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Looks like they are actually strong arming everyone into allowing the ad free version so this outcome does not happen...I understand their reasoning, but is also pretty hostile at the same time. I would definitely allow it, and can't think of a good reason not to, but not giving people a real choice could be a problem.

No, it means that to avoid the situation you just subscribed YouTube forced everyone to agree to be on the subscription plan or they'd effectively be kicked off of YouTube

If that's what happened then good, but it sounds like people who don't agree aren't getting kicked off youtube, they're just not shown to subscribers.

If I were a content producer, I don't think I'd like that policy, but as a consumer, it makes the service more usable, since I know that anything I can see on the ad-supported Youtube site would be available on the paid site.

Much better than the model that cable TV uses where when I look at the channel guide I can see all of the channels, including the ones that I haven't subscribed to, and it's not until I try to watch a show on one of them that I discover that I can't see it.

Yeah that is a pretty odd outcome.