to twice a day eventually with super hyper-local editions customized by as tight as individual neighborhoods. Karp suggests that a city the size of Chicago could have 50 separate editions.

In addition to imported blogs, users can submit their own photos and comments, all of which will appear in the print version.

The Printed Blog will be printed on 11 x 17 inch white paper and will be laid out like a blog instead of in traditional newspaper columns.

The venture has gotten a lot of ink (a write up in The New York Times, a feature on WNYC’s On the Media radio program) for a venture started on a $15,000 personal investment that receives free office space from the Illinois Technology Association. Oh yes, all the employees so far are volunteers. Karp hopes to raise money to pay his idealistic staff.

The Printed Blog has one leg up over traditional papers: The content all comes for free. Karp figures bloggers will do that because of the chance to earn some extra cash from the ads.

Ad purchase will be self-service via the company’s Web site with pricing from $5 to $10 for classifieds and from $15 to $25 for business ads that reach 1,000 readers. The paper aims to sell 200 ads per issue, earning a profit of $750+ each week.

Hyper-local free papers are among the only growth part of the ailing newspaper industry, with local businesses finding the neighborhood focus a better ad buy. 15 advertisers have signed on for the first issue.

It hasn’t been all rosy for the free papers, though. In December, the three-year-old Bluffton Today started charging. Its circulation has since shrunk to 6,500, from 15,000, Tim Anderson, the paper’s publisher, said.

Bob Garfield, host of On The Media, challenged Karp’s vision. “Isn’t it kind of the worst of both worlds? You’ve got blog content minus the immediacy minus commentability minus correctability, all distributed the slow and expensive old-fashioned way at high cost.”

Karp countered that “The experience of consuming something in your hands, having a tactile experience, is not going to be taken over by reading your information on a two-by-three-inch BlackBerry or on an iPhone.”

Detractors like David Cohen, founder of Silicon Valley Community Newspapers, are also cautious on The Printed Blog’s changes. “It just sounds daunting,” he told The New York Times. “To me, that’s why the Internet was invented.”