Paywalls and the problem of competition

Clay Shirky has brought forth another long piece on the economics of the paywall business that's worth a read. I'd just like to highlight a single sentence, though, as I think it's a point that's missed far too often in discussion of the economics of content online:

Newspapers compete with other newspapers, but newspaper websites compete with other websites.

[emphasis mine]

Not with other newspaper websites, but with other websites in general...