That’s Rupert Murdoch’s take on web-based news.  For those who don’t know, Rupert Murdoch is a marketing mogul.  His understanding of how the news game works has swelled his net worth to approximately $4 billion.

Murdoch is planning to put up a pay wall around the online content of his newspapers.  Fair enough.  It may be that his profits will be helped by making people buy his content.  On the other hand, it may just hand over a greater market share to others.

What is very strange, though, is his feeling that Google and Microsoft are somehow robbing him of his profits.    It’s a strange thing for someone to post his newspaper content freely online and then be surprised when search engines point people toward that content.  Google’s not taking his stuff.  He been giving the newspaper content away.

Further, it seems that he definitely does not comprehend the incredible scope of the internet.  There are countless sites with news of all sorts on them.  It is possible that if Murdoch and other media folks can consistently generate content that a significant number of people find superior, they will pay for that content.

But thinking that walling off information will leave readers with nowhere else to go is just silly.  As more and more people wall off their information behind pay walls, the sites which keep their content free will receive more and more visitors, raising their advertizing revenues.

So any attempt by a news group to wall off their content will simply make providing free content more profitable for other groups.  Murdoch’s analysis ignores this.  News corporations just don’t have the necessary economic incentives to leave us with ‘nowhere else to go.’

Murdoch has made the most common mistake of economics:  basing his ideas on the unspoken assumption that an entire sector acts in unity, and not competition.  It’s the same horrifically flawed assumption that gave us Marxism–a class-warfare based system that assumed that employers weren’t competing against one another.