An approach that has worked well for me...
build up a niche community. Something for people who have a common interested.
Make it free to join, lots of good free content.
Allow users to post media etc related to that niche, plus forums etc..
Then once you have a good base of customers launch a premium members area and charge a small fee to access.
I normally add things like chat rooms, premium content areas (depending on site type), additional features such as contact member direct etc just for paying members.
Ive stayed away from adds, if people feel like they have ownership on a niche community, paying a small amount for premium justifies keeping a site ad free.
Works for me, take time to build up the initial core members etc and make the site quality for them.
I fine members dont like adds so much. They might bring in a small amount of money, but Ive found members are willing to pay a small amount to keep them away, also with additional content being thrown in for those who pay extra!
Not all sites have worked that Ive made, but some have stood out. Depends on your niche market though, also what you can provide for them to make your site stand out from others...