I think one of the things that has caused many writers to kind of avoid online only publications is that they are amorphous, they don't have the tangible or tactile qualities of a print publication. After all, we all grew up reading from books and magazines printed on paper and sold in stores and fell in love with bookmarks or carefully folding a corner over and so on.
However, there is an inherant business advantage to operating an online publication: Very low overhead and no need to deal with printing, shipping and on and on. The problem has been trying to get folks to want to go to a website to read a fiction story or narrative nonfiction. The laptop simply doesn't works as well as the book or magazine.
I just came upon a very new lit mag--only one issue so far--that is essentially an online publication, but with two major distinctions. The first is that they pay. Not a ton, about $100 for a story, but in an age where you may be lucky to get a contributor's copy, they offer money and plan on doing it as long as they can, even growing the sum.
You can find them at http://www.raglitmag.com/index.html
How do they plan on doing that? Well, here is the second interesting thing: they have a business model that marries the best of electronic publication with a reasonable facsimle of a book: Amazon Kindle and other eReaders. Basically they have a website, which has a fair amount of advertising primarily around the Kindle (smart) and do all they can to entice visitors to go to Amzon and download a copy of their publication. It isn't that expensive and one assumes a large portion of that money is going to them so they can turn around and repeat.
Smart because the Kindle, while imperfect, makes a pretty good substitute for a book, people can buy their product easily and quickly and on a whim from the Kindle (or iPad for that matter, sorry Steve), and they pay so they will attract a wider range of writers to submit.
As I said, they are very new, it is two guys and I haven't read them yet, but I really like that they are trying to leverage the Internet and ereaders to create something that is economically feasable. Let's hope it works and there are more to follow.
Causes James Buchanan Supports
Expanding health care in the US, ending war as a viable tool of foreign policy, and issues related to social justice in general.