Our own Jason Fry wrote a post worth reading on web economics at Deadspin, the Gawker Media sports site. It’s about Bill Simmons, the star columnist for ESPN.com and one of the bigger web-native journalism stars the Internet has produced. His stories generate huge traffic from a very loyal (and advertiser-friendly) audience.

Simmons is in the middle of negotiations to renew his contract with ESPN, and Fry tries to answer the question: How much is a guy like Simmons worth to a multibillion-dollar company like ESPN? The answer: Not as much as you might think:

Let’s do some back-of-the-envelope calculations. Back in November, comScore said that Simmons’s column had averaged 1.4 million pageviews and 460,000 unique visitors a month over the previous six months. His podcast, the B.S. Report, is typically downloaded 2 million times a month. The Book of Basketball sold more than 208,000 copies in 2009. And the Sports Guy has 1.19 million Twitter followers…

Given an estimated ad rate of $10 per 1,000 views (CPM in Web lingo), Simmons’s columns would be worth some $168,000 a year to ESPN. The podcasts are presented by Subway, while Miller Lite also sponsored a weekly Simmons NFL pick — but both of those sponsorships are likely part of larger multimedia crossover deals with ESPN. It would be a stretch to credit more than $400,000 of that money to Simmons, or to say those sponsorships wouldn’t have been attached to other Web content in his absence. The Book of Basketball — published by ESPN Books and Ballantine — has likely brought in nearly $300,000 for ESPN (and considerably more than that for Simmons), but not even the prolific Sports Guy can write a bestseller a year.

But the raw numbers miss a big part of Simmons’s value to ESPN — which is where those 1.19 million Twitter followers come in. “How many publications would like to have that kind of readership right now?” asks Sports Business Journal’s John Ourand, who notes that while Web dollars are a fraction of ESPN’s overall revenues now, they’re growing.

Jason’s numbers are indeed back-of-the-envelope, but it’s worth noting that CPM advertising represents only a small fraction of the financial value Simmons brings. The larger share comes from companies who specifically want to attach themselves to his brand (Miller, Subway) and from ancillary products like his book. (I don’t know if Simmons does speaking gigs, but I’d think that would be another serious potential revenue stream.) And one of his most valuable assets is his following on Twitter.

Lesson: Even huge audience numbers are unlikely to generate major revenue if they rely on boring old display advertising for monetization. A strong, identifiable brand and the power to assemble a community of readers — that’s where the money is.