The downside of losing ad-supported media will be ad-sponsored media paying to write the content itself.
I'm extremely skeptical. It's not at all hard to think of a lot of different ways that would be enormously convenient and highly transparent to users to have direct pay options. I think they haven't been tried because of the standard technology issues: we're in a local minima and there is enormous inertia with what "everyone uses" already. But that's not at all the same thing as being in an absolute minima, where any change would necessarily be less efficient. Quite the contrary, in tracking flow of money and resources advertising looks to have quite a few unnecessary inefficiencies between user goals and publisher goals. That being the case I see no reason to believe inherently that something better could not be developed if there was sufficient motivation, and an existential threat would certainly be that.
Without government backing, the system you envisage would ironically be prohibited by antitrust laws. It would be a rather clear example of price-fixing and collusion by competitors. Maybe there's some way to do this through peer pressure or incentives, but I think we've seen that approach fail so often that it's hard to see what could be done differently short of a hardline approach that would trigger regulatory scrutiny.
Many people I know (myself included) pay for articles they read on the sources they choose.
It's the websites that copy the articles, mix the words a bit and republish that get into trouble and in my experience have the most problems with ad blockers. I don't think that's a bad thing.
Like others said here, if nobody wants to pay for your articles you either publish them for free or do something else with your life.
Maybe the alternative is: if you don't want to charge for the content you produce or give it for free don't bother producing it. There are huge chances your content is just shit anyway.
The other form of dumping comes from tech companies operating in the red but surviving on investment dollars. Frankly, this is a result of growing wealth and income inequality that leaves investors with few avenues for growth outside of ad-funded moonshots as consumers aren't able to drive growth like they used to due to flat income.
[1] https://en.m.wikipedia.org/wiki/Dumping_(pricing_policy)
Edit: Imagine a world where the average consumer makes $10k more per year, then turns around and spends some of that on online services. You now have a situation where the interests of the user and web service provider are aligned. The user is now the customer, not the product.
Video, particularly HD video, absolutely requires ads or subscriptions. Social networks could probably be built atop WebRTC and run in a federated way, more like IRC... but image or video sharing would start to demand significant resources.