As someone who rarely ever uses YouTube, $25 would be fucking bonkers to pay monthly for no ads. Imo a decent idea to explore would be x amount of minutes that are ad free per month, then after you hit that limit you get given ads. You'd have to be signed into an account, any instances with no account logged in get ads by default.

Another idea is to add lower tiers to the available plans. 5 people can sign in on the current option? Is there a cheaper plan that only allows linking 1 account? This could even tie in with the previous idea and have certain plans that give you x minutes of watching adless per month.

I'm sure there are plenty of other options out there. In fact I wouldn't be bothered having to watch an ad before a video (or a midroll in a longer video) but the experiences I've had with using YouTube frequently involve me pulling up a certain scene within a movie or something and getting 2-3 ads that are a minute long each, unskippable, and potentially midrolls in there if the video is over 5 minutes. It just makes me close the video and think "yeah fuck that, I don't need to watch that scene anymore".

Overall point: the ads would be fine if they weren't so excessive and intrusive

as we know bandwidth is extremely expensive

No. You very obviously don't know how bandwidth is handled for large providers. They don't pay per gb, and instead have peering agreements with other networks. Google generally doesn't have to pay these other networks, as Google has the web applications that the other networks' customers expect to be able to use.

I hate ads as much as anyone, but my question still remains for anyone who demands on blocking all ads and refusing to pay for premium, how do you expect servers and creators to be paid?

I'm pretty sure it's 2023 and this has already been discussed and solved ad nauseam, so I'm also sure all I'm going to say here is just repeated from elsewhere, but:

First of all, "creators" (not artists! There's a semantic difference) are not going to get paid better just because you pay for YT Premium. Premium pays Youtube, not the creators pleading not to be demonetized. If you're asking how are creators going to be paid, the answer is simple: directly. If you set up a service without intermediaries, for example a direct wire transfer, or at least something close to it like a Patreon, you get all of the coins and people who want to pay you-but-not-Youtube (or whatever platform) face a better incentive.

Second, stuff like gift cards.

Third, and this is something I've never seen any naysayer deal with properly: the same methods that have existed before can still work now. I don't remember ever paying rent for Usenet, or IRC, or BBSes, yet those things were literally plentiful, if I so much as lifted a rock in a cropped 8-bit-color grayscale PNG, the tranparency layer had a link to a BBS. And part of the issue is that there's a "attention deficit oooh shiny syndrome" going on where instead of using vintage-timer, battle-tested, lightweight, low dependency, cheap payment, low maintenance protocols and services for ensuring persistence and continuation of communities, we are for some weird reason insisting that whatever community launches next is a Perfect Imitation fo Youtube, or else. Such is the case of Matrix: for all its promises, IRC and XMPP are much better battle-tested and for the monthly price (and monthly annoyance) of 1 Matrix server you can run about 25 XMPP servers, or likely over 300 IRC servers.

And the key here is that it's the devs who have to take the turn return towards simpler, better tech. Devs gotta lead by example. Users (masses of) are obviously not going to be the ones to do it.