* Any individual newspaper can make more money by giving their news away for free and selling advertisements than they can by charging readers.

* If any one paper gives their news away for free, it makes it effectively impossible for other newspapers to charge money.

* If all newspapers give away their news for free in exchange for advertisements, they all lose money.

I guess the prisoner's dilemma would technically be a better term, but it's basically the same thing in this case, at least if you think of advertisers as an over harvested resource.

As far as "Any individual newspaper can make more money by giving their news away for free and selling advertisements than they can by charging readers.", that is absolutely NOT true. Advertisers pay much more for ads in paid publications. Has to do with reader engagement.

Maybe they make more per ad, but how many newspapers are making more money than Facebook or Google? The only reason that newspapers can't make that much money is they don't have enough volume, and the reason they don't have enough volume is that every other newspaper is free also.

It's the free-rider problem. Prisoner's dillemma refers to making antagonistic decisions with incomplete information about other actors' intentions.