There is an interesting article by Chris Anderson in the WSJ. It is mainly trailing his new book, but the subject matter is concerned with business models in an online world where so much is given away free.

One thing that the article has confirmed for me is that Twitter has no business model. It might be the fastest growing phenomenon on the web right now, but it has no idea how to make money from the service it provides.

The basic idea of freeware is, of course, that if you give away enough free stuff then you will connect with some people who are prepared to pay for what you do. This might be in terms of paying for a premium edition of your service (e.g. The Economist), or simply donating money (e.g. WordPress plugin developers, or Clarkesworld). But the problem there is attracting enough people. My usual rule of thumb is that for every 100 online readers you have, only 1 will be prepared to pay you any money.

Advertising doesn’t help. Anderson is right on the money here:

Running Google’s Adsense ads on the side of your blog, no matter how popular it may be, will not pay you even minimum wage for the time you spend writing it. On a good month it might cover your hosting fees. I speak from experience.

So basically everyone needs more readers, except that to get more readers you have to broaden your appeal, and that moves more and more into the territory of the big providers who already dominate the market.

Still, if making money was easy, everyone would do it.