Wow, there is a lot of awesome stuff here. +1 to just about everything MCA and Cecilia say. The tv/movie analogy is spot on; I think many here aren't old enough to remember those days. When Tom Hanks made the move to the big screen everyone was like "ooooh! He's a *real* actor now!"
It's like we're the Velveteen Rabbit; if we get loved hard enough we get to be Real Writers, whatever the hell that means. Well, actually, that mightn't be a bad analogy. Real Writers aren't people who make money at it; Real Writers are read. That's true for any writer, anywhere, not just us.
Karen, your comment about how people find weblit: from my experiences as a neophyte weblit reader a few years ago and as a writer now, people do NOT go searching for weblit, at least originally. They stumble on it. I stumbled on ToMU in late 2007/early 2008, not sure where--oh, I think it was LJ, someone either posted or pointed to AE's knockout first chapter--whatever you think about ToMU or where it's gone over the years, that first chapter just kills. Boom, I was into the weblit community and read like mad. Once you've been introduced, THEN you might come here and look around. More likely you're going to look at the links on your fave author's site, or the ads there, before you come to WFG. That's part of the problem in promoting WFG; no one knows they need it yet.
My experience as a writer has been that people primarily find me through ads and word of mouth, then from sites like OnlineNovels, WFG and TopWebFiction, in that order. Top search term for me: my name. Second search term for me: miranda birth control, for srs. That's why Google Ads fail MISERABLY for weblit. No one is searching for it.
The first ten chapters of Scryer's Gulch in chapbook form has been good advertising for me; it's a free download at Smashwords and is currently the 4th most downloaded scifi/fantasy book of all time and 38th of all books including erotica, approaching 7,000 downloads. I'm starting to see more new readers show up directly, and I tie that to the ebook. Ironically, it's first draft/last draft and isn't even my best work.
So yeah. Finding people is the issue, letting people know we're here *and making them care we're here.* We have to find those crossover spots where people might be likely to try something new, take a risk with their time, because that's what we're asking for. We want them to say, "That was worth the ten minutes to read that installment," not "I want those ten minutes back," and to get them to commit to those ten minutes in the first place.
Webcomics have traditionally been good places to get people to at least check us out, but comics are a quick sample; even something as tersely written as MCA's (absolutely terrific top of my current webserial list) "Spots the Space Marine" takes more effort than, say, xkcd. I'm not sure how we solve that problem. I'm considering perhaps tapping the zine community, printing up some actual chapbooks and handing them out or making them a cheap buy at cons. We need to be looking for people with attention spans.
People ask me all the time how I found my readership. I don't have an answer other than that I was willing to put some money into ads. I think I spent a couple hundred dollars initially, including whatever I made at PW. It paid off. I can't advise that for everyone; I just know it worked for me.
I'm rambling now; I just go back from an afternoon at the steam/sauna with a friend and I am currently made of jello...