There’s a blogonerd fight going on between Nick, Jason, and Mike that Andy ranted about today. Smart, arrogant, opinionated guys with a pulpit, a point, and a cult following tend to be pretty entertaining.

If you can sift through the endless comments (please install Intense Debate already!) there’s actually an interesting discussion going on there about the state of the software industry and what revenue models are most viable (subscriptions vs. ad-supported). 

It’s all changing because ad models are working more and more as web usage soars and the ad industry is waking up to (1) where their customers are, (2) how they can connect with them, and (3) how they can measure (and quickly tune) that connection.  So ad dollars are available that weren’t there even a year ago are shifting online, and it will keep going in that direction.

What’s also changing is that web apps are getting better and more useful.  Underlying technologies and the products being built on them are maturing.  Expectations (from consumers) are increasing, creating a positive pressure.  Product developers are responding by creating better products.

What isn’t stressed enough in the debate is this: people will will pay for good software that fills a need.  People will pay more for great software.  Most of the web apps out there are crap and their failure has little to do with their pricing model.  Yes, you should think about how you’ll make money when you start any business, but that should be a distant second to figuring out how you’ll make a remarkable product.

Think about your users, create a great product for them, and then obsess about how to generate revenue.