Gregg Easterbrook has a reasonably good history of private space launch activities in the most recent Atlantic Monthly, and it's worth reading for someone unfamiliar with the field, though it's not without its flaws. He seems to be inordinately enraptured with Sea Launch, and he almost ignores the tourism market. In fact, this makes the piece a little disjointed:

...history's first space tourists, two rich men who bought rides on old Soviet rockets launched from Kazakhstan in 2001 and 2002, paid about $20 million each to be crammed into a tiny capsule and subjected to agonizing G-forces at blast-off, to eat freeze-dried food and bump into floating Russians in orbit, and, finally, to come home motion sick. There's a limit to that market.

Immediately following this, he then backtracks slightly:

Yet in the early days of aviation, airplanes were absurdly expensive and impractical too. Budget-busting government programs dominated, and flight applications were too specialized for the typical person to care about. In 1935, when Pan Am's first Clipper took off to chase the sun across the Pacific, air travel seemed destined always to be an experience exclusively for the super-rich; in 2001 U.S. airlines alone carried 622 million passengers, including tens of millions of the working class, and even the poor. When Federal Express proposed in 1973 to move packages anywhere overnight, the idea seemed a costly extravagance best suited to big business; now average Americans routinely get shirts or CDs delivered overnight. And in 1910, when crowds gathered throughout the United States to watch the touring Blériot monoplane struggle to gain altitude, anyone who said that someday thousands of Americans would own their own airplanes for personal transportation would have been considered certifiable.

Could space flight undergo a similar progression, morphing from a rarefied, expensive, and government-dominated activity into a mundane, affordable, and mostly private one? Some entrepreneurs think so. Sea Launch is not alone; start-up firms have spent considerable money in the past decade trying to develop cheap rockets, reusable rockets, space planes that are towed or catapulted into the sky, and even a rocket-powered helicopter that rotors up into orbit. And a few mavericks within government have been urging NASA and the Air Force (which has the world's second largest space budget) to adopt revolutionary, low-cost means of reaching orbit. So far every new idea except Sea Launch's has failed. But on the day the Wright Flyer skimmed up into the Carolina breeze, all previous attempts at flying heavier-than-air vehicles had flopped, and the whole idea of entrepreneurs doggedly pursuing the skies struck most sensible people as hilarious.

But then, he starts talking about Sea Launch again, which has nothing to do with such a goal.

Worse yet, he falls prey to a common flawed analogy.

And although the start-ups had ambition and dreams, none ever had enough capital in the first place. Andy Beal's conviction that he could get a large rocket, even a simplified one, flying for $100 million was an illusion; the development of auto models has cost more. It took $2 billion to $3 billion to develop the 777 airliner?a plane that flies between airports using well-established technology. Given that, how can private space-plane developers seriously expect to perfect a machine, for less than many billions of dollars, that reaches orbit using all-new technology?

First of all, "all-new technology" is not required (for sufficiently large values of "technology"). He's apparently been listening to NASA, and others whose bread and butter is "technology." All that's needed is to repackage existing technology in a new design.

Also, it's not useful to compare launch vehicle development to the development of autos or airliners. Both are heavily regulated by the government, and have to be designed for mass production. The 777 analogy is particularly absurd (recall that Burt Rutan estimated, based on experience, that the costs of aircraft certification are between one and two orders of magnitude more than basic development costs). Launch vehicles, for now, do not require FAA certification, which dominates development costs at this point. Getting an orbital space transport may not be doable for a hundred million, but I'm quite confident that it can be done for under a billion.

Tried to nose through my 777 book. The back cover alone disputes the claim that it was built with existing well known tech. It has the largest engines in the world which did not exist before it. It was THE most heavilly tested aircraft in history - as you'd expect it would be for ETOPS approval upon initial delivery. It had a glass cockpit, fly-by-wire, and was built on a CAD system - all new to Boeing. Sorry - no monetary breakdown of how much what all cost.