There is a comment somewhere on HN where a person described implementing ads for a small, hobby website.

Users complaied about the price to go ad-free (something like $25 per year).

The commenter revealed that the actual revenue from ads was much more than $25 per year. Every person who purchased the ad-free option actually cost them money.

----- The lesson I took away is that ads pay more than we expect, though i didn't know the specifics of YouTube.

By providing an ad-free option, they are really allowing the user to out-bid the advertiser.

I think for most people, they would not be willing to pay more to avoid the ad than the ad seller is willing to pay to show it. It's a weird conundrum--but people are very cheap.