Flat-fee world

Market research shows that people want ad-free services, but won't pay for them. They will pay for quality content instead: "People are not buying HBO because it doesn't have ads, they are buying it because they want to watch the Sopranos."

People buy World of Warcraft not because it doesn't have ads, but because it has quality content. Since Blizzard gets paid, it can hire professionals to develop quality content and publish it without ads. There is a feedback loop here; the main problem is bootstrapping—achieving a critical mass of subscribers. Bootstrapping can be accomplished given enough initial investment, assuming people indeed want to play the game.

Blizzard has a monopoly on authoring content for WoW; but there is no reason an open system can't work, with multiple competing content providers. A neutral party can collect money from subscribers—a flat fee for example—and distribute it among content providers according to usage patterns. As long as the fee distribution method is fair, this model is attractive to both users and publishers. The main problem, again, is bootstrapping and gaining a critical mass of users: this can be done by producing or licensing quality seed content.