They must make a fortune on premium users compared to a regular user, I don't believe their adverts pays them enough to get them over 10$ a month for a single person...
They don't connect to an API because the YouTube API requires the developers to sign YouTube Terms of Service, which they refuse to do for obvious reasons. This is why those programs break because they scrape the web page instead of using the API. So when the web page changes, the apps have to change in order to continue working. I think the reason it's called soft piracy above is because you are using the service without watching their advertising and they don't like that very much. piracy is wider scope than just torrents, but that's what most people think of when they hear the word piracy.