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The same way Lemmy and the rest of the fediverse manages to stay functioning despite not generating any income other than donations.
Decentralization, open protocols, And many ulturistic tech savy sysadmin voulenteers in a well enough financial position to eat hosting+maintenance cost out of pocket so a social service can be provided for the many.
Peertube is the shining example here, many many many instances exist and many offer unlimited vido upload. Thoe instances work, they are out there, and video streaming from them is acceptable speeds usually. Two instances I've used personally are https://diode.zone and https://spectra.video and they are pretty good IMO
Now that isn't to say peertube is a perfect alternative, federation and decentralized hosting of many instances is its own can of worms. There are probably many Lemmy users who came from the reddit Exodus who still don't know how things work under the hood, nor should they have to. Peertube needs to become more fleshed out with a better user interface. It still works, though.
Just because services cost money to host doesn't necessary mean they need to make a profit to be viable. Only when you try to make a business out of them. The internet allows for individual provide services at cost, as hobbiest or utilitarian endeavors of passion and philosophy.
Most people admittedly dont care about any of that. They want a convinent service without and hassle or bugs on their part, and dont care about much else besides them and their precious entertainment.
The thing about social platforms is that you need users to attract users, its a vicious cycle of popularity. For an alternative service to attract enough users, another popular service needs to screw up royally enough that people start looking and trying alternatives in mass.
Before the reddit exodus Lemmy was mostly home to communist and hard leaning political extremist, people who are rejected by conventional platforms are the first to look for alternatives. Its only when reddit pissed the whole community of people off that Lemmy got enough momentum to attract normal people.
YouTube needs to piss EVERYONE off enough that the most diehard premium subscriber and most of the content creators say FUCK THIS! And they will most likely find peertube or Odessy.
Somehow I just dont see that happening, it feels like at this point people are so addicted to their YouTube that Alphabet could physically print out androids to hunt down every user to fuck them in the ass, and people would still shell out 10/15/30/50$ a month to daddy google.
Damn this got long, sorry.
Tldr: free decentralized video streaming service peertube exist, but currently has no users to attract more users. YouTube needs to fuck up atomically to push enough people to try out alternative services like peertube. Content creators should rely on growing their patreons/donators for money and not meager ad revenue from the streaming service.