How do free services on the web make money?

There are a lot of ways to make actual profit (not just break even) with free applications.

The Hacker News crowd doesn't always show a lot of love for the "small, free application" crowd, and the echo chamber is correct that having a webapp doesn't mean you're a startup.

I know that I don't consider myself the "founder" of my app, because my site is not a company. I'm not trying to make it a business.

That said, though, this write-up glosses over what has been, in my experience, the easiest and most straightforward way to profit from free traffic: non-targeted ads. For me, that means a single banner advertisement served over Google Adsense.

Now, like I said, I'm not trying to make http://sleepyti.me my primary income. If I wanted to charge users, or enter deals with, say, large mattress vendors, that would be different. But that isn't to say that the traffic and feedback I've received hasn't helped me both personally and professionally.

Personally, I've received a lot of attention from my app. It's pretty popular with college students, and it's gained media attention from outlets such as Lifehacker, the Toronto Star, and most recently the New York Times.

I'm not listing these sources to self-promote, but to show that from a personal exposure standpoint, it's opened many doors for me.

The same goes professionally: I had a brief partnership with YC-backed WakeMate, which, although now defunct, allowed me to interact with an early-stage YC company that I otherwise would not have been able to experience. I get between 1.6 and 2 million hits a month, and the financial reward has been steadily increasing through my single banner ad as well.

People always say that "if you're not paying for it, you're the product," but I don't think that that's always true. I don't prey on my users, and I can think of several free apps that operate in a similar--even less obtrusive--manner. Trello, for example, neither serves ads nor sells my personal data (I hope!). Sometimes it's worth it for a developer to create something and truly release it for free, without having the immediate motive of profit.

I always tell college students who ask how to break into an industry--whether it's information security, professional programming, the startup world, or anything else--to do something. Sometimes a free application, such as the one I created as a free weekend side-project, turns into more than what it is. I'm more than aware that my experience is mostly a fluke, though. The take-home message should be that even if it doesn't become some massively-profitable, highly-trafficked app or site, it's still something that you built.

And that has value.

(Also, I <3 SleepyTime and I would pay like $1 a month or something :D)

On the other hand, a startup that knows what they're doing will know that building out the correct audience is the way to go - if you provide your clients (the advertiser) what they want (quality, relevant audiences, preferably with intent to buy), you can do quite well.