I have one and it works well. The newspaper will work just fine as long as it is damp. Air will go through it very well. Normal decomposition will break down the newspaper. Add the next tray when the first tray is close to full and most of the bedding is gone.

I have a Worm Factory, and have been using it for about eleven months. The main lesson I have learned is to avoid excessive moisture. As I add a tray, I put in DRY shredded newspaper for bedding, giving the bedding a VERY light spritz from a hand spray bottle. The food I provide is mixed kitchen vegetable scraps, and I have found that the moisture from the food is enough to quickly sufficiently dampen all the bedding material. I now have thousands of active, vigorous worms which are multiplying and rapidly and efficiently consuming the food.

I don't have one but would love to hear how it goes for you. My only concern would be using newspaper...from an organic perspective, I try to keep away from anything that may have inks, etc.

My worm bins are simple...rubbermaid containers. I don't even punch holes on the top for them...such a bad mother. But i find that if I turn it 2 or 3 times a week, there is no problem.

I actually blend the food before feeding which, as sesselsfca says, seems to be enough liquid for them.

Anyway, good luck...

I used a mixture of shredded paper, shredded newspaper (black ink only) coir, 2 hands full of dirt, and one cup shredded leaves. I also added crushed egg shells. I got my worms today. Some are in a huge clump and some are moving about. I am worried that my bin is too dry. It is moist but I cant squeeze any drops from the paper. I keep misting the top layer of newspaper. It gets almost dry within two days. But I just added food so i am sure that will change.

I have two of these. I use shredded paper mostly, some leaved and rabbit manure. The Worm Factory works great, but candidly I've done just as well with rubbermaid containers that were a whole lot cheaper.

I have a worm factory. I use newspaper on and off as the mood takes me. I can see a need for newspaper on the very bottom, otherwise the compost which get pretty much like mud, would squeeze or drop through the mesh into the liquid drainage area.
On trays above the bottom tray, I generally don't add the newspaper as I'm not woriied about stuff dropping through and I want to encourage the worms to migrate upwards to the fresh food supply. If I feel things are getting a bit wet, I will add a layer of newspaper on top of a tray. I don't bother wetting it. It soaks up the moisture from the tray above and is soon wet enough. The worms seem to like the newspaper. They gather in large numbers on or within the layers of the newspaper. I don't know whether they are taking a breather, relaxing or looking for sex with other young attractive worms who gather there.
Someone mentioned the ink in newspaper. The black ink is almost always soy based and non-toxic. The colored inks can contain toxic chemicals such as cadmium (or so I have read) This would be a problem perhaps if you later intended to use the compost for vegetables that were going to be consumed by humans. I only grow flowers and shrubs so this isn't a worry I have. For bedding purposes, I usually use one inch strips of corrugated cardboard from cardboard boxes. This tends to clump less than newspaper strips and allows a bit more oxygen to circulate among the food.