I was referring more to the print publication of The Onion and the New York Times than to the websites. To clarify my point, starting a website with an advertising based revenue model is similar to starting a new newspaper or magazine. I used The Onion as an example because I remember it being freely available in bars back when I was in college.

I don't have any marketing data on whether advertisers prefer paying audiences or not, but I assume a lot of that would depend on the advertiser. I know that the bigger players in web media (facebook, myspace, etc) are definitely "bottom-of-the-barrel" when it comes to advertising rates because they reach such scattered demographics.

With that being said, I don't fully understand your point about advertisers preferring paying audiences. I think the problem is in the math. If I start charging for content (turning my users into a paying audience) then I'm going to most likely going to serve less page views. I don't know if the extra money advertisers are willing to spend for my now paying audience would be enough to offset the loss in page views.

The main example of a media website with a paying audience I can think of is the NYT, and I think the only reason they can get away with charging for content is because they've been established for so long. I think the rest of us are going to have to decide between 1) charging up front 2) trying to build a media property 3) trying to make money from premium subscriptions (which usually just amount to being donations from dedicated users).

Thanks for the reply, I'll definitely be thinking about this.