He showed just how incredibly oblivious he is to the workings of new media.
Seems to be a gross sense of entitlement amongst consumers if you ask me. It kills off quality content providers in favor or knee-jerk social media and mediocre content generated by algorithms to maximize SEO/SEM juju.
My point is, there are two sides to this coin and somewhere in between is a happy medium. I don't feel either side has the best solution — yet.
The situation you describe is what is generally known as "supply and demand". If low-quality content is all that many people actually want, the supply is nearly inexhaustible and so the value of content does exactly what you'd expect. There doubtless remains a smaller market for higher-quality content who can be convinced to pay for it, but that's not the mainstream and probably never will be--and while outfits like the WSJ and NYT may be the best of the old mainstream stuff, they're still on the wrong side of the shifting market.
Most of the traditional media is in the unenviable situation of being neither sufficiently high-quality to reach people who will pay, nor sufficiently cheap to reach the new mass market. The only sense of entitlement going on is the media companies bellyaching that the market has moved and left them behind.
Murdoch is a hack and doesn't have the cojones to provide real quality, but at his age he'll probably be dead before his mistakes fully catch up with News Corp. In the meantime, if quality is what you're after, have you considered buying a subscription to The Economist?
I don't know, but some blogs (like TechCrunch) seem to be doing fine. Maybe the big news outlets just need to find a way to operate more economical, so that they can survive off online ads?
If I was a content producer (which I'm not so my experience here is limited) but I would be upset by sites like Digg, Reddit, Mahalo, etc. that simply aggregate news, drive up my bandwidth costs, and leave me with fleeting traffic. There's nothing really meaningful in this relationship. It's like a superficial date that never gives you a kiss at the end of the night, but always expects you to pay for dinner.
I won't pay a penny to a newspaper to read about Britney.