The question has come up once again regarding audience--namely, when to pay attention to audience and when to ignore it. My answer: it depends on what you're writing and why you're writing it.
Some texts are "reader-based" texts. That is, they are written for a specific audience in mind, and that audience needs to be at the forefront of consideration when writing. For example, a query letter to an agent. Certain nonfiction books, like How-to books, also require the writer to have a firm grasp of who her reader is.
Fiction (and creative nonfiction/nonfiction prose), on the other hand, is more of a "writer-based" text. Here I argue that the writer, especially in earlier drafts, needs to put the reader on the back burner and pay more attention to what the characters are telling her to do rather than what she thinks her readers want the characters to do. Even my good friend Aaron Sorkin (ha! I wish!) has stated that if his purpose is trying too hard to find the audience (rather than letting the audience find him), then it can lead to some bad writing/decision-making (one of the criticisms for the failure of Studio 60 included this).
I've said it over and over again: the best writers seem rather selfish in nature in that they write for themselves -- but look at the results. Look at The Simpsons or Family Guy. Look at the classic Bugs Bunny cartoons (those were NOT for kids!). John Lennon said he always wrote for himself. Toni Morrison said "I wrote the book I wanted to read." And so on. Even Mr. Rogers, God bless him, knew that his interaction with his audience wasn't about the many, but the one. When he looked into the camera, he talked to one child. And even now, all grown up, when I watch Mr. Rogers, I *still* feel like he's talking to *me*. Brilliant.
Ultimately, we want others to read what we've written, and more importantly, to *like* it, so audience awareness is going to factor in at some point. But in the same way we'll never be able to figure out the X-factor that will determine how to win the attention and affection of an agent, I think that X-factor exists in other situations, too (unless you know exactly who you're writing to an for what reason). Even my students tell me, "I'm not sure what you're looking for." I reply, "I'm not sure what I'm looking for either, but I'll know it when I see it." I think agents answer the same way.
Bottom line? The more aware of who you are writing to/for and why you are writing will assist you in how well you write. If you're too focused on audience, then perhaps you need to step back. If your audience isn't responding, then perhaps you need to consider them more. Know *what* you're writing, too. Know the nature of the text, the conventions of the genre.
Writing is about decision-making as much as it's about language and expression and persuasion and communication. Good writers make good decisions. Bad writers, well...
I think even Aaron would agree.