I spent the last 3 years selling access-control/paywall-like software to large news agencies, and in the process, met with top executives in almost every major news organization/conglomerate in the US, Europe, and AUNZ.

This is absolutely the number 1 reason the major news organizations don't want to bundle up, and in the case of the top 5 (NYT, WaPo, FT, Guardian), works. Interestingly the second reason is brand. Nobody wants brand dilution from being considered in a "pool" with other publications, because it will reduce their power to charge more for their product in ads and subscription. While small publications actually do want solutions like this, generally the large publications with readership are even more upset to be lumped in with the small publications than they are to be lumped in with their competitors.

One solution which I saw but wasn't worth my company's time to explore was finding a bundle of niche publications willing to work together on a shared content-for-pay solution and had a loyal readership willing to pay, and growing outwards from that seed. But that's a very uphill battle.

Yeah, I definitely think you’d need to bundle niche publications first (Consumer Reports, The Economist) and build from there.

Interestingly, before the arrival of Internet, people had no qualms for paying $1 per day for newspapers. That’s at least $30 per month. Weekends editions were priced more and many people would even have subscription to couple of newspapers. Their content for quarter of the price of a coffee cup looked pretty cheap and no one seems to complain about the price.

Newspapers are tangible things. Some pixels on a screen are not, and the entire model of the web is that "everything is free". It's hard to break away from that.

Right, that's the challenge. But I don't think any papers except the NYT and maybe a couple others are justified in thinking that, and I think even they would probably end up net positive, since the vast majority of their readers are currently just ad-supported. I'm guessing the reality has sunk in for most papers.