Demonetization is in service of advertiser prerogatives. YouTube would monetize every video if they could because it would make them a lot of money, they don't

Demonetization is in service of advertiser prerogatives. YouTube would monetize every video if they could because it would make them a lot of money, they don't do so because advertisers do not want to advertise on controversial videos. YouTube loses a ton of money when they have to stream HD video to millions of viewers for free. Additionally, advertisers are not prohibited from working directly with publishers and this is actually pretty common.