YouTube is only one section of an entire corporation. Compare Walmart's entertainment department to the rest of the store. The company does profit.

Free forever was the whole premise of YouTube. That's why it was named You Tube. Users create content and host it. Ads were fine, the ads now are not fine.

The operational expenses were always covered by ads. Ads is Googles whole business model. They were successful when they were less intrusive, why do they need to do things this way and break up the videos when they have grown an empire on what was previously done?