In the late-eighties Commodore 64 computers had 2000 baud modems, which is 2 kbps. If you had touch tone phone service you could dial a phone number and connect to other people's computers to share video games. It was called piracy. Don't believe anything else you've heard because this was how the internet really caught on with the general public and home computers.

Waaaay back when I started university, in the early 90s, the only really useful stuff I found on the internet were local weather forecasts, and about 500 different discussion groups (usenet). Over a period of a year the usenet grew to over 1000 groups, and more and more resources were connected to the internet, like lexis nexis (corporate profiles), search engines (altavista, yahoo search, etc). Internet browsers were the latest computer software being hyped with access to online search engines. The more resources were connected and made publicly accessible by universities and government the more people started surfing the www.

Modems for home pcs got faster and more ubiquitous, with 16 kbps speed, and gradually speeding up. Corporations began seeing that this was a great advertising medium and got in on the game. News websites started up. Newsgroups (message boards) were always there, so they just got more and more numourous. And so on and so forth.

Today, sharing software is still called piracy, but goes by other names like Peer-to-Peer file sharing. P2P is software driven today (uTorrent, Azereus, etc) since internet browsers are not geared for that. There is also file transfer protocol (ftp) which is another way of directly sharing files with specific people or businesses.

Ultimately, the internet is sustained by free content, either file sharing capability (piracy or ftp) or free information resources, that attracts people and gets them to pay Internet Providers (IPs)the monthly fee for a connection. The rest is just fluff. Commerce. Like you said, almost nobody pays any attention to the advertising. Most of it is just annoying. But it's worth it to businesses because it increases exposure of their brand name to the public and it's cheap compared to other kinds of advertising.