For those of you who don’t know the whole story, Tom read about a flaw in Google’s News service in a blog here.

In a split second, he decides to try a prank on his teenager friends and fakes a press release claiming he was the youngest Google employee, in charge of GMail’s security. Oddly enough, one hour later his story hit on Google News and other major news websites.

Fact is, the power of press releases – fake or not – has been consistently exploited by smart marketers and various individuals for ages. And for good profits too…

This is all fine and dandy, except I-Newswire lost. Let me explain.

Google automated news bot pulls it’s data from approximately 1,500 different news sources. I-Newswire, a specialized PR Internet company, was amongst them.

When Tom’s prank was revealed, Google removed I-Newswire from the trusted sources for news. PR distribution is their primary business, so I believe this will be a major hit and a major loss of revenue for them.

Agreed, PR distribution sites should do some kind of pre-screening regarding what they distribute or not. And I-Newswire was the black sheep this time. But with the popular free package, each PR Internet agency is receiving thousands – if not more – news releases per day. It would require a tremendous man-powered team to verify each and every one of them for accuracy. How will they pay them? By cutting out the free option and increasing the cost per submission, that’s how.

Look. This whole story is intensely mediated. I-Newswire was hit. Bad. But I believe this is only the first ripple and the effects will be seen in the weeks and months to come.

Will the free PR submission service change in some ways? Probably, as most PR sites that are suffering from the same problems I-Newswire had are now searching for options. It is one of the (very few) possible avenues PR sites may have to consider if they want to keep their credibility and good standing towards Google. Heck, I wouldn’t be too surprised if all big PR distribution sites will decide to discontinue their free submissions, or diminish their distribution by keeping them local.

This will definitely leave some small honest guys on the wrong side of the fence as they won’t know, or afford, or both, to pay a premium for their PR to be distributed.

The good part of it? We probably won’t be seeing as many news spammers in the near future as we had in the past. Look at the whole issue as a noise filter if you like. By decreasing the news volume, those that will go through will definitely have more visibility and exposure and thus more value for the buck.

What’s your take?