Giving them money rewards them for pulling a bait and switch where they set the price of hosting plus watching video at free, but are now trying to extort the ecosystem after so many people spent effort uploading. Don't encourage hostile behavior.
Sure, that would have been one honest option. Dumping an artificially free option into the market crowded out other options from being adopted or even developed.
This is how all tech companies got funded, and still do. YouTube doesn't even have much of a network effect, it's just that nobody made anything comparable that was actually better.
