Where else are you going to find videos to watch? Vimeo? Bing? YouTube has a dominant market position And wants you to pay for it. Their reasoning could be that if they give you enough ads that make it unbearable, you will pay just to get rid of the ads and wants you to pay for it. Their reasoning could be that if they give you enough ads that make it unbearable, you will pay just to get rid of the ads.

From a business perspective, it's completely logical.