Donations are not a business model. Its putting out a tip cup and hoping money falls into it. Tip cups do not have a curious property in physics that causes money to be attracted to them.

I do downloadable software, of the "makes people substantially less money than Wordpress" variety. Roughly 1.8% of downloads result in people paying me money. The average paid me is, I say without fear of contradiction, far above the average donation any Wordpress developer with a significant amount of donations has received. (Edit to add: here's a point of reference. Back when MoveableType was donationware, the average donation was 38. Cents.)

When you offer something for donations, you're saying "It would be REALLY NICE if you could put ANY money into this here tip cup because, as you know, almost nobody will. That $1 there, that makes you a better person than 99.9% of the public." This is a cruddy frame of mind to put your I-can't-believe-its-not-a-customer into from the perspective of separating them from their money.

When you offer stuff for sale, you say "It would be TOTALLY MANDATORY that you pay me exact what it says on the sticker for this here thing. Everybody pays for it, except thieves. [In point of fact 98.2% of people do not pay for it, but I don't clobber my users over the head with that fact, now do I.] Offering to pay me $1 for it doesn't make you nice, it makes you a cheapskate and parasite on society." (And the best part is you never have to tell people this because they already know.)

There are people who do well with donations. Rick Brewster of Paint.NET is the only one who springs readily to mind for me. He pushes the donations fairly aggressively (+) and distributes a program which is probably competitive with some of Adobe's low-end consumer offerings.

+ Another problem with donations: they fail quite frequently because people are embarrassed to ask for money, like they feel they are doing something wrong. So they bury the tip cup out of the way and don't aggressively promote it within the application, for fear of being thought poorly of by cheapskates who think $1 is too much to pay for $APP. People with this philosophy will never be mollified, and charging money from the getgo means you never have to worry about what they think of you.

There is a difference between what people want, and what the legalities are. Premium plugins doesn't have a sustainable foundation since they have to be GPL. What's to stop me from buying a so-called premium plugin, and then re-selling it to someone else, or giving it away for free? The GPL explicitly allows me this freedom.

Correct me if I'm wrong, but as I see it, it doesn't matter how many people believe premium plugins are the way to go. The GPL license will still undermine it. Unless WordPress is re-released under a non-GPL license. I'm not sure this is doable though.

This reminds me the recent HN news item saying "Non profits kill the innovation". But this article makes me think that things are even worse than that. Wordpress should do something to change this I guess.