Sadly, he's got it all wrong.
Mathewson is not necessarily wrong about the non-profit model. I don't have any immediate thoughts on the viability of the non-profit model of journalism. Instead, he's wrong because he thinks that the source of the newspaper industry's woes today lies in its economic model.
The source of the industry's woes lies in the fact that it no longer creates a product readers want to consume. Yes, finances are contributing to the industry's decline. No one's arguing that declining ad revenues are not a factor. It's just that they're not the determining factor. The determining factor is the product itself.
The fact that Mathewson doesn't get this is encapsulated in the following comment: "A not-for-profit newspaper, of course, should have a vital online version." As if this online thingy were an afterthought, an appendage, a nice giveaway. This is archaic thinking.
A visionary thinker would put it the other way around: Increasingly, consumers like to get their news online. A new news organization should explore innovative ways of delivering news online -- and continue to print a dead-tree edition only if it can prove that the dead-tree edition has a sufficiently large customer base to merit its production.
It's a point I keep hammering away at: Until news leaders adopt the correct mindset, not only are they incapable of helping the news business find its future, they are a downright impediment to any progress.