PaidContent.org points to a study showing that for the Wall Street Journal to make up the revenues from it’s current paid subscriber base, it would need 12X the traffic.

Although not a great example of being “niche” I think this does argue that for some niche publishers, advertising simply isn’t going to provide the revenue necessary to sustain the business - simply because they won’t be able to get the traffic necessary to make banners, text links and other forms of advertising worthwhile.

Paid subscription for niche content that serves an audience well is also a very valid model. The more difficult it is to get that information elsewhere on the web increases the likelihood that the paid subscription model or pay-per-download model will work.