This question has troubled me a lot. I have not been able to answer it satisfactorily. And imagine my restlessness when this one of the most popular first questions with which a discussion about a website starts, even when it is in the conception stage. I often am involved at early stages, sometimes being a party to a recommendation of using the Web. Whether it is for a publication or for better visibility or for expanding the customer base or for providing a technology service that can enable others. So you can imagine my frustration when I cannot provide a satisfactory answer to this question.
On thinking more about it I realize that the recommendation is not about how much money it can make. It is more about increased value or something new that it can provide. So a revenue model is not the first thing on my mind when a website is being discussed. I cannot even attempt to compare it with existing sites and guess the numbers. However most of the business people want these numbers numbers, not the abstract value or the possibility.
The best answer I have come up with is that it depends on the value that it can provide to the users. It will also depend on what value can the users build using it. For example, twitter provides a technology service, an ability to use the mobile and the web to create a subscriber group or follow others. You are open to build more things from it, and I think this is where it is much more valuable than the others. There are also those websites which provide certain information or provide a business functionality. But unless the value can be agreed upon and verified, you cannot think of the revenue, not even the revenue model.
This is not to say that earning money is not important. It is always a critical factor and there have to be plans to make it happen. Revenue models should be thought about, and I think this is a critical thread that evolves as a website grows. But I find myself helpless, even irritated, when this becomes the first and only question to decide whether a website should be done or not. It usually turns into a stalemate.
I have not been able to think of the money a website, or for that matter any business, can make without thinking about what value it provides. But I have been proven equally inept at communicating this to people who want only the numbers. Have you faced such situations? Have you found an answer to this question?