*Except* without ads the backbone of what currently funds the search engines and alpha sites will dry up.
That's kind of the part I'm thinking of. I think there will be a huge fallout in web publishing. Lots of sites will dry up and I think what will differentiate the quick from the dead will be content that people are willing to open their wallets for either directly by paying for a subscription or indirectly by buying the actual product the publisher is selling (like Moz - the tons of content are really just a commercial for Moz).
We're already seeing paywalls tightening up at NYT and Economist (fewer free articles per month). Mother Jones just went to a "pledge" model similar to the way public radio works in the US (which I think may be a model for many).
But then you have the Buzzfeeds of the world. Tons of traffic, but will anyone ever open her wallet for a monthly Buzzfeed subscription?
So back to Littleman's question, this I think is what the article means by subprime advertising space. For banner ads and retargeting on the Google display network, there will be fewer and fewer slots and higher and higher cost. Will the quality match the cost? I don't know and, in any case, that question may be rendered moot by ad blockers.
In brief, I think if you compare the landscape today to five years from now, online advertising will look more like advertising in any other media (I mean relative to today, not that it will look more like print advertising than web advertising, but the web model of the future will edge closer to the print model of today than it is currently). That will be especially true if everyone installs tracking blockers and it becomes much harder to get granular info on ROAS.