That is cognitive dissonance. If your revenue is derived from advertising then users installing ad blocking software is revenue-equivalent to users pirating your software. The fact that it's legal for users to do when piracy is not provides no support for argument that ad-supported services are on stronger financial footing.
The reason ad-supported services are winning is much simpler. Users prefer them to paying. So if one competitor is "free" (with ads) while another is charging money, the market picks the free one. But ad-supported services don't inherently require centralization or feudalism anyway.
> The internet is the Wild Wild West.
The internet has never been the wild west. Modern computing devices are dramatically more secure than physical things like your house or your car. The internet is so far away from the wild west that we consider even the possibility of a security breach under rare circumstances to be a serious vulnerability and work quickly to close it. And the feudal lords are the ones making it worse -- is it even possible to patch a vulnerability on an un-rooted iPhone which is too old for Apple to patch it officially?
Having said that, I don't disagree that the reasons you're listing are the ones used to justify feudalism, they just happen to be factually incorrect.