There's pretty substantial industries that are built on advertising revenue - free papers, television, and the internet. Over the last 15 years countless websites have proven you can make substantial amounts of money from advertising income. It's a proven business model.
Getting paid subscribers isn't trivial either. You need to learn as you go with either approach.
"There's pretty substantial industries that are built on advertising revenue - free papers, television, and the internet."
In the beginning, it was easier to get advertising dollars for a website. Things have changed in the last couple of years. Advertisers want numbers. How much traffic are you getting and is it targeted? Sure, you could use adsense or some or service, but it will take thousands of unique, targeted visitors to make enough money for a business to survive. This takes lots of time and energy. If you aren't pulling in any other revenue, you will most likely go under.
Charging for a service or product doesn't require those numbers. You can have 100 people a day coming to your site and make 10X more in revenue.
Advertising was, for the most part, invented for traditional media (papers, radio, television). In many ways traditional media and the marketing industry are the same thing, so bringing that up as an example of a proven business model doesn't really say much.
As far as the Internet, how many publicly traded Internet companies actually make their profits primarily from advertising? Okay, all the search engines obviously, but who else?
I just don't think you can say that ad-revenue-based models are as proven of a business model as just selling things.
Sorry, I didn't mean to sound partizan. I have nothing against advertising, I was just trying to counter a point you had made. And you're correct - it's stupid to rule out any source of money.
Getting paid subscribers isn't trivial either. You need to learn as you go with either approach.