Passengers who were going to pay for a seat will already do so prior to this change. The algorithm has been changed to encourage those have been checked in with inconvenient seats to then pay to upgrade; looking to increase revenue.
However, their genius system allocates all middle seats first thereby ensuring this new segment of PAX who would then consider to pay to sit directly next to each other actually can't (because the middle seats are all gone).
Not necessarily.
You could equally argue that, as word gets around, the FUD factor will encourage a higher proportion of passengers to opt for paying in advance to reserve seats than at present.
I'd be curious to know the fate of the revenue intern who came up with this idea when it's all set and done.
He or she will probably get a bonus.