First of all, thanks for asking such a good question. Most of the email service providers, as mentioned by you are providing their services for free for different purposes. There is no doubt that a majority of us will be having an account or two on Gmail, Yahoo or Outlook. Actually, the revenue they make from the FREE services is pretty much intelligently planned and implemented. For a normal email user like you and me, the services seem free. We can access our accounts, send and receive as many emails as we want, including the attachments that may contain different media files and all of that for free.
But the inside story revolves around them scanning our emails and usage behavior, for nothing but understanding which kind of ads can be displayed to us when we access their email site or any other website or service that comes under their network. Hereby, Google stands as the best example for the same. If you are a Gmail user, which I guess you have had been, you must have noticed some random ads running on a side of our email window. When we deeply notice these ads, we will find that we are being shown ads of a USB pen drive or broadband connection for we had exchanged several emails mentioning about these products. Otherwise, we may have had searched it on their search engine or YouTube.
Even for other competitors, the goal is pretty much the same. They provide us free services so that more and more people can use their services. In return, they use this opportunity to learn our browsing behaviour and to show us advertisements for such products that we are actually looking for. Again, as an example, if we are shown advertisements of cheap hotels in our city at a time when we are actually searching for hotels since some days, then it becomes more likely that we will click on such an ad, to just check if it is what we are looking for. Now, how will they know that we were looking for a hotel? Most probably, from the email conversations that we were having in recent days, or from a search that we did on one of the popular search engines that come out to be powered by same parent companies.
Another beneficial point that has worked well for them is that whenever those millions or billions of users use their email services, it becomes more likely that they will want to visit the rest of these sites. And as we are aware, most email service providers; say Google and Yahoo have their email services as one of many services that they provide. Some other services that they provide are Search Engines, Online journal, weather reports and many more. So, when those billions of users make use of the other services of these companies, once again they are shown advertisements based on their need and usage behavior. It becomes like a chain in which they keep getting free visitors to their different services, not just email. Looking it as a whole, that is how they keep getting audiences who use their services, letting email companies understand their users better and then earning revenue from perfectly targeted ads.
Although we can remain assured, our online browsing behaviour and emails are scanned only for the targeted advertisement purposes. As we can expect from them, our personal and sensitive data is never ever sold to third parties, at least by reputed services like Google and Yahoo Mail.
Also, if you are not aware, several companies directly charge a certain fee from the users for using their email services. From a few years, even Google Mail has started their additional service in which you can access your emails directly at email@example.com than firstname.lastname@example.org. Google likes to call this facility as Gmail for Business, which lets you have a professional looking email address without any hassles, for a minimal fee.
Moreover, we can expect from companies like Google to use their collected data for bringing up another good service in future and also to perfect their existing products, by understanding what exactly users are looking for.
"Your value does not decrease based on someone's inability to see your worth"