But if, out of every 100 people who buy the article for $1, a single one of them would have otherwise become a subscriber (if the micropayment option weren’t available), then the paper lost money on net.
I don't think Tim Bray is suggesting removing the subscription option. The point is that there could be a price for an individual article as well as the subscription option. If that 1 person would subscribe anyway then the lack of an individual article price is just leaving the other 99 payments on the table.
No, it might be undercutting the subscription as well.
If nobody ever subscribes any more, and they just choose the articles which interest them and pay, the newspaper may decrease the amount of revenue it gets.
That's an unknown though. Saying it might be undercutting subs is true, but it has no more or less validity than saying it wouldn't. It depends on the number of people who subscribe (could be 1 in 100, but it could be 1 in 10,000), and the number of people who'd pay for an article, and the optimum price they'd pay at, and so on.
I don't think Tim Bray is suggesting removing the subscription option. The point is that there could be a price for an individual article as well as the subscription option. If that 1 person would subscribe anyway then the lack of an individual article price is just leaving the other 99 payments on the table.