I don't understand the confusion folks have about the business model (earnest confusion, not "yur dumb" trolling confusion).
App.net creates an API and people pay money to have access. Different tiers demand different prices. $500,000 in membership fees makes it sustainable (says Dalton).
The big question and, quite frankly, the whole point of Dalton's experiment (as I read him anyway, I don't know the fellow personally), is to test if there is actually a market for it, hence the kickstarter like campaign.
There are paid version of all sorts of web services that are offered for free that are sustainable. I pay for a server space and a domain names yearly. I don't know why something like this couldn't also exist for those who wanted more control.
Will Dalton's work? Time will tell, but something like this will happen and will happen soon.
It would be mediocre if it was simply an "open api" twitter/facebook but, given the chatter on the Alpha site and the look of the API on git (https://github.com/appdotnet/api-spec), I think there is something bigger going on here.
If by "sticking it to the man" you mean "creating a business model based on an open api and not the content in the platform the API uses," then I agree.
The problem with Twitter and Facebook is that they've moved away from supporting external developers into media companies (so the argument goes).
If that's true, then Twitter and Facebook are looking for the best interests of it's advertising partners like every media company (radio, television, print, etc.) rather than the consumers.
In the case of Facebook and Twitter, it means rolling out features that benefit the advertisers. Now, it is certainly possible that the features rolled out could benefit both sides, but the moment Twitter/Facebook has to make a decision between the two they'll pick the advertisers since that's how they butter their bread.
App.net, by contrast, only has one option which is make the best choices for the developers/users. In some sense, this is really more of a B-to-B venture than a B-to-C since, ideally, App.net focuses on the API and let's the developers build the robust applications.
Depends on what you mean by "pull this off." The alpha itself is pretty beefy for the alpha's I've seen. The API isn't stable but it's certainly nothing to sniff at and the web GUI is more realized in a few weeks than twitter was in a few months (learning from others mistakes makes this easier, of course).
Frankly, it wasn't until Dalton linked to PG's write-up of his PyCon talk that I really began to understand what his intentions were.
The write-up: http://paulgraham.com/ambitious.html The video: http://www.youtube.com/watch?v=R9ITLdmfdLI