I stood around with Giampaolo, Tamura, and other Apple folks. I had a significant leg up on journalists; I know the subject well and the Apple folks know and respect me based on technology I've worked on. (And they didn't kick me out when I revealed that I didn't actually have a conference pass). I knew (some of) the questions to ask, and they were remarkably open with their answers.
The cause is the change in editorial standards for the site which has been decreasing for years, and so every year is at a new all time low. Not to mention the really invasive ads and even sponsored content.
As for advertising, how do you expect them to hire writers and editors or run a high-traffic website without advertising? They've offered paid subscriptions for years and subscribers don't see ads at all but not enough people have taken them up on it.
The lack of subscriptions are probably a symptom of the editorial quality going down. You can say there's no evidence of it, but when lots of people complain about it that is evidence of it. I was a long time Ars reader and the b.s. finally got too thick that I have stopped going to the site regularly in the last year.
It used to be a site for intelligent, balanced articles about tech. Now it's got shills like DrPizza who basically just reprint whatever Microsoft's PR department emails him.