Among every server that “do just fine,” there are more instances that are just gone for not having proper funding, especially for non-Western instance where paying for social media in not a common thing. I’m from Indonesian, and almost every Indonesian instance are cease to exist except for Misskey.id.
While Mastodon does not support ads, other fediverse software like Misskey support it. Misskey.io, the second biggest fedi instance after Mastodon.social, runs ads and subscription simutaniously.
Their ads is merely community ads. Letting their community promote their indie games, manga serialization, artbook release, online event gathering, etc. I think that might be replicatable for Western instance like Mastodon.art or Pixelfed.art.
There’s distinction between targeted ads and community ads.
Mainstream internet is bad for targeted ads and for-profit site that plaster ads as maximum as possible.
Fediverse instance like Misskey.io runs ads, but all of them community ads. Letting their community promote their indie games, manga serialization, artbook release, online event gathering, etc.