It isn’t a question of what happens if nobody pays for content. While bloggers are not going to pay for the content, many commercial web sites do. The question is whether having links from blogs really reduces the income of these sites or if it might enhance it by driving more traffic to them.

I think that most people who quote material from the Associated Press recognize the value of what they do. If bloggers were bringing in large amounts of money for posting material from them then it would be justifiable for AP to expect payment. However considering that very few blogs are making much money, this isn’t realistic. Hopefully allowing quotations from blogs helps drive traffic to those commercial sites which do pay for material from AP and make it a win-win situation for both AP and the bloggers.

As you say, the AP might be in the right in a more narrow sense, but it is likely not the best longterm plan. That said, when nobody will pay for content anymore, who will create content?  

It seems sometimes the more information that is available, the less people know and the harder it is for people who create content, either information or entertainment, to get paid.

The AP should be careful what it asks for. They might get ignored in the end. People who want everything for free might be careful as well. I’ve yet to see bloggers with bureaus, editors and photographers around the world. That stuff costs a lot of money.