This was exactly the common wisdom in 01/02. And then the economy turned around, and ad-supported was all the rage again.
So you're right - now. But if you've got enough cash to wait out the downturn, ad-supported businesses could be very profitable. It's always a mistake to try and extrapolate the present out indefinitely...
I don't think the question is whether or not you can run a profitable ad-supported business. The question is whether your product truly matters if people wouldn't pay for it.
I believe there are ad-supported products that matter, but I'm tired of being advertised to. I will pay for good products.
When was the last time you first heard of a startup through a paid-for ad? (And then spent money on the service, or clicked on an ad shown by that startup and bought something there?)
So you're right - now. But if you've got enough cash to wait out the downturn, ad-supported businesses could be very profitable. It's always a mistake to try and extrapolate the present out indefinitely...