Users always pay for software. And I don't mean in some abstract, "pay with screen real-estate" way - they pay with dollars.

Advertising models will result in users paying more for the advertisers' products, either by increasing volume or tolerating an increased price. If it does not, the advertisers will stop advertising and the software will go away. And every other business model (go ahead! Try me! :) can be similarly reduced to money flowing from users' pockets to yours.

Choosing an advertising model is not a good fall-back strategy for a product idea that people won't pay for: it's useful only as an optimization strategy - that is, worth pursuing if the advertisers will pay more than the users.

But if you don't think people will pay real dollars for what you're building -- I say stop building it and go to a movie.

I think users will always pay as little as they possibly can.

Advertising models could be seen more as a competitive strategy of companies that have efficient infrastructure to target ads to software users, thus reducing the price of the software for the end user and squeezing out competition.

So, I think the lesson is to always be thinking of advertising models because if your competition is and you're not, you could find yourself priced out of the market.

I agree, jamongkad! The best part about them, and a major reason why I submitted their post, is that they're from Sydney, Australia. I wanted to show all you non-US entrepreneurs that you don't have to startup in the US to be successful. These guys, and many others in the Aussie startup community, provide much inspiration to Aussie students like myself who hope to follow them into the industry. I hope they add some value and inspire you too!

It's great to hear about that also. Very encouraging to hear that there are successful start ups beginning to gain traction out of the US.

I think the point the author is making is to build something useful for users. I totally agree with him on this!. His blog hits us with some good old common sense.