Like many other business they offer an ad funded service and a paid service. I understand this is Lemmy, and people love getting things for free. But if you don't like ads, have you thought about paying for the service?
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I agree with all your points, not using the service is absolutely an option. I suggested paying for premium because that was the option that made the most sense to me. I hate ads and love YouTube. For me, the value I get from a subscription is much higher than other services I pay for. I'm subscribed to probably 500 YouTube channels and probably watch between 50-100 hours of content per month.