do people feel that investing in a website/idea that is going to rely on free organic search traffic is a worthwhile venture
Personally, investing time money or effort into a website which is going to rely ( by "rely" I think you mean depend upon for most of it's traffic and most of it's revenues, be they from ads or sales of goods or services ? ) on free organic traffic is indeed a waste of time, money and effort.
But then, making your business ( and indirectly your lifestyle, home, finances ) primarily dependent upon what someone else or some other business does is IMO, and IME, naive and irresponsible. It always has the possibility to end in tears..
The writing has been on the wall for years now, G in particular ( but Bing is following suit ) has been making incremental changes designed to keep the surfer on G properties and the surfers eyeballs exposed to G ads to generate clicks and revenue to G, the "organic" ( and in particular small business websites ) part of any G SERP ( especially page 1 ) have been ( as someone said here ) .."backfill"..
The process began when wikipedia began to dominate the top of the "organics", along with Amazon, Ebay, About, Ehow and latterly Pinterest..Placing them in the top of "organics" pushed other sites down, some of those affected complained..most did not, as an adsense check buys a lot of silence and "loyalty" and unwillingness to "bite the hand that feeds" ( even if the rations were decreasing as G's friends were given the best places for clicks )..G has been "boiling frogs" for years..
They are quite ruthless ( "do no evil" was only designed to be catchy and play against anti Microsoft feeling )..Uncle Eric was never really your friend, and Larry and Sergey are "experimenting" at "societies", they no longer need the money, but the power is a heady draft..
Now that they are also answerable to shareholders and the centres of finance and the investment managers and hedgefunds, taking your content and using it as decoration in close proximity to to their ads will only increase..the "backfill" below the fold is merely to stop it looking like the front page of Yahoo..
They'll take you content via their proxies ( pinterest and other crowdsourced scrapers ) even if you blocked them via robots.txt ( which only stops them "for now" displaying what they find, doesn't stop them crawling and indexing your content, just not displaying it, for now )..G has a new bot ..mentioned elsewhere here..now they are looking to snarf your "media content", mp3s, mp4s etc..
Bing does this already..
If your business depends on your website(s)..be they "informational" or "ecom"..you have to get as many visitors as possible from other non SE sources of traffic and persuade them to clicks on ads that may be on your site(s)..If you are in "ecom" and using your site to sell what you have, or make, you have to get as many of your visitors and potential buyers from sources other than SE traffic..
The "easy times", when you could have a website that talked about or showed images what 1000s of others were talking about and showing and put the adsense code in there and wait for the checks are past..
The days when you could set up a site selling what hundreds or thousands of other sites were selling have long gone..The dropshippers were the first to wither, nowadays aliexpress is on etsy ( and the etsy clones )..TaoBao ( soon to be in English ..everywhere ) and similar are going to go through "mom and pop" stores like tornados..with free, or nearly free shipping..
You are going to have to be either dirt cheap ( take a look at aliexpress and TaoBao..AKA ..the soon to be real "competition"..think you can sell your widgets cheaper than they can sell the same or reasonable copies of your widgets..really..)..
Or you can be ( or sell ) "unique", "special".."rare"..to those willing to pay a premium..or aim at the "luxury" market..where word of mouth and specialist sites and offline media is where your customers get to hear about you and what skills you have to offer, or items to make or to sell ..
Many of the things that would fall into the areas of the previous paragraph are also not things that G is ever likely to be your competitor on ( wouldn't fit their "must scale", or their "projected values" )..They would like you to buy ads from them to promote your goods, but if you choose what you make or sell ( and their markets and identify their potential purchasers ) wisely..You'll not need to be buying expensive adwords to have customers..
You also make sure that when you have sold an item, it continues to sell itself to others who see/use it..Why do apple have their easily recognisable logo on everything they make and sell, idem Chanel, Levis..( that could be a very very long list )..the cutomer advertises your product for you, long after they have bought it..no adwords required..
If your site is informational ( revenue via ads or aff' links )..it either has to be "encyclopedic" ( won't stop wikipedia or ehow ripping you off, but if you really know all about your subject you can keep ahead of them and their ilk, but you will have to watch out for scrapers ) ..and don't make it entirely reliant upon adsense for it's revenue..mix in some aff stuff and maye sell some direct ads..at least that way some of the ads that visitors see will be relevant to your site..with only adsense G will display ads that are best for G's bottom line..even if you "block" categories..
Or you can make it "quirky".."sticky".."distinctive"..
Think about your favourite sites..not your bookmarks..the sites that you like..
For most people those will be the sites that are "quirky".."distinctive"....which brings it back to "unique"..
Now, make it as hard as you can for G or anyone else to steal, scrape or take your content..
And that is as much of a "how to deal with G trying to eat your lunch" as ( IMO ) is wise to post in a place that G and it's crawlers and staff and amigos have access to..
IME, if you don't adapt, stay alert, and have a plan A or B ( that doesn't depend on someone elses business )..you'll not survive..
Or you'll have to do something that makes facebook, or MS or G want to to buy you out..
( there may well be typos..it is late here..05.00 am )