Aparrently, the Economist agrees with me:
Ultimately, though, every business needs revenues -- and advertising, it transpires, is not going to provide enough. Free content and services were a beguiling idea. But the lesson of two internet bubbles is that somebody somewhere is going to have to pick up the tab for lunch.
Two weeks ago, they were talking about this on "This Week in Tech", and one of the panelists (I forget who now) said that sooner or later, Twitter and Facebook were doomed without a real revenue model. Lots of eyeballs are one thing; actual dollars coming in to pay the bills is something else again.
Consider how I'm using Facebook - I throw the "Smalltalk Daily" videos up there every day. Now, they aren't huge, but they take up some amount of storage, and anyone who watches them (I'll be darned if I can find metrics from Facebook for that) consumes bandwidth. Who's paying for that? Right now, no one. You think the audience for the Smalltalk videos is interested in the ads that pop up on the page? Right now, I see an "Easter in Howard County" ad, and another one for Lasik. That kind of non-targeted ad simply doesn't work well, and - once the pleasant delusion on advertising passes, will simply disappear.
I really have no idea how either Facebook or Twitter are going to survive. They've gotten us used to the idea of free, and told us that we can upload virtually infinite amounts of content to them for nothing. Where's the revenue for that?
Update: Doc Searls ads some relevant points, and a few suggestions as to what the future might look like.