Slashdot Mirror
Ask Slashdot: How can Free Web Service Recoup Costs?
Trixter
asks this question, which might be helpful to any of you
out there that might be looking to do something similar:
"I'm planning a huge, free, online resource,
and am just looking for a way to recoup any operating costs;
I'm providing the server out of my own pocket, but would
like advertising to pay for the bandwidth each month, with
any additional profits going into upgrading the server
hardware and bandwidth, ad infinitum. Just how do
you make money on the web with a free service?"
You don't make money with only adverstising $$. Your
time and hardware depreciate faster than the $0.0001 per
page view.
Find some gullible and/or unsavory VC to front you a boatload of money, hype up your service, and take it public.
Your company doesn't even need to be profitable. Your stock will shoot up to $400+ per share.
Sell your stake, take the money, and run.
Remember:
"A fool and his money are soon parted."
"There's a sucker born every minute."
There's always the greatest money-making area of the Internet. There doesn't even have to be good porn, or much of it. Just enough to convince people to sign up. This all presumes that your morality won't get in the way, which might be presuming a bit much considering you're putting up a free ISP....
The fastest way to make a website profitable is to put a webcam in your bedroom. I'm thinking of have a finished basement in my home, setting up cameras, and hiring young women to do nasty things for the cameras. I'll make a mint, but my wife won't go for it.
Just call yourself a portal, hype it up and go
public.
It will definately steer you away from some companies that are just incompetent or are out there to rip people off. You should also read/subscribe to some of the mailing lists hosted by that site.
You can make a lot of money on banners.
Try to design something like geocities and host
a lot of porn and MP3 sites.
Even free email. They are all pretty much self sustaining.
Build up a subscriber base! That is really the key to online businesses now. For instance, ICQ sold out to AOL for ~400million. That is around $22 per ICQ user. There were no advertisers at all. I've often thought of offering to pay people $15 to join the subscriber base of my company, waiting to get it up to 30million, and selling it of to AOL/Microsoft at $20 a user. Anyways, if you get people subscribed and offer them special services, like newsletters, etc... if you target well enough and can identify your niche, you can make a killing.
Look at Freeserve in uk. 900,000 users in 5 months. AOL are really sick. There are no charges and no adverts on your (25MB) home site nor on your email, local access nationwide. The trick, a deal with the telco whereby they get a (small) slice of the phone call.
(small*900000*regular=big)
Force9.net in uk $10 pm unlimited email addresses and unlimited disk space, plus telnet into the server blah blah
All this coming to a country near you soon.
You'd better be good.
If you go the advertising route for supporting a free server, consider charging EXTRA for the following characteristics:
1) no banners allowed, only text ads with a maximum size of 25 words.
2) a publicly viewable counter beside EACH ad link to show users and advertisers what kind of ads are getting clicked.
upside.com (i think in its 'down the toilet' section) had a recent article about slimeballs
who do this sort of thing (something like defrauding investors i think)
u get to go to jail
theres an article or two at upside.com about this
There is a major ISP in the UK (Planet) that has set up a huge free ISP known as Freeserve.
Disks containing the software are given away at major PC vendors, and can be used by anyone.
However to recoup their money, they use a premium rate support line, charging around a pound a minute for support. Most of this money goes back to Freeserve.
Every time I hear the add I cringe. I finally sent a message to the admin and asked if they actually understood the history of the internet/web. He reported that yeah they knew the truth, but this sales approach was working so they weren't going to change.
I hate revisionist history for the sake of making money!!!
Hello, my name is Dave Rhodes...
All operate referral services where you get
a cut, up to 20% for Amazon, of anything which
people buy on the site if they come through your
site first. If you are selling information
on your site (sorry, "providing") information,
then encouraging posters to provide links to
Amazon type resources with kickback schemes
could help defray costs... if not turn a tidy
profit...
I dunno why everybody isn't doing this: it's a
win-win-win as far as I can tell...
Really you can't be interested in building a service etc. You need to make sure that you sell out with an IPO or other deep pocket private placement before anybody thinks about it too hard.
This is the key. After you are bought out by a really huge company nobody will be able to figure out if the service is profitable anyway. Besides the only reason you are being purchased is to spit out another meaningless press release to push up their own stock so some fast money can be made by the specialist at some trading firm.
How can you charge for support? What if something is broken on the ISP's end?
Why be anonymous when you can be infamous?
Clickthrough rates may be 1-2% for non-targeted ads. From my experience, when an ad is placed on an appropriate place (a LinuxWorld ad on slashdot, a Junior Mints ad on the peppermint lovers webpage) the clickthrough rate is 10-15% depending on how well the banner is designed.
> What does $3.50 net CPM mean?
CubitPheetperMinuet
At least 1-2% of new visitors will be stupid enough to send you money if you say 'By visiting this site, you have agreed to pay for services rendered. To avoid legal repercussions, send $49.99 to www.orelse.com'. Or else!!!
Do it like this guy does. . .
www.givemeadollar.com
machineryofJoy shouted:
>Trying to support an online venture through >advertising _only_ is extrememely difficult (the >only people I can think of who make a profit at >it are Yahoo. Excite, CNet, et al, don't make any >money).
Correction, Yahoo! has revenues -- not profits. Yahoo! has YET to actually earn a PROFIT.
Their price to earnings ratio (PE) last time I checked was somewhere around -2000. Not too terribly good.
Well I would have to disagree with your theory. I personally run a web site receiving over 25,000 unique users a week (in a market of tops 50,000 people). We are very well known among the users in our market. Even supported by the software companies we are a resource site for. Our research, our statistics, our newsletter, and our list servers are all full of a target audience that comes back on a daily basis.
The problem - Advertisers budgets. No matter how much sense it makes and how much more productive it is, the advertisers aren't buying banners. Forget the price, because we can't even get that far. The people making decisions high up in these companies decide that the web is not a good place to advertise, and even if you have one or two exceptions, there is no money in the budget for it.
Yes we get some advertisement. But it doesn't even cover our server costs - not to mention all the time we put into the site.
As it stands right now, budgets are made with the intention of advertising in print. To explore this further, I started a magazine (which basically covered the same topics of my web site). Within 2 weeks of announcement of the magazine I had advertisers asking how to get in. That pretty much answers the question.
Web site - same content + files; a few banners at $500 a month.
Magazine - same content, no distribution, not published; many ads at 5k + each.
Doesn't make much sense, and I don't believe its right, but that is the truth of the matter.
Except from those of us using squid.redir :)
http://www.taz.net.au/block
Follow these steps:
1) Start a popular "buzz-word compliant" free web service. (see other posts for how to do this)
2) IPO and use PR to keep the illusion that you are still on target to a huge future.
3) Acquire a controlling share in a real business that has real profits via a stock-swap.
4) Dump the internet business.
Now you've got a real business with a real future and all it cost you was a few pages of HTML and some CGI scripts!
freeserve is a free ISP in the UK (supported by the dixons electronics chain). they make their money by the usual means (advertising etc.) *plus* they take a commission on all local phone calls. free local calls in the UK don't exist (unfortunately). i guess free ISPs are the pay-off we get in the UK for paying for our calls.
freeserve has only been going ~4 months but already has nearly 1m customers. impressive, but as i have just discovered, impossible to connect to and has nasty net-cache's in operation etc.
i suspect that a free ISP in the US would be unviable as you folks have free local calls and thus a free ISP couldn't take a cut of the call charges.
i for one would like to see a high-bandwidth ISP. i think there would be a big market for home users who want real fast dial-up connection, particuarly for network games.
CH
Every time I hear the add I cringe. I finally sent a message to the admin and asked if they actually understood the history of the internet/web. He reported that yeah they knew the truth, but this sales approach was working so they weren't going to change.
I hate revisionist history for the sake of making money!!!
Anyone who has either ran an ISP or online service or managed one knows that there is hardly any profit made from the users who are connecting to your service to access the internet. Most of the money is made by either selling advertising space or (if you want big bucks) selling web space to companies. Web space is the key. By selling space and providing bandwidth for companies you can make a huge profit. Check around to see what the competition is doing. Pay close attention to how much actual space they offer and the bandwidth they will provide at different costs. They usually measure bandwidth by hits per month or megabytes transferred per month. Offer local companies in your area a chance to be on the net.
There are still many companies who are not on the net and need someone to walk through the door and sell them on the idea. Take it from an internet business strategist, you will recoup your costs and if your good make a profit. Hey, you never know, you might even quit your job and work for yourself full time. Good luck!
Sell access to materials (i.e. subscriptions)
Sell advertising (this includes things like sponsorships, dedicated promotional pages, banner ads, etc.)
Sell products
Now there's no reason a free site can't sell products as well. As a matter of fact, providing content for a target audience for a vendor can be a highly successful marriage. You provide the traffic; the vendor provides the targeted products. (Since you didn't mention it, I don't know who you target audience is.)
You will need to get your site up and invest in the initial launch before you can take your marketing & business plan to potential vendors (your target audience must be interested in buying *some* kind of product). You should also have figured out how you intend to handle orders, etc. A drop-ship arrangement would be best in your case. Take a look at garden.com. It's a commercial site, but they handle internal cross-promotion well.
And no, I'm not in the marketing department (but I did grow up in advertising and broadcasting...).
Hmmm... using your "$0.003/impression" figure and Rob's statement that he got 410,000 hits on Tuesday, that means slashdot probably raked in $1230 that one day. Not bad...
--
synaptik
HSJ$$*&#^!#+++ATH0
NO CARRIER
Nielson predicts that classifieds are going to turn out well. Hmm. With a Web-forms interface, they'd end up being like commercial-sites-only search engines. Could work.
Mind the Gap
That also assumes you're selling 100% of your ads (I assume you're assuming that, correct me if I misassumed regarding your possible assumption) ;)
Most sites sell like 30% of their ads.
Not to slight your site, but 12000 unique users per month isn't really enough to reach that critical mass where advertisers start jumping on.
If you were getting 12000 page views per day (with mostly, although not necessarily 100% unique users), then you'd be in a real jumping off position.
But 12000 unique users a month is only 400 per day, which is usually too little for a company that might advertise to waste time doing paperwork with.
Posted by David Botton:
Take a look at www.eads.com They offer you money per click.
Posted by lildrajinn:
I was in Ireland awhile back and freeserve was being announced. The reason for their free service was the prohibitive costs of telephone service in the UK. At least one person I talked to said he was paying 300+ pounds to his telco for monthly connect charges to the Internet. This at the time came to @ $480 US!!
Hypermart is a free service that allows you to run personal CGI's. It's a bit like geocities, only better because of the CGI's. Have a look at what they do.
--
Matt. Want XML + Apache + Stylesheets? Get AxKit.
Just don't go the way of that damn GeoCities. I won't even go to their sites anymore.
Watermarks, popup windows are all bullshit!
just like the yahoo email that signatures all your stuff if you use them. I think that you need to make concessions if you are getting something for free, but its getting ridiculous.
Check out http://www.x-stream.com, what they have is a special browser which takes up a portion of the top of the screen to constantly display advertising. You must use this browser to use their service. I imagine with all the ads displayed per user, they make quite a bit. They offer 24/7 service, email, and some kind of gaming service.
-kidlinux.
Check out page 14 of Computing this week, which has as a first paragraph:
"Telephone charges could rise and free Internet services could be scrapped in the wake of sweeping reforms by Oftel expecting next month."
Basically, BT are whinging that they can't cope with the demand of 900,000 FreeServe users, especially since they only get 30% of the call charges for it (Energis get the other 70%).
Well, my heart is bleeding for BT. They make money almost as quickly as BillG and their product isn't any better, so they can shove it up their corporate whatnots as far as I'm concerned.
The only practical way to make money doing that, unless you're only doing it on a very small scale and aren't paying for bandwidth, is get investment money, sink millions into marketing, get several million users and either IPO or sell it. Unless you're on an IPO or buyout track you've got to make a profit and I've yet to see that happen doing that sort of a business.
It started has a student project and bandwith was supplied by the Uni - then the Uni said no more so it went with a commercila provider with a large announce
Then Sun gave a machine and users gave disk and other hardware to support the site. It was not enough so the guy running the machine (which give free space for 30000 users) had a great idea.If you wanted stats for your web then you had to add a cgi script that would show a ad banner
So you should
Ludo
none Yet.
I think the main thing that people are forgetting when they suggest advertisements is that people don't advertise on a page that has no hits- and without a page that has already been online you don't have the hits. Classic chicken and egg problem- you don't have a site without the money to start it and you don't have money without the site to generate the hits. I agree with the person who suggested a small business loan. Get the site started. Then get advertisers to get it up to profitable.
Then again there is the web cam.....
I think selling disk space with free server access is a good tactic. I'd go for it.
[ReidNews]
Check out Philip Greenspun's model on photo.net;
run a significant free service and show how well
you can make it work, and you can charge big bucks
for web site consulting.
No thanks. This perv prefers to simply make use of his knowledge of newsreaders and newsgroups (oh how *TERRIBLY* hard this is to learn [END SARCASM]) to get his porn.
Pay-for-porn sites get worse day by day. Don't bother with them.
Read my stuff.
Quote:
Print, TV, radio, and the web are all different mediums and they all have very different advertising models.
True. Up to a point. However, there is one commonality to all your examples: you can find them for free. There is free print, free TV (okay, lets not get into the cable issue!..), free radio and free web sites. Yes, their models are different, and there is where most people seem to stumble when it comes to Web-based enterprise: there is no/few reliable models, so they freeze like a deer in the headlights. Instead, business people should learn from BOTH the differences and the similarities.
But I wasn't saying that the Web is print, anyway. I was saying that the lessons learned from traditional media (including radio, etc.) are valuable resources for any business person looking to give something away for free -- I used print media as an example simply because it is what I do for a living.
You are so right about local advertisers prefering local papers; however, the same works in reverse, in that a small paper can not easily secure national advertisers because our demographic is so specialized. Both are good examples of problems a Web site can come up against or answer as well.
I apologize if I wasn't clear about my point in the first post. However, as different as the two industries are, it seems (as I have a foot in both coffins, I guess you could say...) that they also have significant issues in common. My arguement is that rather than throwing out the baby with the bath water and starting with an empty tub, look at the resources already at hand. Business tactics are tactics, plain and simple, and have only been modified to fit different industries as needed.
It is also worth pointing out that while click-through counts have gone down over the years, brand recognition has gone up. Another similarity Web sites have with print media is that we sell advertising based on the idea of "getting your businesses name out there." No more, no less.
I'll be sure to check out Nielson's essay. Thanks for the pointer....Pax.....
"You will do foolish things, but do them with enthusiasm." -- Collette
Well well well, an Ask
I work for a "free" newspaper for a good sized city in Florida. "Free" is only applicable to our business in terms of what our consumers think...they can pick up the paper and read it without paying for it, so we offer a service -- providing content for readers to enjoy -- for free. (okay, it could be service or it could be a product...but you get my point)
However, the paper itself is not free. On top of my salary (the most important check cut here, I do believe!), there is the salary of six other employees and the very expensive printing costs. The company itself does over $1 million a year -- not huge, but respectable for a small business. And every penny of our operating budget is paid for by our advertisers.
The lesson here is that advertising CAN support a "free service." I'm not going to blanket this example to cover Web services (there are plenty of horror stories out there), but just because an media is new does not mean it is not effective. What you need is a business loan to start with and a couple of reputable sales people on your staff. Then start talking numbers -- do research into recent studies concerning people's online habits, do marketing samples, do it all.
If this paper had just started printing one day with the hopes that advertisers would see how great we are and then pay us for ad space, it would have folded in a week. A lot of market research went into this, plus a fair number of financial backers. The upshot: the paper is free, and my paycheck clears the bank.
I think many people involved in the Web/Internet industry are too swift in disregarding the business lessons of the past. Stop thinking in terms of "new, unknown, untrusted high-tech commodity" and all the economic mystery that goes with that vision and go back to square one: it's just a service you are providing. Someone has to pay for it. Period. Look around you at any -- ANY -- company in your town providing a free service, and analyze how they do it without folding.
And then go from there! Good luck.....Pax....
"You will do foolish things, but do them with enthusiasm." -- Collette
Exactly, 1 "good" porno or mp3 site will fully load down a T-1...and do you expect the porno webmaster, much less the kid running the .mp3 site, to be able to pay you the $1000/mo for the pipe? The porno webmaster might be able to if he is savvy, but the Geocities advertiser driven business plan would never work with such bandwidth intensive sites...
Actually I find Freeserve is very easy to connect to - very rarely get the engaged tone. The net-caching is a bit of a pain (it's transparent and hence mandatory) but I can understand why they do it.
I now use Freeserve as my main ISP - I do have another free account as backup, plus a work account if necessary, but I wouldn't mind using just Freeserve and the free account.
The key thing with free ISPs is to always use something like www.bigfoot.com or www.pobox.com to redirect from a stable email address to the free address - that way if Freeserve does go down the toilet you can just redirect your mail somewhere else.
In fact, given how crap many paid-for ISPs are, a bigfoot-style (or domain) address is not a bad idea anyway...
But what I want to know is what is the dial/login sequence so I can set up PPP to connect ? Doesn't see mto just accept a (Windoze generated) login and password.
Anyone done it ?
The only way to raise money for such a thing is via advertising. Otherwise, it ain't gonna be free for long...
Yeah but what if you _want_ javascript et al?
No I have a far better way. I use @Guard; it removes, at the TCP/IP level, ALL popup windows, banner ads and cookies; learns about new ones, doesn't provide a blanket approach (i.e. Accept all cookies/Reject all cookies is just too general, what of you want some then youre stuffed because you've got to accept all of them). The learn feature is dead useful; what's that, an advert? well let;s find a unique string that's part of the advert and tell it to block every HTML item containing that string. Bye-bye advert.
Okay it doesn't block that stupid geoshitties watermark (yet) but I haven't seen a geo or tripod popup for months now. Or any banner ads, except for when I have to reinstall Windows because it has become unmanageably unstable yet again (about once every 6-10 weeks for WinNT).
This is one bit of shareware that improves my online experience so much I'm even considering registering it!!!!!!
Is your website still up? What kind of game reviews did you have? Please email me; I want to talk to you more about this, since this is part of what I want to offer...
This is something I would very much like to do,
not for me, since I'm already investing a lot,
and I'm fine with that, but I simply can't afford
to invest any more, and my service is very slow.
You will see that it is a classical MP3 service,
and I have asked some of these online CD stores
with ad deals if they would consider hosting the
site or something, and they have been...less than
responsive. I mean, I just don't believe I will
find a lot of advertisers wanting to be on an MP3
site (I definately try to distinguish myself from
the average k-lame mp3 sites with the porn ads and
popular music). My biggest problem is I need
more bandwidth, I'm running off a 256k dsl line,
which causes many complaints about speed, user
limits, etc. Does anyone have any suggestions?
There's no "deal with the telco". The telco (Energis in this case) _own_ the ISP (Planet Online).
And there's nothing new about getting paid money for calls made to 0845 numbers. Anyone who gets themselves a telco licence and who achieves interconnect status with BT can go ahead and invest in lines, a switch, etc. and collect call revenue from BT on calls made by BT customers to those numbers.
The amount received by the telco which owns the numbers are: 0.3155 pence per minute at weekends, 0.7333 pence per minute during weekday, off peak and something like 2 pence per minute during weekday peak times.
I ran a trial of this type of service when I was working for a "new" telco, back in November '97. It was a very successful trial and the idea got adopted in a different form - basically, the telco said to ISPs "We'll carry your call traffic, provide the lines, modems and bandwidth and pay you for the privilege".
This is why big ISPs are worth so much money, even though they have never generated a profit - they get snapped up by telcos like Scottish Telecom and Energis, who then start reaping in tens of thousands of pounds a _day_ in call revenue.
I know this, because I was involved in ultimately unsuccessful negotiations to buy one of the big UK ISPs, and I had the job of figuring out how to get them on the telco's network and how much call revenue would be generated. My calculations came out with over £50,000 per day. And that was being kind of conservative.
I used to laugh at stories a few years ago which said that the Internet was threatening telcos, with voice over IP and so on, because I knew about this whole call revenue thing, and I knew that telcos have barrel-loads of money to spend on acquisitions, whereas your average ISP is lucky if it's managing to break even.
The telcos were always going to end up buying out the ISPs. Either that, of the ISPs were going to become telcos - eg. Easynet. It's only now that people are beginning to realise why.
The Dodger
I suspect that what happens on Slashdot is that you see the targeted ads so many times that the clickthrough rate goes through the floor.
For instance, right now I'm looking at a VA Research ad. I've already seen it, and I've already clicked on it. I'm unlikely to click on it again unless I'm in the mood to find out what VA's latest offerings are. I might click on the VA ad once a month to check up on things, but as a regular user of Slashdot, I probably see it about four times a day. So four times a day x 30 days = 120 impressions. One click / 120 impressions is less than 1% clickthrough.
Now, if I purchase one Linux computer a year, and the ad combined with VA's web page convinces me to buy a VA computer for $ 2,500 that they make $200 profit on, I've made them $ 200 a year. If the ad cost them $ 0.01 per impression (ads are more expensive when they're on targeted sites), they spent $ 1.20 to get their $ 200 profit. If 1% of Slashdot users buy a Linux computer because of their ads, and the average user gets about $ 1.20 a year worth of advertising, then it costs them about $ 120 per sale.
Anyone know how that compares to conventional advertising for computers, say on TV or in magazines?
D
CPM is an advertising term meaning cost per thousand.
Not sure what net means - probably 1,000 unique viewers, not 1,000 page views.
D
The following approach should work, but requires venture captial.
If your service isn't up and running, it is the advertisers who control how much they pay you for the banner ads. OTOH, if the service has a solid customer base, you can ask for whatever you want (within reason). Best of luck.
Telethons. Gotta put on telethons.
M
MG
Yes, get some big corporation that will take up ALL your possible ad space. Then, maybe strike up a deal with them to pay for your bandwidth. Getting sponsored by someone who provides bandwidth is probably the easiest. :)
The UK has some of the world's highest Internet charges, because the call to connect to the ISP costs a bomb. I am British, but currently live in Hong Kong. It costs me less to call my mother in London, than she pays to call her friends within the UK. Its easy to finance an internet service in that environment.
Of course, when the phone bills come in, most of the Freeserve customers will probably give it up, or greatly cut down their use. Remember the chatline fiascos 8 or 10 years ago?
Yes, look at the traditional media. In many countries free local newspapaers abound. National ones don't, however.
Most free paper advertising is like a bulletin board sent to your home. John Does advertises his car for sale, and people looking for a car scan the paper. In many cases these papers have no editorial, and are purely classified adverts.
This is very focused advertising (a kind of dynamic yellow pages), and generally very localised. How can you translate that to the Internet, which thrives on broad coverage? How can you get a surplus from it to finance your other non-paying Internet activities? I don't say its impossible, but the attempts I have seen to do this so far have failed.
It means that the site, or the agency used, can't sell all advertising space. This is not uncommon at all. Normally unsold advertising is either ads for the advertising agency or the site (if it sells it's own advertising), some kind of per-click ads, public service ads or whatever.
What it means exactly differs from time to time. It can mean both 1000 page view and 1000 unique page views.
Trying to support an online venture through advertising _only_ is extrememely difficult (the only people I can think of who make a profit at it are Yahoo. Excite, CNet, et al, don't make any money).
Be curious to see
=moJ
- - - - - -
Member in Good Standing,
I heard that all(if not most at least) of the free email/search-engines/webservice get their money by selling their statistics to statistic's companies. Of course, advertisement on the side, but places like yahoo couldn't really make their huge profits from just that one simple banner they have. I would suggest emailing some of the major sites and asking them. I may be totally wrong and way off =)
Meept thinks they could change all the colors of web sites to 'gray' , as this seems to bring in a lot of money for Mob Ruleda.
MEEPT!!
Meept says, check out this site, as it has many hints.
MEEPT!!
My best guess is you get yourself set up in some fine business opportunities and then advertise them on your website.
Of course, diversify.
Software testers needed for
-=Julian=-
The way I express it is that your not making money, but you can be saving money. If you sell computers, for example, and your drivers, FAQs and Bios updates are on you site, then your customer's technical support staff are likely to check the site first rather than put a burden on you phone support, which saves you money. Your driver, and Bios updates won't cost you shipping and media expenses if you distribute them over the web. But by definition if you aren't producing cash you are
not 'making money'.
Spyder
We offer cash prizes and t-shirts to the weekly winners during the football season. Our revenue is solely based from advertisers and sponsors.
We use Flycast for our banner advertising. We were getting around $3.50 net CPM from them during the season for doing very little work on our part. We also had weekly sponsors that paid up to be included in our weekly emails and to have an ad on *every* page.
I suggest you create the site with advertising holes in place, and then hunt down your advertisers/sponsors. This takes a lot of energy, make sure you have someone who has done cold calls before doing this.
Also, gainging page views is best done by swapping a portion of your advertising with a partnering site.
Good Luck.
-Don Drake
Ok, now that I have an account...
Haven't read too much of the comments, but I would suggest 1. Sponsors, 2. Donations by the users (both money and/or support of systems.
After building a decent sized ISP (2 DS3's) during the past 4 years I'm ready to move on, but would love to have a place I can hang out and help support "over the wire".
Assuming you are in the U.S., you can always setup a 501(c)(3) charity corporation and seek donations and/or write grant proposals.
You would need a Board of Directors. States vary of the requirements. Your state's Secretary of State website might have materials you can download. Your State's statute might be on-line and it usually very clear (once you get used to the writing style) about the requirements.
There are on-line organizations that will help non-profits.
There are special IRS requirements for non-profits. You must file all the paperwork associated with having employees.
If you have three committed people, a couple months, and a couple thousand dollars in seed money, to hire a lawyer, you could get rolling.
Non-profits cover costs, pay salaries, etc. so it is quite possible to make a living, assuming you can get donations or grants. Also, as a 501(c)(3) you can receive donations of equipment, software, etc.
There are many complex issues with this approach and I wouldn't recommend it for the faint hearted or for a whimsical idea. However, it does avoid the pesky commercial alternatives.