To add on to what the others have said, there should always be competition between free and paid services. Free services should provide only what they are capable of with the limitations they operate under due to a donation model, while paid services can use all the advantages they can get with advertising, big budgets for hosting, etc. Free and open-source often still won under these conditions. Think Encarta against Wikipedia. If paid wins, that's fine, people can still have a reasonably good alternative with the free option.

The problem arises when a corporation builds on the back of a free resource, and then starts charging users once the network effects kick in. With YouTube, Google was able to leaverage 20 years worth of videos that people lovingly uploaded (although 10 of those years were in the post-ad plagued world) and then start forcing people to bend to their monetization rules. Most of those people didn't upload to YouTube because they wanted to make money off their videos, they just wanted to share a funny video. If given the choice, they would have chosen free instead of ad-driven. We have no choice since all that content is now locked behind YouTube's ad walls.