A lot of people in the weblog world are asking "How can we make money doing this?" The answer is that most of us can't. Weblogs are not a new kind of publishing that requires a new system of financial reward. Instead, weblogs mark a radical break. They are such an efficient tool for distributing the written word that they make publishing a financially worthless activity. It's intuitively appealing to believe that by making the connection between writer and reader more direct, weblogs will improve the environment for direct payments as well, but the opposite is true. By removing the barriers to publishing, weblogs ensure that the few people who earn anything from their weblogs will make their money indirectly.
The search for direct fees is driven by the belief that, since weblogs make publishing easy, they should lower the barriers to becoming a professional writer. This assumption has it backwards, because mass professionalization is an oxymoron; a professional class implies a minority of members. The principal effect of weblogs is instead mass amateurization.
Mass amateurization is the web's normal pattern. Travelocity doesn't make everyone a travel agent. It undermines the value of being travel agent at all, by fixing the inefficiencies travel agents are paid to overcome one booking at a time. Weblogs fix the inefficiencies traditional publishers are paid to overcome one book at a time, and in a world where publishing is that efficient, it is no longer an activity worth paying for.
Traditional publishing creates value in two ways. The first is intrinsic: it takes real work to publish anything in print, and more work to store, ship, and sell it. Because the up-front costs are large, and because each additional copy generates some additional cost, the number of potential publishers is limited to organizations prepared to support these costs. (These are barriers to entry.) And since it's most efficient to distribute those costs over the widest possible audience, big publishers will outperform little ones. (These are economies of scale.) The cost of print insures that there will be a small number of publishers, and of those, the big ones will have a disproportionately large market share.
Weblogs destroy this intrinsic value, because they are a platform for the unlimited reproduction and distribution of the written word, for a low and fixed cost. No barriers to entry, no economies of scale, no limits on supply.
Print publishing also creates extrinsic value, as an indicator of quality. A book's physical presence says "Someone thought this was worth risking money on." Because large-scale print publishing costs so much, anyone who wants to be a published author has to convince a professionally skeptical system to take that risk. You can see how much we rely on this signal of value by reflecting on our attitudes towards vanity press publications.
Weblogs destroy this extrinsic value as well. Print publishing acts as a filter, weblogs do not. Whatever you want to offer the world -- a draft of your novel, your thoughts on the war, your shopping list -- you get to do it, and any filtering happens after the fact, through mechanisms like blogdex and Google. Publishing your writing in a weblog creates none of the imprimatur of having it published in print.
This destruction of value is what makes weblogs so important. We want a world where global publishing is effortless. We want a world where you don't have to ask for help or permission to write out loud. However, when we get that world we face the paradox of oxygen and gold. Oxygen is more vital to human life than gold, but because air is abundant, oxygen is free. Weblogs make writing as abundant as air, with the same effect on price. Prior to the web, people paid for most of the words they read. Now, for a large and growing number of us, most of the words we read cost us nothing.
Webloggers waiting for micropayments and other forms of direct user fees have failed to understand the enormity of these changes. Weblogs aren't a form of micropublishing that now needs micropayments. By removing both costs and the barriers, weblogs have drained publishing of its financial value, making a coin of the realm unnecessary.
One obvious response is to restore print economics by creating artificial scarcity: readers can't read if they don't pay. However, the history of generating user fees through artificial scarcity is grim. Without barriers to entry, you will almost certainly have high-quality competition that costs nothing.
This leaves only indirect methods for revenue. Advertising and sponsorships are still around, of course. There is a glut of supply, but this suggests that over time advertising dollars will migrate to the Web as a low-cost alternative to traditional media. In a similar vein, there is direct marketing. The Amazon affiliate program is already providing income for several weblogs like Gizmodo and andrewsullivan.com.
Asking for donations is another method of generating income, via the Amazon and Paypal tip jars. This is the Web version of user-supported radio, where a few users become personal sponsors, donating enough money to encourage a weblogger to keep publishing for everyone. One possible improvement on the donations front would be weblog co-ops that gathered donations on behalf of a group of webloggers, and we can expect to see weblog tote bags and donor-only URLs during pledge drives, as the weblog world embraces the strategies of publicly supported media.
And then there's print. Right now, the people who have profited most from weblogs are the people who've written books about weblogging. As long as ink on paper enjoys advantages over the screen, and as long as the economics make it possible to get readers to pay, the webloggers will be a de facto farm team for the publishers of books and magazines.
But the vast majority of weblogs are amateur and will stay amateur, because a medium where someone can publish globally for no cost is ideal for those who do it for the love of the thing. Rather than spawning a million micro-publishing empires, weblogs are becoming a vast and diffuse cocktail party, where most address not "the masses" but a small circle of readers, usually friends and colleagues. This is mass amateurization, and it points to a world where participating in the conversation is its own reward.