There is no middle ground. It's not as easy as "your website offers so little that it shouldn't exist", it's simply "users block ads, and they don't want to pay for access", so there's really no great options here.
However, ad's don't have to be pure evil. Sure they might be not be preferred, but we can totally create an environment in which we have non-intrusive, non-privacy invading advertisements, it's just a matter of figuring it out.
The ad industry had enough time to figure this out and went from bad to terrible - from popups to distribution of trojans (due to a lack of quality control). It's not surprising that people are fed up with advertisements. Any loss of income is the publisher's own fault, because they allowed ads to get completely out of hand.
Bills gotta be paid, but when push comes to shove, users don't pay the bills for a lot of this type of content, so ad's are the only option left. There is no middle ground.
I am surprised by the lack of imagination on a news site for startups ;). There are all kinds of possibilities that haven't really been explored. Music was considered to be a lost cause 5 or 10 years ago when CD had collapsed and everyone and their dog was using Bittorrent or other peer to peer networks. Now there is a quickly growing ecosystem of streaming music services.
