I might say the same to you.
Everyone wants everything free. That's not the way the world works. And so, with advertising I VASTLY prefer a seamless experience over clunky unwanted banners and marketing that is irrelevant and annoying. Brainwashed? No. Realistic? Yes.

: A seamless experience is one where I turn on my xbox and see no ads
: whatsoever. This is your living room for crying out loud.

That's not seamless. That's void.
Why do you hate ads so much? Not just bad ads, but ALL ads? Advertising (remember, this is a neutral generalization) helps things sell. If there were no ads, there would ONLY be word of mouth. It would be like being back in the dark ages with news and mail traveling at a snail's pace from town to town. Is that good or bad? Who knows, maybe some people would prefer that lifestyle. Seems you would. Not very progressive or lucrative for people who run businesses and want to be increasingly successful and profitable.
But let's not get too Grand here. We're talking about what you see on the Xbox One dashboard, not The Man.

I would certainly support a platinum level membership at increased cost that would remove ads - or at least provide you the choice to remove ads (by their description). But imagine the extreme - everyone gets platinum to get no ads: MS now has no external connections, no partnerships, no role in making those businesses more successful. Happy customers? Perhaps. Arguably, not as happy as they could be because save for pure word of mouth they're cut off from the "outside" world.
You need to define "advertising" when you blanket it all as some big Evil.

No, I am not arguing for advertising! advertising everywhere!!1!. Far from it. I'm arguing for an integration of interesting and relevant content that I may find more appealing, because it's more seamlessly connected with the Stuff I Like. DO NOT make it blatant. DO NOT inundate me. DO NOT annoy me. Give me a good experience, a satisfactory balance between Just What I Want, and What Makes The World Turn.

: I have no cable TV. That plus HBO GO, BluRay / DVDs, plus the internet and
: adblock safari, means I can watch anything I want and not see a single ad.
: It's so great you don't realize how bad things are until you go back and
: have to see one.
: What happened to your house being your castle?

I dropped cable. I now use Netflix (as limited as Canada's is) and network sites to watch the TV I want to watch. And you know what? They still have ads. I can screw them if I want and go download ad-free (and unsanctioned) videos of tv shows (though still being plastered with random irrelevant ads on those free sites trying to offset their provisioning cost or *gasp* make a personal profit), but those big network sites generally have an ad policy that isn't quite enough to annoy me. I can put up with it. I can do something else while those ads run occasionally, or I can passively watch them. It's not intrusive (yet).

I choose the experience that is sufficient for my tastes, which is at a point that I can respect the balance between my desires and *gasp* big business.

The description of the advertising plan for XBO as written in that article has me less concerned than I was, and than it seems you want me to be. And I'm not alone.

: Improving my experience means as little between my me and my game or film /
: show as possible. This is why I only see films at industry screenings, or
: high end theaters now: no ads before the film!

You pay more. And if every service provided an ad-free level, and everyone bought that, everything would be a disconnected, walled up town. Let's get rid of store signs too, cuz geez, I don't want to have to see that while I walk down MY street! I want my town filled with non-descript buildings the content of which only those in the know would be aware!

That article describes an ad plan which is, imo, similar to walking down that street with store signs. Only the street is filled with stores that you like and have no qualms about entering. Some give you discounts, some might hand stuff out free, some might offer services you value, some might be expensive but right in your niche, and the buildings with the games I want to play are also there, and I know where they are if I just want to go to them. But it's all relevant to you, and non-intrusive. It's my street.
But hey, if you want to walk down a ghost-town street and only know what's there because your friend(s) tell you, then that's your choice - and it's a perfectly legitimate one. But it apparently won't be the Xbox One's town.

: Have you ever had a problem with the ads loading? Your Xbox has that little
: spinning circle thing and you have to WAIT UNTIL THEY DO.

Technical issue. Not an inherent problem with Advertising. Something MS needs to correct and adjust if they want to provide a quality service of the standard they have set.