That is a terrible, cherry-picked example. One man's personal failure at finding a good business model is not representative of the entire philosophy.

Well, it was the only example that I could think of where a dev wanted to make a living from their software and offer it up as opensource.

So what is a viable model then? I build a kick-ass TODO list app or a casual game. I open source it. How do I make money from my efforts if I want to try and make this full time? This is not a service. I can't charge for support. Donations don't work. What else???

FOSS lacks one key aspect of the traditional software industry - it's never scarce. Any business model based on artificial scarcity will fail. If game development is what you are into and you want your game to be free you may charge for the game while releasing the code and retaining copyright of all non-code assets (visuals, music, sound effects etc).