It looks like the "advertising only" business model is a pipe dream - Digg, which has more traffic than just about any other site around, is losing a fair bit of money. According to BusinessWeek:

One reason may be that Digg's public profile is much larger than its financial might. Last year the company lost $2.8 million on $4.8 million in revenue, according to Digg financial statements reviewed by BusinessWeek. In the first three quarters of 2008, Digg lost $4 million on $6.4 million in revenue. Adelson declined to comment on the figures.

2007 wasn't a bad year (the stock market was up), and they lost money then. I think it's becoming abundantly clear that advertising - unless your name is Google - is a secondary way of bringing in money. You actually do need a primary way of bringing in cash.

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