1) Offer a free service. Show ads. Snap up ownership of content. Sell that content. Use it in ads. Roll around in the piles of free user-submitted content you glean. Chortle with glee.
2) Offer paid memberships at reasonable prices. Allow those of us who are willing to pay three to five dollars a month the ability to turn off ads. Let us retain ownership of our content. Let us decide when and where our content can be used through a dashboard of clear, simple controls … perhaps going so far as to make it possible for us to offer that content to others for a reasonable fee.
"But very few of our users would pay to use our service!"
If it's not worth paying for -- if it can only be kept afloat through angel investment, intrusive ads, and theft of personal property -- then it's not really worth very much, is it?