What you say is both very true and very false, it depends a lot on the product. Advertising can be an amazing way to get money and sometimes, even if you could directly sell to your users, advertising can perform WAY better. The real important factor to decide wether you should put ads or not is "will I probably get a few paying customers or just a lot of users ?". Advertising is all about the volume, the bigger it is, the more money you'll make and a good relationship with your advertisers can lead to really good revenues and a real business model. When we launched our first product with my company, our only competitor was a paid app. We thought "f* it, we'll make it free!". We now have 600k monthly active users and make way much more than our competitor. So maybe not every business should "sell". With social media &cie, it's starting to be really easy to get a lot of users and ads can be an amazing way to monetize it !