That was one of my main statements on the SBAW panel (Translation: “WordPress destroyed the blog hosting market”) and I'll try to explain that statement a little further here.
What I basically wanted to say is, that the installation of WordPress is sooo easy and there are so many features built in, resp. plugins available, that there are not many incentives to use a dedicated blog host provider and maybe even pay for it. Why should I pay 5 Euro a month to a blog hoster, when I can get for the same price a full hosting, with more disc space, full control over the design, my own domain and certainly more features (I can not only run my blog there, but also other software and get dozens of email addresses). I'm not limited to the templates the blog provider provides and I can install whatever plugin I want. And if I'm not happy with the hosting provider, there are dozens of others, which do the same thing, without having to go through the pain of data- and tool-migration.
Of course, it's still easier to setup a blog at a blog-hoster (fill in a form and there you go) instead of going through the wordpress installation. But from there, you enjoy much more freedom. And if you have a technical problem, just blog about it, there are certainly others around, which are happy to help you .)
One may argue, that even if it is easy to setup WordPress or similar, 90% of the population still doesn't want to do that. Sure, I agree, but those 90% also usually don't want to pay 10 CHF a month for such a service and if they really get into blogging, I argue that most of them sooner or later switch to their own hosting. Just when they become interesting for the bloghoster (either 'cause they'd be ready to pay or generate so much traffic, that the ads on free hostings could get interesting for the hoster ).
I don't say, that this counts for everyone, there is certainly a market for bloghosters (be it for free or paid), but WordPress et al. made that potential market much much smaller. Like eg. Apache made the commercial Webserver market really small :)
You may ask, why I'm saying this, since we're also a blog-provider with Freeflux.net. Good question. First, freeflux.net is certainly not our #1 income source, it's more a tool to show what one can do with Flux CMS (and to give people the option to use Flux CMS without having to have their own server :) ). And there's the other market for providing blog hosting services for others, like we do for blog.students.ch, which still is interesting. And if you use Freeflux.net now, it's easy for you to later switch to your own server with Flux CMS installed, as all the sources are freely available and we'll be happy to provide you with the DB dump and all your other data (for free, of course :))
Update (15:05): I don't say, WordPress is better than Flux CMS (or others) :) It was just the perfect example for my point from the panel. You can of course install Flux CMS on your own hosting as easy as WordPress. And it's Open Source, too :)