My friend Gina runs Ning, a development environment for various web apps that skew towards the 2.0 mash-up hot or not ad supported. Ning launched with lots of fanfare in 2005 but seemingly stagnated in recent months.

TechCrunch, which if it was a print magazine would be something like InStyle + The Industry Standard, pronounced Ning dead and Gina took the time to respond. Stowe Boyd documents it all here.

First let me give Gina props for a thoughtful and mature response to a post which could have been flame worthy.

With regards to the larger question of whether Ning can grow to be a meaningful component of web publishing, it remains to be seen. I love any service that lowers the bar to user-created content and they are clearly moving in that direction.

The greater challenge is how do you monetize this energy in a manner consistent with your business. A “free for basic, $9.95 for premium” account structure? Ad supported where Ning takes a percentage of the revenue? Totally free to get to scale and then keep fingers crossed for an acquisition by someone who wants to build web publishing into their application empire?

One inherent challenge is in the nature of the apps they power, most of which have significant network effects. Different than say Blogger, where you can have 10 million blogs, most of which are read by just a few people, many of Ning’s applications rely upon a critical mass of users to be successful. The Craigslist-clone, the Friendster-clone, etc are of no use if it’s just you and three friends visiting the site.

At the end of the day it’s likely that a handful of Ning-powered sites will be really successful, some more will be mildly successful, and the rest will be stagnant/abandoned. So Ning needs a business model that has to capture disproportionate revenue from the successes. But if Ning wants too much of the pie, that creates a tradeoff where all of a sudden their development platform isn’t enough of a benefit to offset tithing 10% of your ad revenue back to Ning.

Gina’s a smart cookie and all this was likely discussed at Ning long ago so I’m interested to see where they go in the coming months.