You can probably get 100,000 people in a small city to buy that (given proper branding/marketing), and that's enough to hire a local newsroom of about 100 people.
It's good stuff. I could spend hours.
The advertising will continue. The subscriptions are only meant to define the audience demographics. Lots of print media companies actually limit their audiences to only marketable demographics, especially magazines. Magazines often say they're oversubscribed if they don't hit certain demographic profiles, so their advertisers aren't being wasted. For example, if a bunch of poor college males were subscribing to Vogue, it doesn't help their advertisers. And those subscriptions costs a ton of money in mailings, so they tighten their audience to be core advertiser friendly.
From what I gather nobody has any idea how traditional publishing houses are going to dig themselves out of this. Native ads, a quality-over-quantity ad experience for advertisers and premium services (paywalls) are the holy trinity that everyone hopes will save the industry.