Considering what Microsoft has done, it's clear that the best way to do this is to buy everyone who competes with you and charge a lot. Then again, doing something just because one person or many people are doing it isn't always the best way. You have to decide for yourself if the decreased revenue per user is worth a large number of users (and maybe do some experiments). Advertising is great for news and articles because it's very easy to transmit those; sites with lots of media might find that it's not as profitable.
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