Doesn't Google's ability to do that depend on the details of the old agreement? Does anyone know those details?
I could imagine an agreement along the following lines:
1. YouTube will show ads on all of creator's videos.
2. YouTube will pay creator based on some formula (in terms of ad revenue, plays, etc.).
Nothing in that would let YouTube (a) not show ads on the creator's videos or (b) pay the creator based on the hypothetical revenue the ad they didn't show would have earned. YouTube could try to get content owners to sign onto a new agreement that included that, but, um...
In any case though, I imagine that the agreement would be far more acceptable given an only slightly modified version of business as usual as the alternative, than it would given an ultimatum between this and death.
Pay content creators who don't participate and are on monetised accounts as if the Red views had been seeing adverts, show adverts to everyone else.
I'd extract money from the red customers for the no advert feature, who would be more invested in the feature because their favourite channels would be on it. The Red customers would extract value from viewing that user's content. I'd still be getting paid for the adverts seen by everyone else. The content creator would still getting paid.
I honestly don't see any loser in that besides the content creator maybe not getting as big a cut as they would have if they chose to take the deal. If the Red deal was better than the ad-content deal then I'd be better off treating creators that way and letting them opt-out.