Instapaper isn't entirely without other revenue. The web interface displays ads, and he offers a $1/month subscription that improves some features. (I pay for it so that I can send larger compilations to my Kindle.)
Yes. I subscribe not because I cared about whatever features he was offering at the time. (I think it was all about the iPad, and I've never owned one.) I did it because I wanted to make sure he was getting paid enough to keep doing it.
Glad to see that he's happy and feels like he's making enough.
http://www.instapaper.com/subscription