"The big unanswered question about Sullivan’s business model is how the economics are going to play out. He seems to have brought in about $100,000 today, from loyal readers — that’s about 4,000 subscribers off the bat. But that $100,000 is going to go fast. Sullivan is coming off a fat contract at NewsBeast, signed when Tina Brown was flush with lots of Barry Diller cash. He almost certainly couldn’t get her to agree to replicate that contract when it came up for renewal, so it’s hard to know how much money he’d receive if he stayed at the Beast. But my guess is that Sullivan wants the staff of seven, including two paid interns, to earn somewhere in the neighborhood of $750,000 a year between them, plus benefits. Add in what Sullivan lumps under “legal, technological and accounting expenses”, and you’re well into seven digits. So while today’s haul is impressive, Sullivan is going to have to keep those subscription revenues coming on a pretty steady basis, and he’s surely targeting a paying subscriber base of at least 50,000 — about 5% of what he calls his “unofficial staff of around a million unpaid obsessives”."
"The Big Unanswered Question about Sullivan’s business model" isn’t about how it’s going to play out. It’s about whether or not he even got the inevitable lowball offer from Tina Brown and Barry Diller after they spent a milli to bring him and his staff to New York from D.C. (only to have Sully bitch about his couch/not make The Daily Beast the most important website in the world), or if they just told him that this was the end of a beautiful journey like they did to the print edition of Newsweek (and a bunch of far less expensive staffers). The question of whether or not this will be able to support him and his staff at their current salaries is way too kind to Sullivan, who—like any publisher—we shouldn’t take at his word.
Sullivan and his employees are used to being just that: Employees. They like health insurance. It’s a hell of a lot easier to be an employee than an editor and a publisher, especially when the entire brand relies on you to work. Unlike The Awl, Sullivan isn’t launching a blog, or a site, or a network. He’s launching a platform for him, by him, that’s more or less about him. Can you see Andrew Sullivan meeting up with ADP to make sure payroll goes okay for his crew? I can’t.
That said, I wouldn’t worry about whether or not Sully Can Eat: He’s now freed up to do longform pieces for other publiciations, like Vanity Fair, GQ, or Esquire (who tried to get him on contract in 2011, before The Daily Beast scooped him up).
Seeing This For What It It: Sullivan’s doing this to sell another potential buyer on the loyal draw of his audience. Yahoo, New York Times, Wall Street Journal, Bloomberg Businessweek: This is a sales pitch, and one they’re all on the recieving end of.