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Rupert Murdoch is out making news today that pay walls are a great idea and fingering Google Search as his nemesis. He’s off the mark on two points.

Paywalls are attempting to monetize access to content. That model died the day Tim Berners-Lee released CERN HTTPd. Raw access to content will or has been commoditized and that trend will only continue. Especially in the realm of content creation where there is little value add (read hard news), there just isn’t enough invested that the crowd can’t do as well or better that allows for simple monetization of that access. In point of fact, using the paywall in such a way that you break the network effect devalues the the content in question by taking it out of the conversation.

This is why I say that Murdoch has the wrong boogeyman. Murdoch is not competing with the Google search and Adwords. He’s competing with Google Reader.

As Reader continues to improve it will start to learn how you consume news and start to make staying informed easier for the end user. The real challenge for major news organizations is how to go back to the product development drawing board and understand their businesses as services that add value for their end users.

Newspapers were begun to facilitate news aggregation and to make keeping informed easier, more reliable, and enjoyable in the days where telegraphs were expensive or even earlier where 6-8 knots or 20 horse miles per day was the speed of information.

It is now time for news organizations to start thinking about how they are particularly able to add value in ways that leverage the network effect (instead of hindering it) and starts to organize the crowd and the news in ways that both entertain and speed the end users acquisition of news information.

Money can be made and subscriber bases can be grown by major news organizations, but they will be grown because the news business makes a pitch to news consumers that adds value to how the consumer uses their content today instead of simply disconnecting content from the open network. News organizations that choose to try to understand the news I want and offer it to me for one price across my PC, iPhone, iPad, game console, Boxee Box, etc. will give me a reason to be their subscriber.

I’ll note that I have but one login to Netflix and that login knows what I like, what I’ve consumed, helps me find new stuff that will amuse me and comes with a single cross channel price.

Which news organization will compete with Google Reader to make me happy to pay them?