Re: A subscription fee for email‽
I used to pay for Hotmail, back in the day.
People run their entire businesses on GMail and pay for business inboxes.
Exchange costs a fortune when you take into account the CALs, and more if you use it via the Cloud.
Hell, I pay for a domain name, a dedicated server, etc. for my own personal domains - just so I can collect or refuse email in the way I want (I own the entire domain, so I can just make up email@example.com and it will work... and then when some company spams the email I gave them, I know who they were, and I can just shut that alias down). Not to mention that, then, nobody knows where that email actually goes (it ends up in a popular webmail), but I can literally change the destination in seconds, or even copy every email to multiple places for redundancy. Oh, and I give out forwarded address to friends and family.
I haven't changed my domain in nearly 20 years, and have always had paid-for services behind that (the domain itself, the servers, etc.), and I have a complete archive of every email I've ever sent and received despite my "provider" / destination mailbox changing dozens of times over the year.
Personal users aren't the target - and aren't profitable at all anyway. Hotmail/GMail don't make any money out of personal users, except as a branding exercise and "consumer data". As you suggest, they can go anywhere and get a free email address. But private users serious about their email and the millions of business users... that's their market.