> What is an ad? What isn’t?

Anything wie usually consider an ad/sponsored content/boosted content. That includes ad banners, video sponsors, boosted posts, billboards, etc. Really any way that a third party pays some organization to put certain content on their space (be it physical or digital) to be seen by people who are probably there for other reasons than to see that content.

An exact definition fortunately isn't necessary, since our legal system is well adapted to deal with terms that are difficult to define.

> Must all information be paid for by the audience?

Other monetization paths are still possible. E.g. some SaaS orgs could still run blogs to gain mind share, as they do now.

Hopefully most information will be paid for by the audience though.

> I worry that innovators and small businesses won’t be able to get their message out efficiently.

If ads are no longer a thing, people will find other means to get information.

You mentioned in another comment that you like ads in newspapers telling you about some local stores and events. If the readers are genuinely interested in this, the newspaper can still put that information there. Just instead of the highest bidder, they'll put the ones that are genuinely interesting.

Of course, if your product is not worth reading about, it will suddenly be much more difficult to promote it. In my opinion, that is a good thing.