funny how nobody wants to pay for bread and butter functionality, and yet the internet survives on such bread and butter.

I'm really not sure what point you're making. It's not surprising that Reddit rolled their own image hosting. In general, most major websites have done that, because it's easy to do. If your business relies upon image hosting, why would you trust others to do it?

Anyway, Reddit gets paid via ads and gold, so people are paying for it. They just won't pay for it on it's own, because image hosting on it's own is not really worth much. You could make your own perfectly adequate image host on a raspberry pi. Reddit's value is not in it's image hosting. Nor is Wikipedias or 4chans.

Imgur picked a shit business model, the internet will survive their inevitable passing.

I read the OP as pointing out that image hosting, like email, is an awful business to be in, but is something on which tons of other services depend.

Think of it as analogous to sanitation. Being in the garbage hauling business isn't something that really revs that many people up, but civilization literally depends on it.

Imgur picked a good business model, they were profitable years before Reddit came close. It also managed to stay good as the best image hosting on the Internet for a decade.

It didn't last forever, but Imgur was great for a long time.