With the current economic climate a lot of folks have been wondering about the future of ad supported content on the web - from services like Hulu to blogs like TechCrunch.
It was always a touch challenge even in the boom times when I worked at rushTV to ensure that you could raise enough money from ad inventory to make a living.
For content creators models like sponsorship and advertorial only go so far - sure you can get a better, or more predictable return from them but it's a very fine line to walk especially if you have a sponsor who wants to influence the content you deliver.
The other balance is how much advertising do you run. If a site gives up 30-45% of it's real estate to flashing, rotating, expanding adverts how much of the actual content will users be able to consume.
Sophisticated users are getting more aggressive using Ad Blocking scripts or proxies to shield themselves from advertising all together which means the content providers lose out.
Some sites supplement or replace advertising with paid membership or premium content - ranging from reputable news sites to porn the model works if you're providing consistent value to the user and they're willing to pay for an ad-free experience (I do that for my Hotmail Plus service for instance).
Many blogs and smaller sites today don't have enough of a draw to charge users even a few bucks a year to visit, and there isn't a practical micropayment solution out there yet. While I use Hotmail every day so the $20/yr works out at a nickel a day but while I might pay a few bucks a year for Engadget I visit Valleywag so rarely that I wouldn't want to commit any upfront money to it.
That leads me to an opportunity for the ad serving companies.
They already have an infrastructure in place, they track users, they have the network.
If I could go to (for example) DoubleClick and pay them $20/yr to never see one of their adverts (or a pre-determined low impact ad threshold - no interstitial, no animation, text only placement out of the main content experience etc) and the ad network shares a portion of that up-front fee with the sites in their network based on eyeballs then everyone wins (including the network who can invest and earn interest on the upfront fee of course).
It even creates a new market for a single aggregation point that does deals with all the advertisers. Just like I don't want to pay each site individually I don't want to have to pay DoubleClick and MSN and AdMob and Burst etc
The ad funded web isn't going to die any time soon, but the business models will need to change and adapt over time to provide a better experience and less volatile model.