This business model is the online equivalent of a traditional paper publication. This is an expensive site to run as the business has to produce most of the magnet content (the content that attracts users). While the user will occasionally contribute comments or discussions it will not be the main attraction/purpose of the site. Money is generated by selling advertising, kickback from sites you link to in your stories, and paid subscriptions. If you are really clever you will have the latest craze in online advertising and tie your ads to the content on the site. Does this model really work? It depends who you ask.

• The New York Times Online: During it's first few years of operating this website leaked money like a sieve. In the past year it has totally turned around. It now nets the publisher millions of dollars in revenue. It's secret? Cheap, high quality content. It already creates a lot of content for it's newspaper and only has to add a little custom content to the website. With the paper edition paying for 80+% of the content the website can sit around and be a cash cow.
• Salon.com: One of the original big online newspapers, this publication had no print version. If you are checking this link in 2003 there is a small chance that it still works, if you, as a person in the distant future were to check it again you may find a cyber-squatter or a website advertising the latest hairstyles. While I am writing this Salon is fighting for it's life. The problem, they had to produce content to compete with the existing print newspapers and that cost had to be entirely covered by the website.
• Slate.com: Not wanting to lose it's chance to have a major propoganda dealer on the web, Microsoft created Slate. Slate has the same problems that Salon does, plus the technological challenge of running it's software on the inferior MS platform (no I'm not biased .. really). As of this writing Slate was still in business but only because MS pours money into it at an alarming rate. Will it be viable in the long term? Well with more people turning to the web for their news it seems that a purely online newspaper must eventually be a working business model. The best signal of that time is if Slate ever becomes self-sufficient. The problem is that once this happens the market will probably be saturated.