Who's reading?

I just got a rather nasty e-blast from a publisher of a literary journal, basically castigating everyone who's submitted work for not also being paid subscribers. He said that if 1 out of every 200 persons who submitted work actually read the journal, he might be able to keep the journal afloat. It was a desperate, if not painfully honest, plea and posed some serious questions.

If Web 2.0 and the global collaborative community are giving everyone the means to write their own stories/news/information, are we in jeopardy of reducing the number of actual readers?

By having more information within reach, are we more well-read or more interested in how others may receive our own stories?

Does this angry editor have a valid point, or do you think he's simply reacting to the cold reality that the traditional media can't deal with the paradigm shift?