The only thing worse than pre-roll ads on videos are the ads that pop-up mid-stream.
The real problem I have with video advertising is how much it messes with the user experience. I don't know if I'm going to see a pre-roll, a pop-up, both or neither. It's incredibly jarring when you're trying to get into the correct headspace to watch a video.
I'd happily pay $10-20/month or $150/year to not have ads in YouTube. Take my money, please. I've never clicked on a single one of your ads, and I want to support your service.
We could speculate that this is because the ads are too lucrative for them, or because they want to offer advertisers the widest market possible (with no opt-out), or because they want to preserve their image as a "free resource" as opposed to a seller of premium plans.
I don't know to what degree those reasons may be valid, but when companies this big choose not to monetize a channel, there is usually a strategic reason.