Earlier quoted context omitted.
Option 3, let the ad funded internet die and keep the remaining good parts.
The problem is that the most popular alternative, microtransactions, doesn't work. Turns out there is a big psychological barrier between free and literally any payment at all, even a few pennies. People are sensitive to the danger of being nickled and dimed to death. And that's before you get into the problem of how to set up a clearinghouse where you can handle microtransactions without being eaten alive by fees.
I think taxes are the biggest hurdle for microtransactions. You are legally required to report taxes in _every_ country where you have customers. This means that the customer will need to fill in address information for each website they want to use which is also a high barrier. And if you run an online business it won't take long before you have to report taxes in 200 countries. It's a job on its own to administrate that!
With advertisements you receive payments from a single party, and because it's a business-to-business transaction it's tax free.