I'm currently pulling in about a thousand dollars a month via. donations. I think it was worth doing.
For those who don't know, when certain donation totals are reached, I release a bonus chapter on a Thursday. [Edit: Jim mentioned this] In truth, I'm somewhat behind - there are only so many Thursdays, and I can't do every Thursday without burning out. To top it off, I've been slow at times to adjust to increases in the readership, leading to one donation causing multiple chapters to enter the queue.
I started off at a $75 target, then scaled the target amount up to match the size of the readership and amount of donations. It took two months, I think, for the first target to be hit (and the chapter was okay, but not fantastic) - but the second donation chapter blew people out of the water, and things picked up after that. It currently sits at one thousand dollars (having scaled up to 120, then 200 in 2012, 300 in early 2013, and later 600 and $1000) - but part of the reason for the last two totals was actually to slow things down, as my story is currently in the ending arc.
Writers doing work for free is actually a pretty contentious subject in the writer's community, though this typically comes up in terms of doing work for magazines or journals. Some view it as a way to hone their abilities, get feedback and build up a resume. Others feel that writers are underpaid as a rule, and writers doing work for nothing (or next to nothing) puts writers as a whole in a bad position. It's like trying to fix the minimum wage in America - you can't have McDonald's workers striking, because there's an endless supply of people willing to take that $7.11/hour wage.
Now, of course, serials are different in the sense of working for free. But I do think that Greyworld's attitude is a symptom of what the second group is talking about in that debate I referenced. Generally speaking, writing doesn't get a lot of credit. It's fairly common knowledge that if you aren't a NYT bestseller, you're not going to make any money writing. It's viewed as easy, lackadaisical, a hobby more than an actual job. Speaking for myself, when I talk to people (acquaintances, family members, whatever else) about my writing and my goal of writing full time, I very frequently get the 'But what do you -really- do for work', 'Do you have a fallback plan' or [in response to my talking about some good donations I've received] 'How can someone pay that much?'
No. Excuse my french, but fuck that. Fuck that, fuck that, fuck that. Writing is work, and anyone who's got a serial going knows just how much of a grind it can be. Speaking for myself, I put 50 hours a week into the writing, minimum, on top of everything else I need to do in order to get by. I've written 1,550,000 words in 2.5 years, averaging 80k+ words a month for the last year. And I'm doing it all because I'm fighting like hell against these preconceived ideas. I want things to be different so I'm butting my head against the wall until they are.
Writing is a gamble, because you don't know how something will take off until it's done (this is helped some with collaboration with editors and other writers, or the serial format) and it's an investment, because you're putting huge amounts of time and effort into something that only (maybe - see the gambling bit) pays off further down the road. Serials, again, help, because they let people help to support you along the way. Regardless, there's so much luck involved, and there's only so much you can do in terms of raw work, compared to everything that's based on luck and the kindness of others. The only way around this is to do more raw work and to maximize your opportunities for luck and good fortune.
Let me elaborate on what you're fighting against. The average self-published author makes $500 off their book. That's a pittance. Authors who've appeared on Amazon's bestseller lists can made $10k. The ones you're thinking of, like Stephen King or J.K. Rowling? They're in a whole different ball park (I'd say something about J.K. Rowling's experiment in writing under a pen name, but I don't want to stray too far off message here).
Published authors still get a pretty bum rap. You go through the rigamole of jumping through hoops, get it past the slush pile and past the editor's desk. Then you get a pittance of an advance and at the end of the day you're told you need to market your own work yourself and that you won't get much attention from an editor or copy editor. And when all's said and done, your book title, genre and ISBN # are put in a catalogue for major booksellers to pick from, lost in a massive binder of pages in plastic sheaths, one line among thousands of black text on white. In short, you're essentially trading away 85% of the earnings for little more than the publisher's name on the spine and inside cover. Maybe you get a better deal with smaller publishers, but you lose out on distribution. Now, there's reasons for this, and I totally, 100% believe that editors and copy editors and all of the other individuals in publishing houses deserve to get paid as much as writers do, and I believe (a little cynically, yes, but sure) that there's a degree of legitimacy lent to you if you do have that publisher's icon on your book, but the publishing industry is sort of dying, and that means less funds, which means less going to the author and lower quality works, which hurts the publishing industry in turn.
Now, I don't want to sound entitled, because I love my readers and I adore the people who've been donating. If I could meet them in person, I'd give each and every one of them hugs. But expecting to get paid for your work should be status quo. I've put in a hell of a lot of effort and done my best to be pretty professional about this whole endeavor, treating it like a nine to five (in my case, a nine to 2am), and I've been lucky enough to have my readers respond as if I were that individual, donating in kind. I gotta say I do sort of agree with the one side in the debate I mentioned before, in that I think writers (and people as a whole) should have expectations that writing is rewarded for the work it is. If and when that happens, then we get better works and we get authors who aren't getting the equivalent of 5 cents an hour.
And while I'm putting in 200+ hours a month, I'm making less than minimum wage. Others who can't put in the time are, as stated above, only getting a handful of donations. But we're approaching a new era, I think, where people can support the things they want to support, with kickstarters and the like. The middleman is becoming less necessary and we're seeing more successful works that come out of fanfiction or online fiction, and successful works that get kickstartered or serialized (with, of course, varying interpretations of success).
Acknowledging donations is a part of acknowledging this new age and being a part of it. I wouldn't be embarrassed (and am not embarrassed) at all about soliciting such. So long as we keep putting out good work and so long as we're patient and persistent and focused, I think things will get a lot better.
Whether you've got big dreams or whether you're a hobbyist or experimenting by putting in 500 unedited words a month, I think you have to leave the door open to being valued and rewarded for your effort.