Farhi is saying that the media should make a decision to inform fewer people. To do its job -- if you understand its job as providing news rather making profits -- worse.
But newspapers always, at some level, made the decision to inform fewer people--simply owing to the fact that, in order to read a newspaper, people had to plunk down some money for the privilege. Call it the original paywall. Moreover, the tension isn't so much providing news versus making profits as it is providing news versus being able to afford to produce the news. The Internet, of course, has changed everything, but it seems like before we start coming up with radical ideas to save the media--whether it's abandoning the web or moving to public subisidies--we ought to have a clear understanding of what the media's job is and was.