Rich Miller is keenly interested in the commercial viability of weblogs, but the notion of an ad within an RSS feed just feels wrong (via Corante on Blogging). But while weblogs may be driving the popularity of RSS, it is a mistake to think that Weblogs are synonymous with RSS.
The right model for ad supported RSS is the email newsletter, such as the LangaList or This is True. Each is available in either a ad-supported, abbreviated version or a paid subscription, full version - I’ve been a subscriber to the ad-supported versions of both for years. The war on spam puts all email newsletters at risk, and I think RSS is the best way out. BTW, a financial analysis is available online for a fledgling newsletter: Brian’s Buzz.
I also think that most weblogs are not a suitable platform for advertising. I’d guess that the percentage of ads by number and volume will need to be under 20% to prevent a reader revolt. And I suspect that most weblogs have less than 4 entries a day. So the ads aren’t really going to fit in unless entries are held back and released in a burst.