@Neil – good points. It is essentially a circular model in which the value of the service needs to continually match or outpace the value of the “punishment” as you put it. The obvious case study right now is Twitter. What happens when they burn through their VC cash? Would us Twitter addicts cope with ads? Would we pay for the service? What would “premium” Twitter look like? What if a free version opened shortly after the paid-for version – would we jump across to that one? etc etc.

Under this of course is the enduring question: who the **** clicks on the ads anyway? Where did we get the notion that (online) advertising has any inherent value – and is this (apart from physical “thing drops through your door”) the only way to make serious money online? Google seem to think so.