Think of every user as having a maximum price that their willing to pay. This is not known to us, but we know there's a distribution. You may be willing to pay

Think of every user as having a maximum price that their willing to pay. This is not known to us, but we know there's a distribution. You may be willing to pay $10/mo for Google but your rich cousin would happily pay $100/mo. The cost for producing the marginal digital media is roughly the same, regardless of willingness to pay. So,how do we maximize revenue? Ideally we would charge everyone exactly what they are willing to pay. Except, that's often illegal (discriminatory pricing) and infeasible. But, there's a very good proxy: ads! With ads, the proportion of revenue from a given user correlates with its willingness to pay, especially for entertainment. Why? Because willingness to pay correlates with purchasing power and so does online purchasing. So, if you can serve the right ads to the right eyes, you could approximate that optimal pricing strategy. And that's where the bonus kicks in: the more users you have the better you get at serving ads. This means that users whose willingness to pay is negligible are actually still valuable to the service because they improve your ability to monetize the richer users! Contrast this to setups where you have to pay directly: subscriptions by being flat end up being too expensive for a big chunk of potential users and too cheap for the rest, pay per use is too much friction and again ends up leaving money on the table. Every business that can do effectively, will do them. It's just such an attractive model.