Validation: I've subscribed to Astronomy magazine for 30+ years and Sky and Telescope for nearly as long. I was Astronomy's first ad guy during the reign of Richard 1 and have kept up with the business over the years. In fact, several people who are now working or have once worked for Kalmbach also worked with me at the local newspaper.
Rod's article was, as always, articulate and thoughtful. The costs of producing a physical product like a magazine are daunting-- paper is the single greatest expense and the largest portion of the payroll is devoted to non-editorial people. Online, that's simply not a problem.
I don't know the astro magazines' circulation these days, although it is probably down. Ad rates don't alwways reflect this because costs remain fixed and rates are driven by internal considerations. The difference between printing 125,00 magazines and 100,000 is minimal, but other costs dictate the rates and they can't be controlled easily other than by releasing staff.
(My sympathies to Kelly Beatty, by the way. He is one classy guy and I'm sure he'll land on his feet after being victimized by two poor decisions on new magazines. Remember that magazine on digital astronomy? Good magazine, bad business. Anyway, back to the future.)
Rod did not mention oen important factor in the economics of magazines: renewal rate. It costs a LOT of money to replace lapsed subscriptions, but both mags have very high renewal rates. This means a guaranteed audienced for advertisers, and like it or not that pays most of the bills. This is why American Heritage sends me the magazine two years after my subscription lapsed. The economy has affected advertisers like everyone else, and for the public the cost of nonessentials like hobby gear is easily reduced. This is the primary reason why the magazines are smaller: loss of advertising base. When the economy improves after 1-20-09, magazines will get larger.
BTW, I did forcefully express my view on S&T's awful paper to Rick Feinberg. He was good enough to respond and, yes, it was all economically driven. Still, the magazine looked sleazy for a few months there.
I suspect that there will always be a base of amateurs like me who just enjoy the permanence and ease of use that magazines bring. A comfy chair, dish of butter pecan, a blues CD--bring it on. Still, I use the net often to order gear-- excessively, according to my wife-- and current information is always accessible. So for me paper and electrons are compatible and even complementary.
The acqusition of magazines by investor owners will continue; both of the astronomy mags are in that cart. Kalbach killed a couple of Astromedia publications soon after the acquisition, as did S&T's owners. Kalmbach's money comes from scale modeling, mostly railroads, and it isn't hard to imagine them taking a loss in that sector.
Put it all together and the magazines are in trouble. There may well be a shakeout, but as long as astronomy and S&T can retain their subscription base at a profitable level, they'll be here. And so will I.