How do small free webmail providers make money and stay in business?

[michael_kent123]

I suspect that the majority of people who use webmail use Gmail, Yahoo, Hotmail / Outlook, or AOL.

However, there are hundreds of other services out there. I don't mean niche services that cater for privacy-minded people but inferior versions of Gmail.

Here is one example: http://www.lpemail.com/

And another: http://registration.myway.com/primary_login.jsp?regarea=email&return_url=http://my.myway.com/email_redir.jsp

Here are my questions:

1. How do such services make money for their owners? They cannot have that many users. Who wants to sign up for a service with 125MB of space (like Myway). Will they really make enough cash from advertising?

2. How easy would it be to set-up a webmail provider in which each account had 1GB of space. In other words: a poor man's Gmail. What would one have to do? How much would it cost (highly speculative question!)