Not much more to tell. Its like any website that has a big competitor. Like why alot of forums are failing due to Social networking sites like facebook. Less and less people go out to find directories. Actually i bet you the only people that do are people looking to be listed. After that, your just gunna get googlebots stealing your data. Good for everyone but you.
Most directories don't make money because they are simply not worth submitting to. There are plenty of threads around here that discuss what makes a quality directory. If all you are doing is creating a free-for-all link farm, you're bound to fail and that's what probably 95% plus of "directory" owners are doing.
No, it does not. I do not equate free directories as automatically being low quality nor do I equate paid directories as ensuring quality. Any directory can make money from advertising if they create a worthwhile site. What I'm saying is that any directory without solid editorial policies will eventually fail. And unfortunately, the vast majority of the directories do not enforce any editorial guidelines.
I've actually seen way more free directories that are better than the paid ones. I think that's because the paid ones want to approve everyone to make money, while the free ones aren't obligated to approve everyone as they want to keep they're recurring visitors and Google happy at the same time to keep revenue coming in from Adsense etc.
You are right about that. It's far easier for me to say no to a listing when I don't have the issue of a listing fee in play.
Niche local directories seem to be working for a lot of people these days but that's it as far as I can tell.
Due to the high cometition and availability of free web directories, they fails to attract huge number of visitors and the chances of getting paid listings drops down drastically.