The Wall Street Journal is up in arms about it; the Associated Press is building a robot army to fight it. But it turns out online news piracy is at most a $250 million-per-year problem. Just how small is that?
About seven-tenths of one percent of total 2008 newspaper ad revenue of $38 billion. And that's assuming the worrywarts are correct; the $250 million number was provided to the New York Times by the CEO of an anti-news piracy startup Attributor which has an interest in over-estimating the size of the problem.
So solving the piracy problem overnight would do basically nothing to fix the news industry's woes, financially speaking. Strategically, it wouldn't help much, either, since sites that illegally copy wire stories tend to be very low-stakes operations, usually Google spammers trying to make small change via AdSense (see Wired's explanatory chart). More dangerous to newspapers is the explosion in Web outlets that give news without infringing on copyrights (with the possible exception of the Huffington Post, which could stand to dial back its "excerpting" a notch).
I am a staunch believer that people will not in large numbers pay for news content online. It's almost like there's mass delusion going on in the industry-They're saying we really really need it, that we didn't put up a pay wall 15 years ago, so let's do it now. In other words, they think that wanting it so badly will automatically actually change the behavior of the audience. The world doesn't work that way. Frankly, if all the news organizations locked pinkies, and said we're all going to put up a big fat pay wall, you know what, more traffic for us. News is a commodity; I'm sorry to say.
(Disclaimer: Attributor CEO Jim Pitkow once headed Moreover, the syndication company co-founded by Gawker Media chief Nick Denton.)