You are ignoring that people give away things for free all them time if the cost to them is small enough. But currently those genuinely free options have to compete with ad-funded services for attention and getting that attention requires more effort than just providing the service so this happens less than it otherwise would.

Or to put it another way, most of the content on the internet is already unpaid with the creator not receiving any compensation. What's left is the hosting/distribution and we can find many different ways to (collectively) pay for that besides ads and user subscriptions.