>> "Now that it's tough to raise money, "copying" 37 Signals and charging for your products on a monthly recurring basis is spot on for most new web services."

I just don't understand the recent backlash against ad supported. Some people seem to think it's not real money, or doesn't count as much... Fact is there's insane amounts of money to be made from advertising income.

The problem with ad revenue as a business model is that you're beholden to something you can't control directly that is controlled by a third party. With products/subscriptions it's an A to B relationship without the extra C group of advertisers who actually pay the bills for you.

I disagree that people think it isn't really money though. I believe that people think it isn't really reliable.

In my experience, it's amazingly reliable. As long as you're not working with a single advertiser, or small number. This is one of the reasons adsense is so successful - you're beholden to 'the market' rather than a single advertiser.

I think it'd be a really bad idea to discount it as a possible business model.

For every person making $XXX a day with AdSense there are a thousand making $XXX a year. Or things are humming along smoothly until you wake up one morning and you've been smart priced back to the stone age and aren't making anything per click anymore. The only guaranteed winner with AdSense is Google themselves. The reason AdSense is so successful is because Google takes an unspecified cut of every click and it's an industry built on the back of ringtone scams and click fraud.

Being beholden to a market that consists of a bunch of AdWords account managing hooligans that gnash and claw all day to drive bid prices down and are being governed by Google isn't really the kind of market you want to be counting on long term. Which just goes back to my point that while things might be good one day, by relying on an outside party for revenue, you might wake up tomorrow and be screwed because of decisions made by people totally unrelated to you or your product.

I've been generating revenue from online advertising since late 1999. It's pretty stable and growing :)

>> "it's an industry built on the back of ringtone scams and click fraud."

Sorry but this one is just ridiculous. How much have you used adsense, or any other affiliate network?

Ha, I knew that one would provoke a response. Click fraud is a very real problem with AdSense that I wish drew more attention.

I'm going to stop now because this is diverging into a pissing match of sorts, but I've been in the business of making money with online advertising myself long enough to feel qualified to comment and pay my bills.

I said nothing about ads, rather that it's hard to raise money so charging is almost a must.

About ads, FriendFAQ is killing it on Facebook. Friends that run content sites say ad payouts are down, affiliate companies are killing it.

I think it's because there are people who feel that ad-supported business models on the interwebs is unproven during recession. That sentiment may be overstated.

Do you think people will continue paying money for webapps during a recession?

I think the evidence from the dotcom bust was that online advertising continued to grow.