I wouldn't be surprised if someone will do an ad-supported service. Or just do a straight-up subscription service -- I mean, Usenet providers do that. Means that you don't risk having your instance just vanish, someone handles security updates and load issues and so forth. Different models could coexist at different levels of reliability and performance and whatnot.

The point of the fediverse is that hosts can pick their own business model - free, freemium, ad-supported, subscription. Just like e-mail, you sign up with the provider who provides the type of service you think best meets your needs. If they piss you off, you move to a different provider.

If the fediverse demands hosting for millions of users, someone will make a server to host millions.

I personally think "big" instances should focus on user/identity management, while communities live in small groups on small instances. This lets the identity providers include/exclude with much better granularity (compared to the beehaw mess) making the communities much less susceptible to being collateral damage.

I'd like this to be avoided as much as possible. But I am a bit weary about the fact that even small instances have to copy everything else on the Fediverse and thus will be very strained. Or do they copy the stuff only when their user wants to view it? Not sure how it works.

AO3 is a huge website that makes money purely off of donations. They often get like quadruple the amount they ask for every time they ask for money. Wikipedia comes to mind as well, although I'm not sure if they only make money off of the donations. Instead of donating to a third party service, Lemmy should build in the ability to donate into the website.

Maybe something like DuckDuckGo's ads that respect DNT?

I think it's reasonable for some instances, where there's good alignment. There was a thread I replied in a few days back around how/if TTRPG creators(who are mostly small enthusiasts themselves) could advertise in related magazines, and legitimizing that business wouldn't really pose a conflict for the hobby - that's how it was built in the first place! It's just a matter of finding a place for it and defining the technical solutions.

As a general "let in all the advertisers and promise riches for someone" measure, it does cause known problems. There is some freedom to figure out what works in a specific case here, it's not defined top-down since it isn't centralized.

Donation based funding has historically been used amongst the fediverse and is therefore the most likely path forward. I'm also partial to this model as it prevents predatory changes towards increasing ad revenue. We see many content creators and organizations (such as the lemmy devs themselves) utilize donations as a method towards preserving the FOSS spirit of the platform whilst supporting these projects part/full time or just server and maintenance costs.

I am of the opinion that in the long term, donations will also be the best way to preserve Lemmy's independence from profit based oversight by staying ad-free and the instances that step away from this and embrace ads most likely will be the ones that already have stepped away from the spirit of Lemmy by defederating. I have no interest in remaking reddit and many others feel the same so I am more than happy to donate and enjoy other FOSS projects.

I'd rather have a smaller/cheaper platform with no ads than a bloated mess like reddit with ads and data mining.

A small community is perfectly ok.

I'd be absoloutely fine with some unobtrusive side bar adds, its only when adds make it difficult to actually use the website that add block turns on.

Ads is what's ruining everything that's good on the internet. If you have two similar platforms and one is run by ads and one by a subscribtion model the latter is going to give you way better experience.