The pricing feels like it only makes sense if you want to use YouTube Music (and thus also don't use one of the many streaming music competitors). Paying a couple of bucks extra for ad free YouTube is fine and that's why I pay it personally. But if I wasn't a YTM user already, I don't think I would.

And most people don't want to switch streaming music services. I did that years ago and it sucked. Music is the kinda thing where you really benefit from the service knowing your tastes. I only did it because back then, Spotify was missing some of my favourite artists while Google Play Music had them. I don't even know if that applies today.