As an inner-city blue-collar newspaper, the New York Daily News makes no splash in the hinterlands, though it is the best of its tabloid breed and at one time had more readers than any other U.S. daily. We rarely see it here, in contrast to its upscale competitor, the New York Times, which has a national edition.

The Daily News is itself a high-profile story these days, however. Its life is at stake, and the issues in its survivability are those affecting all papers.Its normal daily circulation has been halved in recent years to just over a million under the impact of TV competition and the flight of readers to the suburbs. It also has lost ads as department stores have departed the city.

Now, a bitter strike by its 2,500 workers has consumed it for the past two months. News vendors seeing repeated violence against distributors have refused to sell it, and readers and advertisers have deserted it in droves. It will lose $85 million this year.

- ITS DEATH would not be a tragedy, as the loss of the Times would be, but it would be a loss for New York and for journalism. This may seem a strange statement, for the paper has thrived on being brassy and on its raffish style. Yet American journalism is nothing if not colorful, diverse and dynamic.

And the city would be poorer if there were not a downscale paper, or one that any reader would see as a counterpoint to the gray Times (you'll never see it using a word like "ineluctable" in a headline, as the Times did last week). Or if there were not simply another newspaper voice.

The third general paper published in the city is the New York Post, which is even sassier than the News and is itself teetering on the brink of extinction. In my professional lifetime there were 11 mainstream dailies in Manhattan itself, plus papers like the Brooklyn Eagle in the boroughs, reflecting a wide hue of views and appeals.

- THE STRIKE BALLOONED from a trivial incident. Now management sees the issue as the unions' unconscionable featherbedding. The unions are outraged by what they call management's attempts to break them by firing the strikers and importing "scabs."

Though politicians like Gov. Mario Cuomo and Mayor David Dinkins and Jesse Jackson support the strikers, management has a legitimate complaint over archaic union rules that in effect have denied it the right to manage.

The American Newspaper Publishers Association has identified as a prime need in maintaining a healthy press in these hard times the development of cost-effective programs, especially the use of money-saving new technology. Most other papers have slimmed down work forces with the aid of new machinery. The Daily News insists it still is encumbered by overmanning such as maintaining 10 men to do the work of three on the presses.

BECAUSE IT IS SO MUCH FUN and so readable, and because it does do some excellent popular journalism, it is unfortunate that the Daily News is best know for a shameless act and an impudent headline.

The act was its coverage of the execution of Ruth Snyder, the first woman to be electrocuted at Sing Sing prison, in 1927. Although the press had pledged not to take photos, an imported Daily News photographer got entrance to the execution chamber as a newsman and legal witness and took a picture at the instant the switch was thrown, using a special camera strapped to his ankle. The resultant photo was splashed all over page one, but the incident has been called a blot on news photography.

The head was the famous double banner, "Ford to City: Drop Dead," which ran in 1976, when President Gerald Ford was seeking re-election. Legend has it that by grossly oversimplifying the issue of federal loan guarantees to the city, the headline cost Ford the city's vote, and with it the state electoral vote and the election.

THE DAILY NEWS WAS FOUNDED in 1919 by two cousins, Joseph Patterson and Robert Rutherford McCormick, heirs to the Chicago Tribune empire. Patterson, who served in France with the AEF and was forever afterward called "Captain," was on furlough when he met the publisher who built the British popular press, Lord Northcliffe. Patterson figured a paper that used the same formula as Northcliffe's wildly successful Daily Mirror would be a hit with New York's subway-riding millions.

The parallels with the British popular press continue to this day. Regrettable though it was, it took Rupert Murdoch's firing of striking unionists to become profitable again after decades of work stoppages. They have now installed computerized production, ended overmanning and moved to new plants across the Thames.

At one time the Patterson-McCormick families owned the largest circulation newspapers in three key cities, New York, Chicago and, with the Washington Times-Herald, the nation's capital.

Patterson considered the Daily News in its early days the voice of the proletariate and supported the New Deal. He swung right politically in the '40s. But he never lost the common touch, the sure instinct for mass appeal, that remains the Daily News cachet to this day.