How to make money with Web 2.0

I caught a few of Dave McClure's slides presented  during his Startup Metrics 101:  Product & Marketing Wrkshop with Hiten Shah and Vanessa Fox at the Web 2.0 Expo SF.  They'll be posted on his blog 500hats and slideshare later today.

The most compelling was "How to make money?" [with Web 2.0 startups]. 

1. Adsense--Dave and several of the other presenters I've heard agree that it's hard to make money on Adsense.  However, this is not the same as saying "forget ad-based revenue models".  Dogster, BlogHer and others show that the devil is in the details--direct advertising and sponsors and a highly motivated and passionate community--longtail or not--can be quite profitable.

2. Start Free-->Go Freemium--I was delighted to hear Dave bring up key timing and sequencing issues in Web 2.0 and "exponential" network effects strategy.  When you offer "free" and whether it is for early-mover advantage, or developing critical mass and social influence before an imitator/competitor/other platform triggers a competitive race or to swing an affiliate vote in a tippy market battle zone--matters a lot.  The 2nd and 3rd chapters of my new Web 2.0 strategy book looks a lot at these particular "make or break" decision points in a Web 2.0 world.

3. Subscription and Recurring Transactions--Dave brought up the pros and cons of one time e-commerce-style transactions vs. subscription and recurring transactions.  His discussion made me realize that there's much more going on than just a price-based unit product sale versus the monthly or time-based fee more often used for time-based services.  Recurring transactions not only build "stickiness", but a "frequent" transactions-kind of trust.

4.Qualify your customers--Dave characterized conversion as a type of prospect qualification and lead generation.  This was an interesting perspective and quite different than thinking of communities as large scale focus groups.

5. Sell something physical or virtual.  Dave mentioned that the "virtual" goods economy was getting more developed in Asia--China and Korea, for example.  I love