That is definitely not the argument - everyone pays for peering regardless (one way or another). The argument was that Comcast, despite peering agreements, should not make Netflix traffic on their own network slower while prioritizing their own video services traffic on top of it unless Netflix or their customers paid them for the privilege of not being slow - regardless of actual bandwidth.
Net neutrality would say no - they are a defacto utility and need to treat the traffic objectively and fairly without prioritizing their own at the expense of others.
Reprioritizing say ALL video traffic? Perfectly fine. Peering arrangements at the network link layer that would benefit some players due to locality and not others? Perfectly fine as long as they don’t do it explicitly to penalize a competitor (and even then probably fine).
Targeting certain services or protocols because they are a threat to their own products? Or asking for upsell money to get useful speeds for certain protocols not due to network management/bandwidth and handled objectively, but for revenue extraction? Not fine.
Would you like USPS or UPS to be able to charge you extra (the package recipient) to ACTUALLY deliver Amazon’s packages at the rate Amazon paid those companies already to deliver them, since they know you’re buying expensive things a lot and obviously have money? The extra load on their trucks from these packages is awfully expensive after all. Surely once a week deliveries will be fine for now unless you want to kick in? Don’t worry, the spam mailers will still be free.
There's also the fact that Comcast isn't a tier 1 ISP. The only netflix traffic going across their network is traffic specifically requested by Comcast customers. It's not like Netflix (even indirectly through their ISP) is somehow using Comcast's network for non Comcast uses.
Most of the peering talk was leaving that part out, trying to pretend that Netflix was using Comcast's network to reach third parties like is the model being addressed by peering agreements between tier 1 ISPs.
Your questions are making the assumption that this would cost more and limit choice. This is not how markets work, this is exactly what government regulation and crony capitalism does.
Even in the case of your Spotify but not YT music example, what if there was a 5/month offer for 15mb internet with spotify streaming. Because spotify and your provider made a deal that subsidized the plan? At the end of the day, partnerships are not bad for the consumer. YT music could make a competing for deal for less money with more Google offerings. Also, this wouldn't eliminate an unlimited option across the board. When has competition made something more expensive? Its regulations like NN which pour amber over a system and make it impossible to be cheaper or better.
The fight is over whether ISPs should be able to leverage their position in the uncompetitive infrastructure space to extract rents from the very competitive internet application space.
Perhaps the reason it's so amazing is because that's not actually what net neutrality is about, and never has been, despite a massive propaganda campaign to trick you into believing it is.
Peering is for fellow ISPs. Netflix, as you may or may not be aware, is not, in fact, an ISP. They already pay for their internet access. Do they pay enough? That's between them and their provider. Does their provider need to pay more for peering with its fellow ISPs? That's between the provider and its fellow ISPs.
What we do not need is for me to need to pay for my internet access and a Netflix subscription, and then pay extra just to let Netflix's internet traffic actually reach me.
