Practice- and Policy-Oriented Abstract With the rise of ad-blockers, firms are worried about the loss of revenue. A simple solution like denying web access to ad-block users seems intuitive; but it can lead to a significant drop in the popularity of the website, which can eventually lead to a further decline in the user base. This paper addresses the ad-blocking problem faced by websites and proposes a solution, and using it can increase a website's revenue. Overall, the presence of an ad-blocker at a user's end reveals that the user is very sensitive to ads. Similarly, the absence of an ad-blocker at a user's end reveals that the user is less sensitive to ads. This information about the ad-sensitivity of users is revealed to the website because the ad-blockers are detectable by the website. Using this extra information about the users' ad-sensitivity, the website can discriminate users by showing fewer ads to highly ad-sensitive users and by showing more ads to less ad-sensitive users. This discrimination ability increases the website's revenue. Users who have an ad-blocker installed present a genuine predicament for a website (also known as the publisher): On the one hand, these users do not generate revenue for the website; on the other hand, denying them access can shrink the user base and adversely affect the popularity of the website, ultimately reducing traffic over the long run. This has led some websites to require that ad-block users "white-list" them for obtaining access to an "ad-light" experience. We model the decision problem for a website facing two user segments: regular users and ad-block users. The first-level decision or gating strategy is whether to allow ad-free access to ad-block users or require them to white-list the website for gaining access. When ad-block users are allowed ad-free access, the second-level decision is the level of advertising (or ad-intensity) for regular users. When ad-block users are required to white-list, the second-level decisions are the ad-intensities for regular users and ad-block users. The net utility of a user from visiting the website depends on the intrinsic value of the website's content, the value obtained due to network effects driven by the amount of traffic/popularity of the website, and the cost incurred due to the presence of ads. We derive an optimal gating and ad-intensity strategy for the website and also solve an identical model for a world without ad-block software. We show that the website can increase its revenue by discriminating between regular and ad-block users via the ad-intensities shown to them. More interestingly, we find that the discriminatory power bestowed on the website by ad-blockers can increase the social surplus and, in particular, increase the surplus of both user segments, namely, regular users and ad-block users, when the utility from their outside option is below a threshold. Thus, the advent of ad-blockers can lead to a win-win for both the website and its users. Finally, we propose a superior selective-gating strategy in which only a fraction of ad-block users are gated. We establish the robustness of our conclusions under several enhancements to our base setting: (a) heterogeneous profitabilities from regular users and ad-block users, (b) endogenous adoption of ad-blockers, (c) the presence of a subscription option, and (d) negative externality due to increased traffic. Our analysis ends with recommendations for three stakeholders in this problem, namely, publishers, web-browser developers, and policy makers. [ABSTRACT FROM AUTHOR]