I disagree ads are what keeps the internet alive. What keeps it alive are hackers and artists. They share this: an itch to create. They will create even for free. But we would have been so much ahead in creative business models that they could explore (see Kickstarter) in an alternate reality where ads did not exist.
The user side is simple: As the user base grows your infrastructure requirements grow as well. And, at certain milestones these needs grow in large capex bursts. Flexible services such as AWS have made scaling far cheaper, more linear and less expensive, but it it still very expensive once you cross certain business-dependent thresholds. Hardware is hardware, whether you own it or not.
Of course, the team will scale based on other parameters. More engineers, more designers, customer service, accounting, operations, whatever. More people. Not working for peanuts of feel good hippie thoughts but for money. They need it to live, rent or buy a place to live, feed themselves and their families, save, invest, have fun, etc.
Given that internet culture quickly --from the very early days-- levitated to free and add-supported free most internet users only want to pay for their connectivity. Nobody wants to pay for anything on the internet. That's just a fact. Pick any service, say LinkeIn, far more free users than paid users. It's like that across the board.
Hell, it's even like that in mobile. Unless you get lucky it's nearly impossible to make money with paid apps. Make them free and then sell them something from within the app or support it with ads.
I stand by my original sentiment: The internet would collapse tomorrow if advertising was banned. That doesn't mean I prefer it that way. I am simply reflecting reality.
The Internet didn't always run on big business - business gradually shaped it into the way it is today.
Making ad revenue, e.g. from Google, means you're reinforcing the big corporations who really need to market themselves through ads--those are the ones who could not live without ads (they need the constant intrusive, paid-for flow of unwilling eyeballs to keep their investors happy), not the independ publishers (who I think could.) Niche ad networks are alright, but nevertheless they contribute to making it easy not to think hard (and work hard) to pursue alternate business models.
That's the approach taken by the people behind Project VRM and Doc Searls' Intention economy[1].
The biggest need is brand advertising. If Coca Cola reduced their brand advertising, their sales would go decline. Maybe I'm not imaginative, but I don't see an intention economy product for beverages, where the transaction cost is low and the switching cost is zero. People don't actively think, "what would I like to drink today?"
Another need is driving awareness. Movie releases depend upon heavy ad campaigns to ensure that people know when a movie is coming out. A different example is changing service providers, like a cell phone or car insurance. Sure you might one day decide to comparison shop, but Sprint's new unlimited plan, or Geico's "save 15% or more" campaign are effective at encouraging a switch when it wasn't within consideration.
"Brand advertising" means making companies far more rich they than needed to be. I'd prefer an economy where companies actually rely on their product being good and people telling each other (see craft beers), and no, I don't think it's healthy for them to grow into mega-corps (which they wouldn't be able to do without ads.)
As for awareness and changing service providers, again, word of mouth and spontaneous sharing of links and stories on the internet.
Again, that's the seller's perspective. Under the buyer's, they could make their intention of knowing about the new releases if they wanted to. Better yet, they could announce what kind of films they want to know about, instead of being drowned in ads for Fast and Furious 348.
A different example is changing service providers, like a cell phone or car insurance. Sure you might one day decide to comparison shop, but Sprint's new unlimited plan, or Geico's "save 15% or more" campaign are effective at encouraging a switch when it wasn't within consideration.
You shouldn't need to comparison shop. The point of the Intention economy is that you announce to the market of your intentions and desires, and let it come to you with bids that fit what you need.
A generic "I want to know about offers that are strictly better than my current plans" would in fact be a decent intent to announce, but it should be at one's discretion and adjust itself to one's conditions (for example, no point in getting such information if you're locked in a contract).
I just think customers are bad at describing what they like/want. They need to see it. That's why product demos, movie trailers, and coupons are an effective call to action.
But no reason to believe me -- anyone's free to test with an IE-driven offer. No reason why it can't coexist with advertising.
(oops, replied to my own post instead of hitting edit)
http://www.kickstarter.com/projects/freddiew/video-game-high...
http://www.kickstarter.com/projects/pemberleydigital/the-liz...
No it isn't. Aside from that which I pay for through Netflix (no ads), I pretty much only watch and listen to the various BBC outlets (no ads, and I pay my license fee). I pay for Spotify and Audible and I buy CDs. I like paying money for things because I also hate advertising.
Unless you like/watch/read (for example) TV shows on premium cable, Consumer Reports, etc.