novice - 5:21 pm on Apr 11, 2005 (gmt 0)

"5) I am not an economist but doesn't the model of supply and demand mean that at some point there will be so many websites with adsense that it will make it unprofitable? When a publisher has 500 websites wanting to run their ads won't they be able to pay less to each ad?"

Based on Google's projections they hope to add 2,000 new advertisers every week. That will help support the supply.

As for the demand, just because a publisher starts 500 websites that does not mean that they will generate a massive amount of traffic. Setting up a web site is one thing, getting traffic is another.