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Run as a public service without the motivation of profit, the funding would come from the city or state taxing residents.
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More than likely, if the service does turn a profit, it would likely be split between the service ans a slush fund for the city. This can be a negative though, as it is likely the city given budget would be cut since profits would make up the gap.
This happens from time to time. Open a private window and sign in, or wait a couple of hours for the prompt to reset. Ublock will update in a week or so to get rid of the prompts until the next time YouTube updates the detection software.