The problem I see here is a symptom of Europe run by people who are from another era, at least in terms of thinking. The reaction by the papers is a natural one, but it is more of a knee jerk reaction that trying to understand the technology and how it works.
The people who "run Europe" may be from a different era, but it is a bit too much to simply assume that they are stupid.
The problem they are trying to address with laws like this is the destruction of the press by the internet. I know, technology and business models and yadda yadda, but if we lose the press we lose institutionalized independent journalism with the budget to do actual investigative reporting, which is crucial in a free society. Bloggers won't do as a substitute, nor the pay-nothing-for-content model of the huffington post.
So google shut down its Spanish news page. Frankly, I think this is a good thing and an opportunity for the Spanish press to reinvent some of its business models. I hope they succeed.