I think its also worth mentioning that Doctorow's plan wouldn't be successful if he didn't do such a good job with the CwF part of the equation: he frequently interacts with his fans on BoingBoing (for free!), and learns what THEY want to read about while getting them interested in in what he is writing about it.
I'm not a huge fan of his writing, but I certainly applaud this move by him.
I might not be reading the article closely enough, but it seems like people aren't making a lot of money based on people BUYING apps.
What about free apps, like the Pizza Hut one that enables you to order pizzas through your iPhone? Surely things like this must be making money for people (and I realize this is a slightly different issue than making money directly by sale of the app).