Back and forth the ball goes. In his Recovering Journalist blog, Mark Potts cites a handful of others who have tried to calculate the online subscription economics necessary to sustain a newsroom. He concludes their work demonstrates the advocates of a fee-for-news world are out of their minds and that it's time to drive a stake into the concept. It just can't work. Too much traffic needed, too little likely to ensue, and that even with other revenue, it's a certain doom.
I'll add my two million cents' worth.
What is most problematic in many of these calculations on subscription-supported --- and for that matter, on free and advertising-supported --- content online is the narrow basis upon which people tabulate news industry expenses. It's as if the newsroom exists in a vacuum from the many other areas that complement and support it as part of the business. Among the few things that will not change in the new digital order are the functions that ensure journalism finds its audience most safely and intelligently.
Thus, few calculate the cost of technology, its development and support. Content may be free, but the backbone and frame of the Internet hardly are.
Few look at the cost associated with acquiring advertising --- they simply look at the gross revenue of sales, not the salaries and commissions against it, the expense of courting advertisers and keeping them in the fold, and the cost of make-goods and rebates when it doesn't satisfy.
Hardly any take into account the expense of marketing (no, you can't build a large audience simply virally). The link economy might help exchange brand for brand, but those brands will be found at times through basic awareness marketing.
Want to employ people? You need guidance and support on human resources, a finance team to ensure bills are paid to and by you and to ensure you're abiding the tax laws.
Ah, lawyers --- yes, you need some to keep your operation viable and some to keep your journalism viable.
Presumably you've got to rent or own space to run your operation. And, sigh, once you've done that, you then have to pay to research, gather and create, well beyond what your payroll. Not all information is free, sorry, and a newsroom buys a lot of information as a result. It travels to that information and needs to be fed and sheltered when it arrives.
Speaking of payroll, don't forget to attach benefits to those salaries in medical, dental and other costs to make sure you're competitive. or else you'll be spending more on recruitment --- another cost few identify --- because you'll be churning through staff.
My basic point is that, in any enthusiasm to report online revenue against online expense, the former might be accurate but the latter often isn't. Even for a pure-play online newsroom --- forget about trying to cost-separate a multiplatform operation to reflect the true costs and revenue for the online content --- the tally needs to reflect much more than the journalists on the floor.
We can only hope for the arrival of a link economy to widen the audience for content and its advertising or that the nascent digital advertising business matures in such a way as to adequately reward the environment for good content.